How inequality and environmental degradation threaten to exclude poor people from the benefits of economic growth
The G20, the preeminent global economic decision making body, has thrown its political weight behind the commitment to shared growth and narrowing the development gap through its Seoul Development Consensus.
But Oxfam’s new report Left behind by the G20 reveals that it is falling behind on inequality, and inclusive and sustainable growth, with inequality having increased in 14 of the G20 countries since 1990 as economic growth has too often failed to benefit poor people.
Inequality is linked to social breakdown, poor governance and weak institutions, all of which act as a brake on economic growth. Where income inequality is high and/or increasing, the evidence is clear that economic growth has significantly less impact on poverty. New data analysis in the report shows that in Brazil, for example, with only modest growth, income inequality fell significantly and nearly 12 million people have escaped absolute poverty.
However, in spite of continued growth in South Africa, the number of people living in poverty there has hardly fallen at all; in the coming decade, more than a million more people could be pushed into poverty unless rapidly growing inequality is addressed.
This report points to the importance of governments’ policy choices: the evidence suggests that if governments choose to invest in essential public services like health and education that help reduce inequality and raise people’s ability to participate in the economy, higher levels of growth that benefit people living in poverty as well as rich people will follow.
This report also looks at the environmental sustainability of the G20’s growth over the last two decades. The report finds that while most G20 countries’ economies have grown faster than their resource use, a lot more is required – particularly by industrialized countries due to their role in emitting the majority of CO2 over the last century.
Essentially, most G20 countries have not provided evidence that they can make economic growth environmentally sustainable. This is important for poverty and inequality: poor people suffer disproportionately from environmental degradation because they are more likely to depend on natural resources to make a living and are less able to protect themselves from health risks. The same is true of climate change – poor people are more likely to live in areas at risk of flood droughts and other extreme weather events associated with climate change.
Left behind by the G20 shows that, if the G20 is to live up to its commitments on shared and sustainable growth, it must practice what it preaches, and tackle the linked but distinct challenges of equality and sustainability.
In order to tackle the issue of inequality, and ensure that the benefits of growth are both shared and sustainable, Oxfam argues that G20 governments should pursue policies in the following areas:
- Redistributive transfers;
- Investment in universal access to health and education;
- Progressive taxation;
- Removal of the barriers to equal rights and opportunities for women;
- Reforming land ownership, ensuring the right access to land and other resources, and investing in small-scale food producers.
Oxfam also recommends that, to tackle climate change and environmental degradation, G20 countries as a whole must show much greater leadership at UNFCCC climate talks, in particular by ensuring that developed countries:
- Commit, as a first step, to the high end of their current 2020 mitigation pledges and give assurances to mobilize long-term mitigation financing;
- Forge consensus on the fair shares of the global emissions cuts needed to prevent more than 1.5°C of global warming; and
- Broker agreement on new and reliable long-term sources of climate finance.