Transcript International Development Theory and Policy I

Millennium Development Goals, Peer
Review and African divergence
Jorge Braga de Macedo
Faculty of Economics, UNL
and Tropical Research Institute (IICT)
Panel on policies, institutions and convergence
OECD Paris 16 January 2006
Outline
• Question: Can the African Peer Review
Mechanism serve as a convergence instrument?
• Answer: No, but it sure beats the Millennium
Development Goals, whose African record is
dismal.
• Intervening Topics:
– Tristes tropiques
– FfD vs. MDGs
– Policy convergence
– NEPAD-AU vs. APRM
Systematic Quantification of
Comparative Economic Performance
• Maddison (2002) provides a millenial perspective on
the world economy with a message of divergence in
space and time: “the West and the Rest”.
• This has to be adjusted to the rise of the BRICs.
• In the same vein as celebrated GS car race, Whalley
(2005) has BRICs (+South Africa, ASEAN and
Mexico) at 20% or 60% of OECD GDP in 2004
depending on valuation.
Dreaming with BRICs
Overtaking the G6: China Moves
into Pole Position
UK
Germany
Japan
US
China
Italy
France Germany
Japan
India
Italy
France Germany
Russia
Italy
France
Germany
Brazil
G6
BRICs
*cars indicate when BRICs US$GDP exceeds US$GDP in the G6
2000
2005
2010
2015
2020
2025
2030
2035
2040
2045
2050
GS BRICs Model Projections.
Source: Goldman Sachs (2003) courtesy of Roopa Purushothaman
Tristes tropiques or Is Africa becoming
a global ghetto?
• On slightly different definition of West from
Maddison’s, East in 2015 reaches same % as 1913,
5 points above 1950 trough while the gap between
West and South (Africa+Latin America) falls over
20 points during same period.
• According to Maddison (2004), Africa’s average
GDP per capita in 2001 was 1500 and Latin
America’s 6000 (both in 1990 international $)!
GDP cap in different regions as % West (excluding
Japan, Russia, Turkey)
Year
WMad
East
South
0
98 %
99%
92%
1000
102 %
112%
103%
1500
100%
80%
58%
1820
102%
53%
43%
1913
103%
22%
26%
1950
100%
17%
29%
2001
110%
19%
9%
2015
107%
22%
8%
Note: WMad includes J, RU & T here they are included in East. South is
Africa+LatAm. Numbers in Maddison (2004) differ somewhat
“institutions survive the presence of geography,
and vice versa”
• Gylfason (2006) explains growth differentials across
countries by:
• Private initiatives (investment, fertility)
• Public policies (education)
• Institutions (democracy)
• Geography (natural resources)
• Total effect of natural capital on growth is negative as
long as wealth per head is below $150K
• No African dummy.
• Contrast Sachs (2000): “Perhaps the strongest empirical
relationship in the wealth and poverty of nations is the
one between ecological zones and per capita income”.
Policy convergence
• According to Sachs and Warner (1995), countries whose
policies related to property rights and to integration of the
economy into international trade do not qualify as
appropriate do not converge.
• In published version they dropped property rights and
overstated their argument.
• Cohen (2002) shows that there is not a unique factor behind
the poverty of nations.
• Poor countries are "slightly" disadvantaged in each one of
the factors behind prosperity. But the combination of these
slight weaknesses results in huge income gaps.
From 25% to 6% of the West
• Excluding Sub-Saharan Africa, Cohen finds average
income per capita in poor countries is only 1/4 that
of rich countries even though the level of human
capital, its ratio to physical capital and total factor
productivity are each 2/3 of the rich countries'.
• Sub-Saharan Africa has only 40% of the West’s level
of human capital, physical capital and productivity
but this implies that average income is just 6% that
of the West.
Financing for development and MDGs
• The persistence of tropical underdevelopment has led to
internationally agreed goals such as the Millennium
Development Goals incorporated in the 2002 “Monterrey
Consensus” (sometimes called Washington consensus with a
sombrero).
• Clemens et al. (2004) argue that the MDGs may
undermine the cause of helping the world’s poor “by
over-reaching on the targets and overselling the
efficacy of aid”.
• This is even more true when international organizations
(UN, IMF, World Bank, WTO) are unable to work together,
as indeed seems to have been the case (The FfD conference
in Monterrey was the exception).
• In Zedillo report, the call for more aid is supplemented by
Reisen on global taxes and special funds
• Global taxes seek to finance a global public “good”
(development) by imposing a tax on a global “bad”, such as
speculative international finance, pollution or the arms
trade. They have widespread public support, notably among
civil society groups but face the opposition of crucial govts.
• Topic-specific funds, like the Global Fund to Fight AIDS,
the Vaccine Fund and the Global Environment Facility, can
serve as focal points for finance for specific urgent global
problems but they may also result in a less coherent
response to global problems, since they may duplicate
existing structures or introduce new ones into what is
already a cumbersome and complex management system.
The International Finance Facility (IFF)
• The IFF would be built on a series of pledges by donors
(each lasting 15 years) for a flow of annual payments to the
IFF. On the back of these pledges (its assets) the IFF would
issue bonds in its own name (its liabilities). However, real
liquid public assets would bolster the credibility of the
Facility.
• The IFF could boost aid to as much as $100 billion per year
during the crucial 2010-2015 period.
• Yet agreement about the IFF has not been reached within
the G8. The United States, in particular, have favoured a
bilateral approach, increasing foreign aid by 50 per cent
over the next three years by creating a Millennium
Challenge Account (MCA).
Quoting Clemens et al. (2004)
• What poor countries need from rich ones is broadbased, sustained, moderate engagement—not
emotional, moralistic, centralized big bangs. Aid can
work, but it must be dramatically improved.
• Innovations like the Global Health Fund or the
Millennium Challenge Account are a great start, but
we need much more such experimentation and
evaluation before “scaling up” makes any sense.
• And we need to go far beyond aid,
– investing in key technologies (such as vaccines),
– opening our markets,
– finding creative arrangements for win-win labor mobility,
• and many other avenues to support ongoing efforts
by poor countries themselves.
Eight MDGs from 1990 to 2015
1. halve extreme poverty (1a) and hunger (1b);
2. achieve universal primary education (indicators are rates
of enrollment 2a; and reaching grade 5 2b);
3. promote gender equality (3a) and empower women (3b);
4. reduce under-five mortality by two-thirds (4);
5. reduce maternal mortality by three-quarters
6. reverse the spread of HIV/AIDS, malaria and other
diseases;
7. halve the proportion of people without access to safe
drinking water (7a), ensuring environmental
sustainability;
8. develop a global partnership for development with targets
for aid, trade and debt relief.
MDGs and Africa
• At current rates, the fraction of world population living
under $1 a day will be halved in 2015, due to spectacular
progress in China and India.
• It will not be the case in Africa, where extreme poverty will
fall from 48% in 1990 to 39% in 2005, while the MDG is
23%. Only six countries – mostly from North Africa – will
reach the goal. The hunger target has been achieved in
Ghana, Libya, Namibia, Nigeria and Tunisia.
• At end 2005, African outlook remains mediocre, in spite of
numerous initiatives on the part of the UK presidency of
G8 & EU and of continued world growth.
• Russian G8 Presidency goals (energy, education, health) not
targetted to Africa.
MDGs performance ratio in Africa
Goals achieved and on track as % of total (includes
slightly off, far behind, slipping back and no data, the
latter is indicated in parentheses)
1b. halve people suffering from hunger: 28% (11%)
2a. all children enroll in primary education: 59% (6%)
2b all children reach grade 5: 13% (74%)
3a promote gender equality: 55% (23%)
3b empower women: 36% (40%)
4. reduce under-five mortality by two-thirds: 21% (2%)
7a halve the proportion of people without access to safe
drinking water: 51% (28%)
African Economic Outlook
• Joint report by OECD Development Centre and
African Development Bank Publication began in
2001 thanks to grant from European Commission.
• Modeled on OECD Economic Outlook, includes
overview of 29 countries representing close to 90%
of population and GDP and a statistical annex which
includes social indicators.
• Special themes each year: Privatisations in 2003;
Energy in 2004; financing of small and medium
entreprises in 2005.
Macroeconomic Indicators from
AEO 2005
1996
-02
3,8
03
04e
05p
06p
4,4
5,1
4,7
5,2
Inflation % pa
11
8,3
7,9
7,5
6,2
Budg defic % GDP
1,9
1,4
0
0,7
0,3
Trade Bal % GDP
1,6
2,8
5,7
7,1
6,5
GDP % pa
AEO Message & NEPAD
• AEO Message since 2002/2003 has been that economic
challenges are rooted in domestic governance rather than on
external factors.
• Monterrey Consensus explicitly acknowledges the role of
good governance and peer pressure. NEPAD does the same
as it based on the twin concepts of ownership and
partnership, whereby Africans themselves are in charge with
the support of their development partners.
• This has led to 5 African Partnership Fora meeting in Africa
and in the G8 presidency country.
• More importantly the key to NEPAD is its African Peer
Review Mechanism (APRM), reviewed by Kanbur (2004).
NEPAD, AU and good governance
• NEPAD has led to a new dialogue between African
leaders and their development partners but also to a
new impetus for African integration.
• The pressure for appropriate policies has increased
and stronger commitments have been made in
connection with sustainable development and social
and economic programmes socio-economiques
• AU-NEPAD Ministers for Science and Technology
met in Dakar in Sept 2005. These meetings are usual
in EU especially as a new framework program is
being approved in Parliament.
26 countries have signed up for APRM
• 26 countries have signed the APRM Memorandum (or are
about to so at the 5th Summit to be held in Sudan next
week): Algeria, Angola, Burkina Faso, Cameroon, Congo,
Ethiopia, Gabon, Ghana, Kenya, Mauritius, Mali,
Mozambique, Nigeria, Rwanda, Senegal, South Africa,
Uganda, Benin, Malawi, Lesotho,Tanzania, Sierra Leone,
Sao Tome, Sudan and Zambia.
• The review of Ghana and Rwanda will be concluded, to be
followed by Kenya et de Mauritius, then Uganda, Nigeria,
Algeria and Senegal.
• So far no announced peer review date has been met: the 5th
Summit was supposed to take place in November 2005.
APRM spread itself too thin
• APRM provides a forum that speaks with an African
voice to African nations but Kanbur (2004) cautions it
must not spread itself too thin to meet the three criteria
of competence, independence and competition.
• There are 93 indicators in the 4 sub-areas listed of
governance. This cannot be covered competently, no
matter how good the staff.
• The success of the APRM depends on the seeds of its
assessment of a country falling on the fertile soil of a
vibrant civil society dialogue in that country.
• Better links with other multilateral surveillance
procedures (IMF, OECD and EU) would help. This is
the purpose of the Africa Partnership Forum, launched
in Paris in 2003, now under Russian and Nigerian co-
Annex Kanbur’s criteria for peer review
1. Competence
• Technical competence is essential.
• Academic peer review relies on the
competence, authority and reputation of
journal referees and editors.
• The OECD secretariat is central to the
functioning of its peer reviews.
• The IMF is criticized more when it steps
outside of its basic competence in
macroeconomics.
2. Independence
• Any suggestion of influence on the reviewers, either
from those reviewed or from forces extraneous to
the review, would undermine the integrity of the
review.
• In academic review, anonymity assures this
independence, as well as the professional stature of
the reviewers and editors.
• OECD peer reviews explicitly include a political
phase where the reports and their conclusions are
discussed, and negotiated, but there is
independence of the technical work.
• The IMF’s independence from the interests of its
major stakeholders is widely questioned by
3. Competition
• Peer review mechanisms work best when they are
part of a wide range of assessments. When a review
is perceived to be the “only game in town”, the high
stakes set up a dynamic of pressures that can
undermine trust.
• There are many academic journals to which authors
rejected from one journal can take their paper;
• OECD peer reviews feed into a rich and ongoing
policy dialogue and debate in the reviewed country;
• IMF reviews work like OECD reviews in rich countries
not using IMF resources, but not so in poor countries
dependent on them.