On Tuesday, G8 leaders met to agree a co-ordinated response on tax and transparency, amid renewed efforts to boost world trade. One item hidden away on paragraph 55 of the joint communique is undernutrition, traditionally seen as a development challenge, and one in which Canada has shown great leadership. A historic shift has taken place in recent weeks: large-scale undernutrition is now rightly seen as dampening growth in developing countries, with profound consequences for the global economy.
Undernutrition remains one of the defining features of many developing countries. Even in high-growth markets such as India or Nigeria, as many as 40 per cent of children under the age of five grow up stunted from inadequate access to nutrients. Physically weaker, malnourished children are more prone to disease and more likely to die prematurely. A young child’s developing brain is also highly sensitive to nutrient intake, without which cognitive damage can become permanent by a child’s third birthday.
For generations, children in the developing world have grown up with their natural capacities limited by poor nutrition. Studies have shown that stunted children are 19 per cent less able to read than their peers and score 7 per cent lower on maths tests, and after school earn 20 per cent less and are 33 per cent less likely to escape poverty. In countries where there is large-scale malnutrition, the economic impacts are considerable.
If the relationship between educational attainment and economic productivity needs to be better understood, the best evidence points to a combined loss of GNP resulting from increased healthcare costs and reduced productivity of as much as 11per cent in Asia, Africa and Central America, where malnutrition is concentrated. The high growth we see today in these countries will be difficult to sustain with so much stranded human capital.
British Prime Minister David Cameron, chair of the G8, was therefore right to hold a high-level meeting on nutrition last weekend, alongside the Children’s Investment Fund Foundation and the government of Brazil. The $4.1-billion committed by attending governments, businesses, UN agencies, NGOs and charities to nutrition over seven years is perhaps less important than the first ever political agreement to prioritise nutrition as a policy area in its own right.
Among the many commitments that underpin the Global Nutrition for Growth Compact, two stand out. First, southern countries with the greatest burdens will increase their own investments. Second, governments and UN agencies will itemize nutrition spending as distinct from other categories, in particular health, education and food budgets. Differentiating nutrition spending from food will in particular help shift the popular belief that malnutrition is rooted in hunger. In Africa, this approach means economies will not escape the negative impacts of undernutrition until mid-century.
High-burden countries should look to successes among the BRICs. By focusing on nutrition over many years, Brazil reduced its stunting rate among children from 37 per cent to 7 per cent. In Maharashtra, India, stunting fell 40 per cent in six years with similar efforts. As in other areas, direct knowledge transfer between southern countries is expected to increase without the involvement of traditional western allies.
Global corporations have an important role to play, not least because an enormous future work force and consumer base is at stake. New products, services and supply chains can be developed to support the most efficient means of tackling undernutrition, typically community programs encouraging breastfeeding, hand-washing and nutritional supplements. Financial returns of $15 for every dollar spent, equivalent to road-building or irrigation, mean emerging markets are also increasingly equipped to finance their own programs.
These are relatively straightforward investments compared with addressing the world’s food supply infrastructure, or the minefield of sovereign taxation policies or company reporting. Malnourished children result in weaker economies and this means less trade for everyone. Breaking the cycle of deprivation would add $125-billion a year to the global economy by 2030. With a $10-billion price tag, it could be among the best money we have ever spent.
Jim O'Neill is the former chairman of Goldman Sachs Asset Management; Jamie Cooper-Hohn is chief executive officer of Children's Investment Fund Foundation