Transcript World Economic Situation and Prospects Mid-2009

Fighting Poverty:
Employment, Productivity,
Socioeconomic Security
REPOA Annual Research Workshop,
White Sands Hotel,
Dar es Salaam
Thursday, 30th March, 2011
MDG 1: Halve Poverty, Hunger
Progress on poverty reduction uneven,
threatened, but achievable
• WB’s $1/day poverty line: 1.4bn people
living in extreme poverty in 2005,
down from 1.8bn in 1990
• But without China, no. of poor actually
went up over 1990-2005 by @ 36m
• 92m more poor in SSA over 1990-2005
2
But hunger increasing!
• % of world’s hungry increasing
since 1990
• Still >1bn hungry people
• >2bn deficient in micronutrients
• 129m children underweight
• 195m <5yr stunted
3
Where are the poor?
• Highest share of poor changed from
E Asia to S Asia + SS Africa
 57% of world’s extreme poor lived in
E Asia in 1981, 23% in 2005
 S Asia share increased from 29% in
1981, up to 43% in 2005
 SS Africa share more than doubled
from 11% (1981) to 28% (2005)
Poverty without China?
Africa: % with <US$1/day
SSA poverty rate (1993 PPP)
Africa poverty rise, 1981-2001
% living on
< $2/day
in 2001
Change in proportion and
number of poor people
between 1981-2001
%
millions
World
53
-8
81
East Europe + C Asia
20
15
70
Middle East + N Africa
23
2
19
L America + Caribbean
25
-3
3
East Asia + Pacific
47
-23
-252
Sub-Saharan Africa
77
2
134
South Asia
77
-9
106
Source: UN Millennium Project (Sachs Report)
All but SSA poverty rates drop
SSA informal employment highest
Share of informal workers in non-agricultural
workforce by region
 North Africa:
 Latin America & Caribbean:
 Asia:
 Sub-Saharan Africa (excl. South Africa)
48%
51%
65%
78%
More than 80% of African PRSPs
lacked employment strategy!
SSA contraction  poverty
GDP per capita continued to decline
until 1994
Per capita income in 1998 < in 1980
Despite some growth since 1993, per
capita income in 2005 < in 1980
Poverty in 2002 greater than in 1981
despite better macroeconomics
GDP per capita, 1960-2008
GDP per capita in constant 2000 US$
Annual average compound growth rates
World
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa
1960
to 1969
1970
to 1979
1980
to 1989
3.4%
1.3%
2.1%
4.4%
1.4%
6.1%
2.4%
1.8%
2.0%
3.1%
2.8%
0.3%
0.7%
2806
140
3659
210
2277
923
201
475
3099
1295
224
577
1990
to 1999
2000
to 2008
-0.8%
-0.4%
3.2%
-1.0%
1.2%
7.1%
-2.0%
1.5%
1.8%
3.3%
-0.5%
1.7%
8.0%
5.8%
2.3%
2.7%
5.4%
2.4%
4177
358
2296
3446
1372
274
552
4780
696
1847
3643
1464
373
504
5585
1299
2496
4197
1687
545
553
Averages per decade
World
East Asia & Pacific
Europe & Central Asia
Latin America & Caribbean
Middle East & North Africa
South Asia
Sub-Saharan Africa
Source: World Development Indicators, World Bank and author's calculations
SSA industrialization reversed
1970
to 1979
1980
to 1989
1990
to 1999
2000
to 2008
Sub-Saharan Africa excluding South Africa
Agriculture, hunting, forestry, fishing
Industry
Mining, Manufacturing, Utilities
Manufacturing
Construction
Services
69%
15%
12%
7%
2%
17%
43%
25%
22%
12%
3%
32%
30%
29%
25%
11%
4%
41%
28%
33%
29%
8%
4%
38%
All developing economies
Agriculture, hunting, forestry, fishing
Industry
Mining, Manufacturing, Utilities
Manufacturing
Construction
Services
29%
34%
29%
19%
5%
37%
18%
38%
32%
21%
6%
44%
12%
35%
29%
22%
6%
52%
10%
38%
32%
23%
5%
52%
Averages of percentage shares in GDP
Source: UNCTAD Handbook of Statistics and author's calculations
SSA SAPs slowed growth
958 SAPs during 1980-98 in Africa  average
annual 0.3% decline in real per capita income
over 1991-5
Typical policy conditionalities in Africa:
Cuts in public spending, credit restraints, higher
interest rates, elimination of subsidies
 reduce aggregate demand, income, output
 recession
SSA trade balances did not improve over
adjustment period despite severe costs
Market liberalization?
• Economic liberalization since 1980s
- slowed growth, poverty reduction
- increased inequality, vulnerability,
volatility in most countries
• Slower growth (except 2003-2008)
• Reduced policy space
• Less growth + revenue -- due to
liberalization, tax competition -- have
reduced fiscal means
• Reduced fiscal + policy space  adverse
effects for growth, poverty, destitution
Africa’s falling terms of trade
Productivity gains lost by
worse terms of trade
Terms of trade
Volume of exports
1980-81
100
100
1996-97
64.7
125.0
Source: Eric Toussaint
Productivity gains important, but such
gains – e.g. by small producers
without market power -- can be lost
through falling terms of trade
Tariff bias against Africa
• Imports between developed countries
average 1%
• Tariffs on agricultural products from
developing countries as high as
20%
• Tariffs on textiles from developing
countries can be as high as 9%
• African preference erosion with
trade liberalization
Agricultural trade liberalization
No net gains
• Food security undermined
• From net food exporters (’80s) to importers (2000s)
• (Most) food importing African countries worse off
without subsidized food Ms
• Mainly benefits main agricultural exporters, i.e.
Cairns Group
• 20th century decline of ToT for
primary commodities [vs manufactures],
tropical [versus temperate] agriculture
• Agricultural share of SSA-RSA Xs fell
from 27.9% (1995-2000) to 18.5% (2001-06)
Trade liberalization
 deindustrialization
African industries prematurely exposed to global
competition by trade liberalization
Share of manufacturing in GDP has fallen in most
African countries, from 22% in 1980-89 to 9% in
2000-06 in SSA-RSA!
Rates of growth of manufacturing value added have
fallen continuously from 1970s, and contracted
by an annual average of 1% during 1990-97
In 10 industrial branches in 38 African countries,
labour productivity declined by 7% during 199095, attributable to de-industrialization (UNIDO)
Financial flows to Africa?
• Aid flows improved after Monterrey, but
well short of 2005 Gleneagles’ promises
• Net transfers modest after deducting for
debt servicing
• FDI rose during mid-2000s
– mainly for minerals, in few countries
• Debt sustainable?
– HIPC, MDRI, debt workouts (e.g.
Nigeria) reasonable progress
• Remittances growing with brain drain
• More than offset by capital flight
Capital flight from SSA
Despite impression of net flows to SSA
40% of private African wealth invested
outside Africa in 1990 (Mkandawire 2002)
K flight from SSA estimated at $193 bn
($285 bn with imputed interest) in 1970-96
(Boyce & Ndikumana 2000) compared to
combined debt ($178 bn in 1996; higher
now) (Mkandawire 2002)
K flight from Africa largely debt-financed
(Ndikumana & Boyce 2002)
Aid trends mixed
•
•
•
•
•
•
•
•
Aid flows volatile, unreliable
Aid ‘quality’ problematic, limited improvement
Actual flows declined in 1990s, esp. after 1996
Much recent aid for debt relief, servicing, i.e.
less net aid transfers
2005 G8 Gleneagles’ promises huge shortfalls
ODA to Africa from G8 < from Nordics
Recent ODA mainly for MDGs, not economic
Recent BRIC increase of South-South aid to
Africa, mainly to productive sectors
Poverty magic bullets
Poor evidence of IFI/donor favoured
special poverty programs significantly
reducing poverty without sustained
growth + job creation, e.g.
-- good governance
-- micro-credit
-- property rights (e.g. land titling)
-- ‘bottom of the pyramid’ marketing
Financial crisis, African poor
• Limited financial integration insulated SSA from
contagion
• New funds for LDCs through IMF allocations,
refinancing regional development banks
• Donor countries aid cuts, mixed trends
• Continued pessimism regarding SSA achieving
MDG poverty goal of halving population
share living < $1/day
• Though Africa growing fast again, due to
mineral wealth, rewards uneven
Jobs essential to cut poverty
• ‘Jobless growth’ before crisis
• Jobless recovery
• Employment lag long after
output recovery
• Unemployment rate for youth
worldwide much higher now
26
Employment, socioeconomic security efforts
Macroeconomic policies should
prioritize sustainable development
Promote decent work
Protecting and augmenting social
expenditures, especially for health
care + education
Social protection floor comprising
basic social provisioning package,
e.g. job guarantees, cash transfers
27
Thank you
Report on the World Social Situation 2010
Please also visit UN-DESA esa.un.org/
United Nations Development Agenda
National Development Strategies Policy Notes
World Economic and Social Survey DESA
working papers
Also see: G24 website: www.g24.org
IDEAs website: www.ideaswebsite.org
28