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Trainee doing metalwork. Copyright: photothek.net

Economic cooperation:
fighting poverty and achieving equality

Sustainable economic development:
Promoting broad-based growth – reducing poverty

No country can develop sustainably unless its economy develops too. Broad-based economic growth is one of the most important prerequisites for poverty reduction. Economic growth creates job op­por­tu­ni­ties that help the poor safeguard their livelihoods through their own efforts. The increasing glob­al­i­sa­tion of economic processes and the liberalisation of trade create major challenges for partner coun­tries of development cooperation, as well as opportunities for their development. Some countries and businesses have so far succeeded in adapting to the new conditions and global competition. Other countries are finding it difficult to do so. They risk being sidelined from the global positive growth process and, ultimately, being left behind. To help enable everyone to participate fairly in the global growth process on a sustainable basis, German development policy promotes economic development based on social and ecological market economy principles.

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Supporting the private sector – reducing poverty

Solving the social, economic and ecological problems faced by developing countries is a challenge that cannot be met by the state alone. What is required is intensive cooperation between all sections of society. Companies in the private sector wield major influence over the globalisation process. By cooperating with them, governments can gain access to additional resources, know-how and money for development cooperation. Furthermore, the commitment and innovative power of private businesses often penetrate into areas the state cannot reach for political, economic or logistical reasons. This is why the German government cooperates closely and highly successfully with the private sector at various development policy levels.

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Fair trade

Consumers play an important role in the world trade system because their decisions on what to buy can have a direct impact on the working and living conditions of people in developing countries. Fair trade can help free the producers involved in the transaction from a life of poverty, whilst promoting sustainable economic activity. Long-term trading relationships and fair prices – which are generally above world market levels – help create planning security and enable producer organisations to invest in the future. So far, fair trade products account for only a small share of world trade. Nevertheless, fair trade can help make globalisation more just and dismantle inequitable global economic structures in the long term.

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World trade

The global market economy needs international institutions to create the enabling environment for fair global trade. The most important such forum is the World Trade Organization (WTO). Since 1995 it has been set­ting out rules governing the trade in goods, services and intellectual property which affect practically every person in the world. The aim of German development policy is to help establish a stable and socially respon­sible world economic order. Germany is committed at international level to reducing competition-distorting subsidies in industrialised countries and to opening up markets in industrialised countries for products from developing countries. In order to prevent competition turning into exploitation, it is also committed to decent terms and conditions of employment.

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Social standards: Decent work for all

The global competition for markets and investors is tough. To gain a short-term competitive edge some developing countries flout workers' fundamental rights, i.e. social standards. Germany is committed to implementing these standards worldwide, because this will make a key contribution to improving living conditions in partner countries, and thus also to reducing poverty. As many businesses have discovered, social standards can also bring competitive advantages.

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Environmental standards: Motivating businesses to do more to protect the environment

Environmental protection measures and environmentally friendly production processes promote development and increase competitiveness in the long term, but they cost money and reduce a company's earnings in the short term. Voluntarily meeting the cost of such measures and the resulting general benefits is still considered "uneconomic" by many businesses. That can change if market forces are used to encourage businesses to do more to protect the environment. What is needed is an enabling environment that ensures that polluters pay for the environmental damage they cause. Environmental standards are an important element of such an enabling environment. Their purpose is to promote sustainable development and thus to preserve our natural resources, not least for future generations. Germany assists its partner countries in introducing such standards.

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Information and communication

In spite of rapid technological developments, there are many people around the world who are being denied access to information and communication technologies (ICT) and the opportunities they open up. According to the 2008 Human Development Index (HDI), in 2005 only 48 out of every 1,000 people living in the least developed countries (LDCs) owned a mobile phone and only 12 out of every 1,000 had internet access. ICT are gaining in importance in development cooperation. They are not only indispensable project planning and coordination tools, they also have a key role to play when it comes to achieving specific development goals.

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