Transcript Diapositive 1 - Graduate Institute of International and Development

Globalisation, growth and
employment:
Development Stakes
Frédéric Lapeyre,
Employment Specialist,
International Labour
Organisation
Large dichotomies in development theory
Development theory is marked by swinging
ideological debates and movements around big
issues:
State/Planning versus the Market
Internal versus external development dynamic
Import-substitution versus export promotion
Critical position of growth or basic needs in
development strategy
5. Convergence versus plurality in development
models
1.
2.
3.
4.
Three governance paths for globalisation
Neo-liberalism:
 Accumulation limits need to be pushed back
 Global utopia based on the logic of
unhindered accumulation
Reformism/Social democracy:
 Globalisation needs to be humanised
 Reaffirming the principles of solidarity and
redistribution
Alternative:
 Another world is possible
 A fairer world based on people’s demands
and not on the logic of accumulation
Short background on employment being
taken into account for growth models
No in-depth debate on the link between growth, employment
and poverty in the 50-60s. 3 reasons:
1. The hypothesis of ‘positive growth spin-offs’
2. Kuznets’ hypothesis on the development of inequalities in
periods of economic development
3. Lewis’ hypothesis on labour transfer from the traditional to
the modern sector
 Good policies = accelerated economic growth =
industrialisation
Dominant development vision in the
1950s
Mobilisation of savings
and planning
Higher investment
rate
Industrialisation
Global Trade
and
Movement of capital
(IDE and Coop. for Development)
Convergence
Less poverty
and more jobs
Growth
Import-substitution strategies
With regards to deterioration in exchange terms: The
Singer-Prebisch thesis:
 Vision in terms of Centre / Periphery with power
asymmetry
 The Centre preserves productivity gains and, in
addition, it appropriates those from the Periphery due
to:
1. The unfavourable insertion of Latin America in
international labour division.
2. The interference of organisational factors – powerful
unions and supply oligopolistic structure – in market
systems in industrialised countries
Solution = forced industrialisation so as to change the
production structure in peripheral countries by making
it less dependent on Centre demand
 Refusing to base growth on raw material exports which
in the end causes lower accumulation capacity for
periphery countries
 Advantages of an internal dynamic to the
industrialisation process and less dependence on
growth rate vis-à-vis the exterior
 The ‘industry in its infancy’ argument to justify resorting
to protection for domestic industry against foreign
competition
 Key role of the state as conductor
Dependence theories
The dependence school is based on rejecting the
universalist vision of the school of modernisation
 Under-development as the result of an historic exploitation
process of the South by the North
 The surplus generated is either largely expropriated by the
Centre or wasted on luxury consumerism by traditional
elites. Therefore, resources required for investment for
economic development are highly limited
 In this context, the perspectives for economic growth in
dependent countries are highly limited
Three central hypotheses:
– Latin America and other periphery regions have been
incorporated into the global capitalist economy from the
initial periods of colonisation
– The integration of these peripheral capitalist economies into
the global economy is done via a metropolis-satellite
relationship within the framework of which profits made in
the periphery are hijacked by the Centre
‘Dependence is a situation where economies in a
group of countries are conditioned by the development
and expansion of other groups of countries.’
Contributions of the dependency trend
1. The biggest obstacle to development is not internal factors
but rather the international division of labour inherited from
colonialism and imperialism, i.e., external factors
2. Development and sub-development could be seen as two
aspects of the same global process
3. These links must be broken; dissociating from the global
market, breaking the mechanisms of surplus expropriation
and promoting a national strategy based on internal
resources
Problem: the static nature which meant transformations in
action could not be thought of for the periphery in the 1960s
and 70s
The new international economic order
A change in the North-South power
relationship in the 1970s after the first oil crisis
and economic restructuring in the North:
 Pressure for a fairer international trade system
 Thesis of mutual interest and interdependence
 Internationalisation and industrialisation of the
South
Restructuring the production sphere in
the North and internationalisation
End of the 1960s: Signs of
tension on social commitment in
the North.
Strikes and conflicts in the
production sphere multiplied in
response to the alienating
nature of work organisation.
Worker frustrations turned into
salary demands.
 Conflicts on the distribution of
income in a period marked by
slowing productivity gains due to
the exhaustion of the Fordism
work organisation model
 Profitability crisis and reduced
higher accumulation levels
 Worsening of the situation after
the 1st oil price shock in 1973
 Breakdown of capital-work
commitment
Business strategy
Restructuring of production organisation
responding to a triple challenge:
International competition
The productivity crisis
Increasing resistance with regards to work
organisation
=> The institutionalised commitments of Fordism
appeared in this new crisis context as a source
of problems due to the rigidity they involved.
The two main strategies adopted by businesses
to face up to the profitability crisis and harder
competition were:
1. The transition to a model based on maximum
flexibility research with regards to work,
production and consumer models =>
development of subcontracting and atypical work
contracts
2. The geographical restructuring of production
whose aim was to profit from the cost and
legislation differences on a global scale
Economic globalisation, competitiveness
and flexibility
The highly competitive international setting due to the
movement of capital and mass internationalisation of
markets contributed to making efficiency and
competitiveness central business aims
Implementing territorial competition and for the
populations living there
Due to a lack of political care, the problem posed by the
need for salary flexibility experienced negative
points=>Defensive flexibility
The new accumulation system no longer took into
account social progress and the preservation of a social
link as part of its own logic
The years of SAP
In the early 1980s: debt crisis in the South and neo-liberal
counter-revolution in the North
 Social adjustment programmes dominated by:
1. Macro-economic balancing aims
2. Micro-economic transformations
3. State withdrawal from the economic sphere
 Aim: start sustainable growth
 Emphasis placed on internal factors: Putting an end to the
distortions caused by States’ voluntarist development
policies
 Liberalisation and integration process
Globalisation and the logic of performance
centres
Deep reforms in OECD countries during the 1980s so
as to kick-start growth driven by the private sector:
1. Restrictive monetary and budgetary policy to beat
inflation
2. Deregulation of the labour market and financial
markets, privatisation, support for the private sector
3. Redefining the role of the State which becomes a
guarantor of competitiveness in the national area
4. Speeding up integration into the global economy
=> Emergence/ maintenance of growth centres
Competitiveness, flexibility and
employability
Virtuous circle:
Adaptation to global economy norms:
competitiveness-flexibility-stability-employability
Integration into the globalised economy
Growth
Employment and reducing poverty
The dominant model of virtuous
circle
Liberalisation:
•Price
•Commerce
•Financial Sector
•Job Market
Attractiveness
for IDE
Redefining the role
of the State
Integrating into the
globalised economy
Strengthening the
private sector
Growth
Reducing poverty
Creating jobs
The logic of accumulation centres
Priority: Emergence and maintenance of
competitive accumulation centres
Constraints of the globalised economy are
imposed onto national structures
Principles of harmonisation with regards to
globalisation constraints
From then there are two levels of
responsibility within the framework of the
globalised economy:
1. One regarding the responsibility of each
country to adapt to globalisation norms
2. One on the new world order for guaranteeing
good accumulation conditions on a global
level through the right to intervene or sanction
aimed at bringing back into line those
disturbing the global order on which the
dynamic of globalisation rests
=> Vision of global and national governance
proposed in the dominant doctrine
The consequences to economic
globalisation
Increased unemployment and notably long-term
unemployment
+ More insecure employment
+ More poor workers
 Major consequences on living conditions for people in
the North and South
 Loss of security and new poverty
 Crumbling of social cohesion and increased social
exclusion
Dominant discourse loses
legitimacy in the 1990s
Growing gap between the reality of
regressive social phenomena and
supporting elements of the discourse
Increased protest with regards to the
integration project and the supremacy
of the growth objective
Increase of a wide indignation movement on a
global scale amongst a growing section of the
population
 Stronger voiced condemnation – from Seattle to
Genoa – of the unfairness of globalisation
 Denunciation of globalisation that excludes the
poorest from the benefits of growth that it creates
or, in any case, proportionally less benefits
(according to the radical nature of the discourse)
 Greater poverty and inequalities in the world lead to
the erosion of the ‘globalising utopia’
 Strengthening of a pessimistic vision on
globalisation and growth
The dominant doctrine in the face of
proof
Development of a conflictive vision of the
world between the winners and losers of
adaptation policies to globalisation norms
 Increased refusal to cooperate with proposed
reforms
 Weakening of accumulation conditions
 The global order put into question
 Gloomier sustainable growth perspectives
Growth is good for the poor and
liberalisation is good for growth
At the end of the 1990s an intense debate
opened up to determine how the poor
benefitted from growth within the globalised
economy
An intellectual counter-offensive aiming to
reaffirm the central place of growth through
integration in the globalised economy in
development strategy: Article by Dollar and
Kraay
Implications in terms of development policies
Strategy based on the double relationship of:
Growth is good for the poor
Liberalisation/integration is good for growth
By transitivity, liberalisation is good for the poor
Whoever wants to deal with poverty must promote economic
growth
Shift in development policies towards poverty reduction
strategy papers (PRSP) based around promoting growth
The elasticity of poverty with
regards to growth
In general: strong link between income growth amongst
the poor and GDP growth per capita:
 Around a one-to-one relationship for the first quintile
(David Dollar and Kraay, Roemer and Gugerty)
 Income elasticity amongst the poor with regards
to GDP evolution per capita
 When the latter progresses, for example, at 10% then
income amongst the poor also increases by 10%
Stakes in terms of development
Main stake: the place of growth in development policies:
– Central if the benefits of growth are distributed fairly
– Re-inserted into an integrated policy if the benefits of
growth are unfairly distributed
 Recreating a space for employment
 Growth as an element amongst other in development
strategy in the same way as:
1. Creating productive jobs
2. Fairer income distribution
3. Social protection
4. Meeting essential tangible and intangible needs
Observed disconnection in the
2000s
Sustained growth in many African
countries produced disappointing results
in terms of:
1. Reducing poverty
2. Creating jobs
3. Making headway in decent employment
4. Reducing inequalities
The return of sustained growth
in sub-Saharan Africa
Decent employment and MDG:
poor workers (1.25 USD per day) as part of
total employment
80,0
70,0
1997
2007
Central
and
Southeast
Europe
(outside
EU) and
CIS
East Asia
60,0
%
50,0
40,0
30,0
20,0
10,0
0,0
Southeast South Asia
Asia and
the Pacific
Source: ILO, Econometric models of trends, 2008
Latin
Middle East
America
and the
Caribbean
North
Africa
SubSaharan
Africa
Share of vulnerable employment
in total employment (%)
Vulnerable
employment
2007
(Vulnerable
employment:
own-account workers
plus
contributing family workers)
100
Male
Female
80
60
40
20
0
WORLD
subMiddle East
Latin
Developed Central & East Asia South East South Asia
Saharan
America &
Asia & the
South
Economies
Africa
the
Pacific
& European Eastern
Caribbean
Europe
Union
(non-EU) &
CIS
North
Africa
Growth performance in 80 countries, 1984-2001,
International Poverty Centre, UNDP
Pro-Poor
Anti-Poor
Total
Positive
Growth
55
(23%)
76
(32%)
131
(55%)
Negative
Growth
53
(22%)
53
(22%)
106
(45%)
Total
108
(45%)
129
(55%)
237
(100%)
Pro-poor growth when the income of poor households increases
quicker than that of non-poor households
Nature of growth
(%)
Countries with
low income
Sub-Saharan
Africa
Pro-poor Anti-poor
Total
21
33
54
20
34
54
Different pathways:
the growth model issue
3 determining factors regarding side-effects of growth
benefits for the poor:
1. Initial income distribution – more or less unequal
2. Growth promotion policies – more or less redistributive
3. The employment promotion policy and, specifically, decent
employment – more or less central in global strategy
4. Growth based on more or less work-intensive sectors
The missing links between growth and
poverty reduction
Access to
resources / vulnerable
groups
Public investments
Income distribution
Growth
Demographic growth
Promoting decent
employment
Pro-employment
sectoral policy
Increased productivity
Reduced
poverty
Two different development strategies to
respond to the employment challenge
1.
2.
3.
1.
2.
3.
4.
Dominant approach: Main growth objective provided by:
Market forces
Macroeconomic stability
Integration into the globalised economy
Alternative approach: Central nature of employment
based on:
A macroeconomic framework favouring pro-poor and projobs growth
Public investments
Industrial policy favouring key sectors in terms of job and
income generation
A mass strengthening programme for education and
health
Placing employment at the heart of
development strategy
Employment is the essential link between growth and
reducing poverty
 Growth in itself is not enough as seen in the different
pathways
 Nonetheless, growth is an essential element for all
development strategy
 Main issue = Growth model
 Social project based on sharing the benefits of growth
and promoting employment
Three factors affecting employment and
income amongst poor workers
1. The growth factor: Growth rate
2. The elasticity factor: Quantitative and
qualitative impact of growth on employment
3. The inclusive factor: The level at which the
most vulnerable groups benefit from the
fruits of growth
Necessary conditions to make growth
more job incentive
Rapid growth rate based on:
1. Growth of job intensive sectors
2. Growth of sectors with a major driving effect on
the domestic economy
3. Growth in employment productivity
Education and training system improvement
programme so as to increase job opportunities for
the most vulnerable groups
Structural policies setting out growth
and employment objectives:
1. Fiscal and financial policy: incentive /
labour intensive sectors
2. Policy for increasing capacities of the
poorest (microfinance, training, access
to basic resources and services, etc.)
Employment in South Africa in 2014 according to 3
scenarios
Total employment New jobs created
3 scenarios
in 2014
in 2014 (millions)
(millions)
Continuation of present
9.8
0.9
trends
Accelerated growth
without subsidies /
Credits / key sectors
Accelerated growth
with subsidies / Credits
/ key sectors
10.8
1.9
12.4
3.5
Employment and reducing poverty
Improving employment opportunities: towards shared
growth (‘pro-poor’)
 Three sections:
– Increase labour demand: to reduce underemployment
and declared unemployment
– Increased salaries and work productivity
– Improved workforce economic mobility: can a poor
person benefit from new opportunities?
Job market specificities in subSaharan Africa
High employment rate linked to:
1. Very high underemployment level
2. Employment centred on low-productivity jobs
3. Poor workers
Employment as main income source
Job market structure dominated by the agricultural
sector
Weak salaried employment
Non-agricultural work structure dominated by the
informal sector
Large number of under 25s in the population
Implications of the job market
specificities
Even with high growth rates, formal salaried employment
growth could never absorb the new entrants on the job
market
 Priorities = increase work productivity in subsistence
agriculture and micro and small enterprises in the informal
sector
 But all too often = Weak priority levels in national
development strategy
 The high priority level given to policies dealing with job
market rigidities does not match the constraints seen by the
vast majority of economic operators
Madagascar
Burkina Faso
Main factors determining income
levels of the poor
Income amongst the poor will improve based on
an increase in:
1. Salaried employment, mainly non-agricultural
2. Real salary
3. Income coming from self-employment linked to:
i) Increased working time
ii) Increased productivity
iii) Increased output prices
iv) Lower input prices
v) Easier access to non usurious credit
Output per worker (constant US$2000 at PPP)
Indicator 2: Change of Labour
Productivity
70.000
60.000
1997
2007
North
Africa
Sub
Saharan
Africa
50.000
40.000
30.000
20.000
10.000
0
WORLD
Developed Central &
South
Economies
& European Eastern
Europe
Union
(non-EU) &
CIS
East Asia
Middle East
Latin
South East South Asia
America &
Asia & the
the
Pacific
Caribbean
Insufficient or badly
targeted
public investments
Low access
to resources
Low productivity
Low expenditure level
on education and health
Low investment
level
High level of insecurity
Low income
Ways to improve productivity:
1.
Private investment allowing new technology/know-how to
be introduced
2.
Increased public investment (electrification, irrigation,
applied research, education, health, etc.)
3.
Development of the non-agriculture sector and,
specifically, manufacturing units
4.
Active industrial policy (tax incentives, targeting priority
sectors and priority access to credit, etc.)
5.
Financial policy favouring access to resources for micro
and small enterprises in the agricultural and nonagricultural sector
Distribution of productivity gains and
multiplying effects
1.
2.
3.
4.
Lower prices
Increased real salaries
Increased income/household consumption
Increased profits
 A very different impact following the chosen growth model
 More or less large multiplying effect on income and
employment from productivity gains according to sectors
involved
Better
health
Higher
productivity
level
Public investment
Increased
household
income
Higher training
level
Development
of Micro
and small
enterprises
Investment
Access to
resources
( microcredit,
Land, etc)
Increased
decent
employment
Improved
legal and institutional
framework
Strategy of
intensive growth
in work
Development of
salaried
employment in the
non-agriculture
sector
Support policy
for sectors with
a high multiplying
effect on jobs and
income
Priority sector policies
Growth due to market forces and MDG in subSaharan Africa
 Concentration of resources / Use of natural resources
 Technologically limited investment choices
 Intensive investment in capital and weak integration
into local / domestic economy
 Example of the mining sector in Madagascar: Chérit
Priority sectors and employment
Main aspect of identifying sectors with major
multiplying effects on employment and income,
specifically benefitting vulnerable groups
 Formulating support policies for these sectors
 Necessary condition for pro-poor and pro-
employment growth
 Need to develop analysis methodology tools
Restoring economic policy tools
Monetary and fiscal policy determines central
economic variables for attaining the aim of
reducing poverty:
1.
2.
3.
4.
Real interest rates
Price levels
Exchange rate
The level and nature of domestic investments
=> Required convergence effort between growth
objectives, employment and reducing poverty
By way of a conclusion
1.
2.
3.
4.
5.
Need to work on the emergence of a specific cooperative
global commitment for each country between:
Economic growth
Macroeconomic stability
Employment
Environmental protection
Reducing poverty
 Sub-optimal solution for each criterion but optimal in terms
of sustainable development
 Choice of society based on solid economic arguments and
social dialogue
 Autonomy in choosing the nature and speed of integration
into the globalised economy
 Subordination to a desirable and sustainable social project