6.C. Financing equitable policies: Transfers across three
levels
Given the large extent of global income asymmetries, financing an
equitable development agenda requires a degree of transfer from
the wealthy to the poor across three levels:
- North-South transfers: The justification for more equitable
international distribution cannot be stronger. For globalization
to be accepted, it will have to be a globalization that benefits the
majority, a globalization for all and not just for a privileged few.
While the predominant channel for international redistributive
flows is official development aid (ODA), international
commitments continue to fall short. Of the 0.7% of gross
national income (GNI) promised by high-income countries,
actual ODA flows remain at only 0.3% (OECD DAC 2010).
Given the failure of donors to meet aid commitments, new
international sources of development finance have been
proposed, mainly taxing luxury goods and services or those with
negative social or environmental externalities. Recent proposals
have included: taxing the arms trade, global environmental taxes
(carbon-use tax), taxing speculative short-term currency flows
(the so-called “Tobin tax”) and taxes on international airplane
tickets (Atkinson 2004). Proposals for an International Tax
Organization have been suggested by both IMF staff and by the
United Nations. Some point out that the overall amount of
north-south transfers needed to vastly improve the well-being
of millions of persons is trivial; Jeffrey Sachs, Director of the
United Nations Millennium Project, estimates that extreme
poverty could be eradicated with only one percent of the
combined GDP of OECD countries (Sachs 2005).- South-South transfers: South-South cooperation is becoming
increasingly important. Though still minor in amount, South-
South transfers are occurring in three main forms (Ortiz 2009):
(i) bilateral aid (China, Saudi Arabia and Venezuela are
noticeable examples), (ii) regional development banks (e.g.
Islamic Development Bank, Arab Fund for Economic and
Social Development, Andean Development Corporation or the
Bank of ALBA) and (iii) regional integration (e.g. the South
American Common Market, MERCOSUR; the Bolivarian
Alternative for the Americas, ALBA; the League of Arab States;