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Commission proposes new rules for grading countries

Friday, August 31, 2012    

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THE Economic Commission for Latin America and the Caribbean (ECLAC) has proposed an alternative but complementary approach to the criterion of per capita income for the allocation of financing for development.

The analysis involves directly combining into the co-operation agenda an evaluation of the structural gaps that are not reflected in the income per capita indicators.

ECLAC's proposal was presented by Deputy Executive Secretary Antonio Prado at the meeting of the South-South Co-operation Committee, which was organised as part of the 34th session being held in El Salvador.

Prado said the structural gaps that limit a country's development with equality, and that are considered in this new approach, include income per capita, inequality, poverty, investment and savings, productivity, innovation, infrastructure, education, health, taxation, gender and the environment.

Earlier this year, Jamaica's Foreign Affairs and Foreign Trade Minister AJ Nicholson advocated for a revision of Jamaica's status as a middle-income country to allow it to qualify for more development assistance.

Senator Nicholson's observation had come against the background of a World Bank classification which resulted in the slashing of concessionary financing to the island as this kind of international assistance is reserved for the poorest nations.

"What we are hoping is that there will be a reclassification. The truth is that it is going to be difficult, perhaps impossible, for us to access the funds that can help us in our development. And especially the development that is sustained if we are classified in the way that we are in this point in time," Nicholson said. "We are an indebted country. We have many of the challenges that some of the countries who are not so classified have," he told world diplomats gathered at Jamaica House as part of Diplomatic Week activities then.

According to the ECLAC document — Middle-income countries: A structural-gap approach —the allocation of official development assistance (ODA) based on per capita income has two main problems.

"First, overcoming inequality is both cause and effect of the development process, which is multifaceted and demands that countries close significant structural gaps that limit or hamper inclusive development processes through which it may be possible to tackle the problems of poverty and inequality," said the publication.

"Second, the per capita income criterion presupposes that the categories of low, medium, and high-income countries contain relatively homogenous countries in terms of their economic and social needs, which is far from being the case," added the document.

According to this criterion, Latin America and the Caribbean is a predominantly middle-income region. Only five of the region's 33 countries are not classified as middle income (with one low income and four high-income ones). This has meant the region's official development assistance has been in free fall, both relative to the region's gross national income and in comparison with other developing regions.

In the 1960s, the region received an average of almost 14 per cent of total ODA for developing countries, while the figure now stands at around eight per cent. In terms of regional gross national income, the ODA received by Latin America and the Caribbean went from over one per cent in the 1960s to 0.4 per cent in the 1990s and 0.22 per cent today. Infrastructure and social services are the sectors to have received the most ODA. Currently, middle-income countries are home to more than 70 per cent of the world population living in poverty.

Said the ECLAC document: "In order for the structural gaps to be used to establish criteria to guide the distribution of resources from the international co-operation system, it is essential to create new forums to discuss a global development agenda." Added to this, it said, was the need to generate innovative instruments for development financing.

In the meantime ECLAC has suggested the widening the political dialogue at the national, regional and global levels. It was also of the opinion that the international community needed to define the general framework for an inclusive development agenda that, rather than homogenising countries' development issues, embraces their diversity and specific characteristics first. This, it said, included broadening the multilateral dialogue on sources of resources and allocation criteria.

It has also proposed deepening regional integration and increasing the participation of Latin America and the Caribbean in global governance in order to generate agreements on such matters.

It said, too, that countries that receive co-operation should define the gaps they wish to prioritise and use these to formulate concrete policy proposals as part of an inclusive dialogue with civil society and the private sector.

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