Two years ago, following the gravest global financial crisis since the Great Depression, leaders of the world’s most powerful economies acted together and redefined the way the global economy is managed. They scheduled periodic Group of 20 summit meetings, recognizing the need to include the world’s major developing economies if we are to lift the world from its slump.
Now we approach a milestone as my country, Korea, steps forward to become the first “emerging economy” to host a G-20 summit. As we welcome President Obama and other world leaders to Seoul this week, we have been debating how to “rebalance” the global economy and reform financial institutions – all challenging subjects. But I also am reminding my colleagues that all these goals, however crucial, are insufficient. We must not let the needs of the world’s poorest countries be obscured by preoccupation with the major economies. In fact, helping the poorest of the poor can contribute to the global rebalancing and growth we seek, instead of being seen as a subsidiary issue.
Even in times of crisis, there are success stories among some low-income countries. Many are even seeing the dawning of an opportunity for the first time in decades. Sub-Saharan African annual growth rates averaged more than 7 percent between 2002 and 2008. If these growth rates persist and overcome bottlenecks and shocks, they will bring sustained improvements in health, education and living standards, enhancing the prospects of achieving the U.N. Millennium Development Goals to cut in half the number of destitute people by 2015. Growth is therefore a means toward achieving these goals, rather than a G-20 distraction.
The experience of many new members of the G-20 – including Korea, China, India and South Africa – also demonstrates that the most effective cure for poverty is economic growth. As much as 97 percent of long-term poverty reduction is due to growth of average incomes, driven by economic expansion.
This is not to underplay the need for aid. But what we need is a change in the philosophy of aid, with a new emphasis on investment for the future, particularly in basic infrastructure, human capital and productive capacity.
We are determined to create a long-term G-20 agenda to help the poorest nations, reflecting the G-20’s comparative advantage as an economic forum including donors, recipients and high-growth emerging economies. Such a step can only enhance the G-20’s legitimacy. Though it represents 85 percent of global gross domestic product and two-thirds of the world’s population, the G-20 must not forget the 173 U.N. member countries and the remaining third of the world’s population not represented in Seoul. It has been agreed, for example, that two African countries, in addition to South Africa, will attend future G-20 summits.
In our consultation with African leaders, Korea was reminded of the skepticism we once met from donors and some multilateral agencies when we proposed to build the Seoul-Busan Expressway or to set up the Pohang Iron and Steel Co., both acknowledged as successes today.
Accordingly, we recognize that developing countries must choose their own priorities for the future – infrastructure, quality of human capital for jobs, private investment. Having chosen the hard path itself, Korea could not choose the easy road for the Seoul Summit – picking one isolated development issue, creating a flashy new donor fund, moving on after the photo opportunity. The development path we have chosen embraces complexity and hard choices.
We have worked with the United Nations, the World Bank, regional development banks and other agencies to build several pillars in a new development consensus complementing the successful initiatives of many players, focusing on building infrastructure – especially power, roads, water, communications – and on teaching skills for new jobs. In addition, the new consensus emphasizes building capacity and access to trade, private investment, access to finance for small companies, food security, and improved collection of domestic tax revenue.
This new consensus will be based on a multi-year action plan, recognizing that the right initiatives take time, and on accountability and deadlines. It will emphasize a partnership with low-income countries, understanding that there is more than one recipe for progress. For if we forget the challenge of achieving growth in the world’s poorest countries, we will fail on everything that really matters.
Lee Myung-bak, president of the Republic of Korea.