The global economy grew 5.4% in 2006, to $66 trillion (PPP). The population grew 1.1%, increasing the average world per capita income by 4.3%. At this rate world poverty will be cut more than half between 2000 and 2015, meeting the UN MDG, although probably not in sub-Saharan Africa. Although the developing world produces half of world annual economic growth and it grew at 7% during 2006, income disparities are still enormous: 2% of the world’s richest people own more than half of the world’s wealth and the poorest half of the world owns only 1% of the wealth. The World Bank reported that 2004 was the first year in which the number of people living on less then $1 a day fell below 1 billion, and it estimated that the share of world population living in extreme poverty could decline to 10% by 2015. Yet almost half the people in the world live on less than $2 a day, although that is expected to decrease to nearly a third by 2015.

Official development assistance from OECD DAC members fell 5.1% to $103.9 billion in 2006, while private finance for developing countries reached a record $647 billion. According to UNDP, all agricultural subsidies by industrial countries cost developing countries $72 billion per year. The WTO has agreed to eliminate agriculture export subsidies by 2013. This, plus improved fair trade, increased economic freedom, and successful Doha Round negotiations, is expected to boost growth in developing countries substantially. Carbon emissions trading might soon reach $200 billion a year, with half flowing to the developing world. The Index of Economic Freedom, the Corruption Perceptions Index, and the Bribe Payers Index show that reducing corruption and increasing freedom correlates with improved economic development. A World Bank study found that bribery may have passed $1 trillion in 2006. The UN Convention against Corruption entered into force in December 2005.

According to WTO, China’s exports totaled $969 billion in 2006, compared with $1,037 billion from the U.S. If trends continue, China will pass the U.S. during 2007. Its high tech–low wage condition plus the increasing development of India will make it very difficult for other developing countries to compete. Hence, it would be wise for most developing countries to rethink their export-led growth strategies and to create alternative development strategies that not only build on their agricultural and industrial domestic markets but leapfrog into new activities via the Internet as a key means of production in the information, service, and knowledge economies. Policies should support individuals seeking markets via the Internet rather than seeking non-existent jobs. Doing Business reports 43 countries in 2005–06 made it easier for individuals to start businesses.

A strategic plan for a global partnership between the rich and poor should be created and implemented that uses the strength of free markets and rules based on global ethics to reduce the disparities that otherwise might grow enough to increase migration of the poor to richer regions, increasing conflicts. The strategy should also include massive investments into tele-education and tele-work, replacing welfare attitudes with entrepreneurial spirit, reinforced by expanded microcredit mechanisms coupled with technical assistance, while using state welfare in states with not much of a private sector.

Ethical market economies require a “level playing field” guaranteed by an honest judicial system and by governments that provide political stability, a chance to participate in local development decisions, business incentives to comply with social and environmental goals, fair trade, a healthy investment climate, and access to land, capital, and information.

Challenge 7 will be addressed seriously when market economy abuses and corruption by companies and governments are intensively prosecuted and when the development gap—by all definitions—declines in 8 out of 10 years.

Graph: Share of People Living on Less than $1.08 a Day (%)