Abstract
This paper analyses the impact of financial crises on the Sustainable Development Goal of eradicating poverty. To do so, we develop an adjusted Multidimensional Poverty Framework (MPF) that includes 15 indicators that span across key poverty aspects related to income, basic needs, health, education and the environment. We then use an econometric model that allows us to examine the impact of financial crises on these indicators in 150 countries over the period 1980–2015. Our analysis produces new estimates on the impact of financial crises on poverty’s multiple social, economic and environmental aspects and equally important captures dynamic linkages between these aspects. Thus, we offer a better understanding of the potential impact of current debt dynamics on Multidimensional Poverty and demonstrate the need to move beyond the boundaries of SDG1, if we are to meet the target of eradicating poverty. Our results indicate that the current financial distress experienced by many low-income countries may reverse the progress that has been made hitherto in reducing poverty. We find that financial crises are associated with an approximately 10% increase of extreme poor in low-income countries. The impact is even stronger in some other poverty aspects. For instance, crises are associated with an average decrease of government spending in education by 17.72% in low-income countries. The dynamic linkages between most of the Multidimensional Poverty indicators, warn of a negative domino effect on a number of SDGs related to poverty, if there is a financial crisis shock. To pre-empt such a domino effect, the specific SDG target 17.4 on attaining long-term debt sustainability through coordinated policies plays a key role and requires urgent attention by the international community.
Highlights
The adoption of UN 2030 agenda for sustainable development, crystallised in 17 Sustainable Development Goals (SDGs) and 169 targets, is one of the most importantHandled by Joseph Alcamo, University of Sussex, United Kingdom.Electronic supplementary material The online version of this article contains supplementary material, which is available to authorized users.decisions that has been taken in the pursuit of socioeconomic and environmental sustainability
Considering current global debt dynamics and heightened debt distress risks and episodes across poor countries this means that the attainment of the UN Agenda 2030 for low-income countries is beyond reach, and that instead of steps ahead we may see steps backwards, i.e. a reversal of the positive outcomes achieved during the Millennium Development Goals (MDGs)
We have presented an adjusted Multidimensional Poverty Framework incorporating income, basic needs, health, education and environment, allowing us to investigate positive or negative synergies of multiple parameters related to poverty, not just those stated in SDG1
Summary
Developing countries were anticipated to grow on average at 5 percent, between 2015 and 2030 (UN 2013), while the target for least developed countries was even higher at 7 percent per annum (SDG 8: target 8.1). Neither developing nor least developed countries have reached the anticipated growth rates in any single year since 2015. Least developed countries have lagged significantly behind, with average growth for 2015–2018 at 4.2% (WB databank). Over the last decade, global debt has been rising in all sectors across the globe (Antoniades and Griffith-Jones 2018). These dynamics are especially pertinent in the low-income developing countries
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