The Future State of the World: What it means for Australia's foreign aid program

Abstract

In January 2011, the Australian Government’s Independent Panel to Review Aid Effectiveness commissioned the Lowy Institute to undertake a study of the future state of the world as it relates to the Australian Government foreign aid program. Lowy Institute researchers have conducted a broad review of statistical projections, global strategic, economic, political and social trends, long-term dynamics in development and development assistance, reports on the likely evolution of the world undertaken by governments and research organizations, and emerging dynamics in finance and trade, demography and climate, food, resources and water production and consumption, and governance and institutions. Despite the current attention on the Millennium Development Goals, there are clear indications that the nature and definition of the development challenge is changing, and will continue to evolve between 2015 and 2020. According to World Bank statistics, global poverty has been reducing at an average rate of one percent per year between 1980 and 2005, although some estimates suggest an even more rapid decline.1 The global financial crisis briefly pushed rates higher, but the World Bank projects a likely continued fall in global poverty, albeit at lower rates. Patterns of poverty reduction point to a markedly different global profile by 2020. For a large number of developing countries, extreme poverty will have fallen to below 5 per cent of their populations. In some cases, this is up to four times less than the 2005 estimates. The exception will be in sub-Saharan Africa and South Asia although in both cases, there will have been remarkable advances in lowering the percentage if not numbers of extremely poor people in both regions.