G20 ushers in 'great leap forward' on development

By Alan Wheatley, Global Economics Correspondent, Reuters

Posted at Nov 11 2010 05:46 PM | Updated as of Nov 12 2010 01:46 AM

SEOUL, South Korea - A new global development strategy to be unveiled at this week's G20 summit marks a "great leap forward", the head of the OECD said on Thursday.

The Group of 20 major economies plans to endorse the "Seoul Development Consensus for Shared Growth", which includes an emphasis on infrastructure investment as a means to attain sustainable growth in poorer countries.

"This is really going to change the way in which we address development," Angel Gurria, secretary-general of the Organisation for Economic Co-operation and Development, told reporters.

He said the adoption of a multi-year action plan would be a "a very big deliverable" from the two-day G20 summit, which starts on Thursday.

The blueprint identifies nine areas where action is needed to ease development bottlenecks, including skills training, increased access to finance, expanded investment and improvements to the physical fabric of developing countries.

"The great leap forward here is that this is no longer a question of aid. It's a question of development," Gurria said.

Gurria applauded summit host South Korea for driving the new agenda, which says there is no one formula for development success.

Central bank governor Kim Choong-soo said South Korea's graduation from aid recipient to donor added credibility to the strategy.

German Chancellor Angela Merkel backed the plan as a step towards market-orientated growth. "We must quit the traditional path of development aid," she told business leaders.

The G20 plans to set up a high-level panel to recommend ways to mobilise financing for infrastructure in developing countries.

World Bank President Robert Zoellick estimates the financing need at $900 billion a year. Actual investment is about half of that, Zoellick said in Singapore on Wednesday.

Don't dodge promises

The Overseas Development Institute, a British think tank, said the G20's emphasis on trade, investment and growth was the right one for long-term development. It described the G20's agenda as going beyond aid, not replacing aid.

Other non-governmental agencies reacted more cautiously.

"Rich countries must not use the economic crisis or the G20's focus on growth to wriggle out of their commitments to the world's poorest at a time when they need help more than ever," said Takumo Yamada with Oxfam, a British aid agency.

The draft of a communique to be issued on Friday says the continued provision of soft loans will be remain essential for most poor countries. It also reaffirms G20 members' aid pledges.

But Ben Phillips with Save the Children, another British campaign group, said the communique fails to reaffirm a commitment the Group of Eight rich countries made in Gleneagles, Scotland, in 2005 to double their aid to $50 billion by 2010.

So far the G8 has provided $12 billion out of the promised $25 billion, he said: "Now is the time that we need aid. Countries are looking for excuses to break their promises."

But Phillips said it was welcome that the G20 was stepping back from imposing the "Washington Consensus" of orthodox free-market policies on developing countries.

Instead, the draft communique says they must be engaged as "partners, respecting national ownership of a country's policies as the most important determinant of its successful development".

Additional reporting by Yoo Choonsik and Gernot Heller; Editing by Tomasz Janowski