G20: Anyone remember the Millennium Development Goals?

Few saw the economic crisis coming two years ago. Even fewer saw the crisis coming when the world agreed to set goals to reduce extreme poverty back in September 2000, when the world adopted the United Nations Millennium Declaration.

Now known as the Millennium Development Goals (MDGs) world leaders committed to a 'new global partnership to reduce extreme poverty and setting out a series of time-bound targets - with a deadline of 2015'.

But the recent economic crisis has outshone the multilateral attempt at inclusiveness, or so it seems. Governments across the world spent the latter part of 2008 putting billions of dollars into their countries' failed banks rather than global development, considering it second to saving their financial institutions.

School children in Sudan. Photo credit: Tom Law

However, to salvage the world economic crisis and build a new, healthy global financial system the G20 should especially address the MDGs and dedicate resources to meet them, Professor Danny Quah said at the London School of Economics (LSE).

Prof. Quah, who heads the LSE economics department, addressed the need for the new global economic system to include the emerging economies, and for that to succeed the MDGs must be high up on the G20 agenda. He spoke at a special Ralph Milliband panel event, titled: ‘What should the next G20 meeting do?'

At the event, prof Quah argued that the emerging economies could play at large part in the build-up of a new healthy economy, but the West should acknowledge their importance and continue to aid their development, in stead of looking at the MDGs as "an unnecessary and distracting afterthought" in the face of the current crisis.

"Emerging nations need to be made to feel engaged with international financial institutions. They need to be convinced that those institutions are on their side and will support them in the face of economic difficulties."

Prof. Quah outlined a four-point forecast of what the G20 will discuss in London this coming April that included boosting of global demand through fiscal stimuli and quantitative easing, improving the financial market and strengthening world trade by staying clear from protectionism. As a fourth point, he added the MDGs.

"The UK and a number of other countries, are insisting, perhaps half-heartedly on a fourth, that is, to keep an eye beyond the current financial turmoil; continue the efforts towards meeting the millennium development goals; combat global climate change."

If the fourth point is not addressed, Prof. Quah warned it could exacerbate the crisis. Many of the Western countries are deficit countries, and therefore the boosting of demand in those countries alone will only worsen the crisis.

"We might actually, by quantitative easing and over-relaxed fiscal and monetary policy simply be putting in place the seeds for the next financial crisis.

"Fixing credit challenges in the West alone will only bring the global economy so far. Getting the surplus countries like China, the Middle East and North Africa, Germany to boost their domestic demand will be a double effective recommendation."

Prof. Quah illustrated his point with those regions and people in the world still unaffected by the crisis.

"New bank loans in China rose from 19 per cent at the end of 2008 from 12 months before, probably the only country where the banking system has continued to hand out loans to the private sector.

"In India, new cell phone subscriptions reached a record of 11 million in January of 2009"

It is especially these regions with its billions of inhabitants, were they to be given further resources to develop, that could boost the world economy from the bottom-up.

But these countries need to be convinced they will come out of the crisis stronger as well.

"The experience of many emerging economies is that in a financial crisis they do not want to be caught without back-up, reserves and resources. The East experienced the humiliating and sobering such episode in the 1997 Asian financial crisis and they will try very hard not to be caught out again."

To overcome the global economic problems, Prof. Quah stated the G20 is a step in the right direction, to make the emerging economies feel engaged with the global financial institutions and not like they are "just an incidental last item on the to do list that the G2 will get to if it has time and resources left over".

"So in addition to all the other sensible things that the G20 should go about doing providing greater global participation to the emerging countries ought to be higher on the agenda."