Transcript Events management system: IDB Strategy and Financial Position

IDB Strategy and Financial Position
A Regional Forum on the Occasion of the
Inter-American Development Bank’s 50th Anniversary
Port-au-Prince, Haiti, July 16-18, 2009.
Outline
I.
LAC Main Development Challenges
II.
Alignment Between IDB’s Institutional Priorities and
the Region’s Main Development Challenges
III.
Strengthening the IDB to Meet its Institutional Priorities
IV.
Addressing the Needs of the Poorest Countries
V.
Development Challenges and the Businesses Cycle
2
Fostering equality
of opportunities
LAC faces two
main development
challenges
Closing the growth gap
while contributing to
global environmental
sustainability
3
Fostering equality of opportunities requires
accelerated progress in meeting the MDGs
Despite improvements, large inequities in access to quality services
and in opportunities persist between and within countries.
Science score in PISA 2006
Under-five mortality by mother’s educational level
Difference betw een Low SES and High SES
600
No education
160
Primary
140
Secondary or higher
120
100
80
60
40
20
Average
550
500
450
400
350
300
250
0
200
LAC
OECD
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Equality of opportunities is critical for growth
and sustainable poverty reduction
• High levels of inequality in access to good jobs, credit and capital
markets, and institutions in charge of enforcing the Law, among
others, lead to forgone economic opportunities for some with high
economic potential, and inefficient production and investment
choices for others, all of which translate into lower growth;
• Unequal access to education, health services, basic infrastructure,
justice and housing reproduce structural conditions that are the
determinants of social exclusion;
• Differences in race, ethnicity and gender are still important
determinants of unequal access to opportunities in LAC.
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Sustainable poverty reduction (MDG1) is achievable only by
tackling disparities in labor opportunities
• Disparities in labor opportunities stand behind large differences in earnings
and productivity:
– between 1990 and 2008, extreme poverty fell from 22.5% to 12.9%, partly as a result of
improved macroeconomic stability, increased remittances in some cases, and a new
generation of targeted programs (mislabeled as CCT’s);
– however, sustained poverty reduction requires raising the productivity of poor workers.
• Unequal access to high productivity jobs is a major barrier that needs to be
overcome:
– more than half of LAC workers are in the informal sector in insecure, unstable, low
productivity jobs, with no social security coverage or training opportunities.
• More and better formal firms are needed to create more high productivity
formal jobs with social security coverage.
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Raising productivity is critical to increase welfare and growth
Poor performance in terms of productivity, along with the persistence of
large inequalities of opportunities, are central and related features of LAC.
Evolution of LAC’s GDP per capita and TFP relative
to OECD*. Index: 1960=1
Evolution of TFP in Latin America and the
Caribbean and the Rest of the World. Index: 1960=1
1.4
1
1.3
0.9
1.2
0.8
1.1
0.7
TFP
LAC
1
GDP per capita
0.6
Rest of the World
0.9
0.5
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
* Excludes: Czech Republic, Iceland, Luxembourg, Mexico, Poland,
Slovak Republic, Switzerland and Turkey.
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Closing the growth gap ………..
•
Improved macroeconomic management in LAC and unusually favorable international
conditions allowed relatively robust economic growth between 2002 – 2008. Yet,
over a longer perspective, growth of GDP per capita in LAC has lagged behind the
rest of the world.
•
LAC trade performance has been lackluster compared with, for example, that of
developing countries in East Asia.
Share of the World Goods Exports:
LAC vs. Developing East Asia
GDP per capita growth: LAC vs. Rest of the World
25
3.5
3
East Asia
20
2.5
%
15
2
1.5
1
10
LAC
0.5
Rest of the World
LAC
5
0
-0.5
1960
1965
1970
1975
1980
1985
1990
1995
2000
2005
1980
1983
1986
1989
1992
1995
1998
2001
2004
2007
* Developing East Asia includes China, Indonesia, Korea,
Malaysia, Singapore, Taiwan and Thailand
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…while contributing to global environmental
sustainability and dealing with climate change
To increase growth while contributing to global
environmental sustainability represents a vast challenge:
– understanding processes that are characterized by uncertainties
and large externalities;
– ensuring regional coordination;
– developing the right mix of regulations and market incentives to
save on energy and diversify its sources.
9
Alignment Between IDB’s Institutional
Priorities and the Region’s Main
Development Challenges
10
IDB’s proposed institutional priorities are well aligned with the region’s main
development challenges and deal with the requests made by Governors in
Resolution AG-06/09 in March 2009 in Medellin, Colombia:
– Social Policy for Equity and Productivity
– Infrastructure for Competitiveness and Social Welfare
– Institutions for Growth and Social Welfare
– Competitive Regional and Global International Integration
– Protecting the Environment and Responding to Climate Change
11
IDB’s Five Institutional Priorities
1. Social Policy for Equity and Productivity
–
–
–
Building well-articulated safety nets for the
poor, compatible with productive insertion in
labor markets (beyond CCTs);
Improving the functioning of labor markets to
reduce informality, increase productivity and
expand coverage of social security;
Raising quality and equity of education (preschool, secondary);
–
Promoting equity in health outcomes and
addressing new challenges posed by the
epidemiological transition;
–
Tackling gender and diversity issues: labor
market outcomes for women, narrowing gaps
in indigenous groups’ education and health
outcomes, legal frameworks against
discrimination.
2. Infrastructure for Competiveness
and Social Welfare
– Access to water and sanitation
for all; governance and efficiency
of the water and sanitation sector;
– Stepping up investment in
transport infrastructure,
supporting sustainable transport
alternatives;
– Increase investment in renewable
energy and energy efficiency.
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IDB’s Five Institutional Priorities
3. Institutions for Growth and
Social Welfare
– Improving functioning of credit
markets through better registries
of properties, regulatory
frameworks for property rights and
resolution of legal disputes;
– Fiscal efficiency and
sustainability, tax and public
expenditure management at
national and sub-national level;
– Improving citizens’ security with
effective institutions and civil
society involvement,
modernization of criminal justice,
anti-corruption initiatives.
4. Competitive Regional and Global
International Integration
– Negotiation and implementation of
trade agreements;
– Administration and harmonization
of trade regulations and customs
procedures;
– Export and foreign investment
promotion;
– Development of new instruments for
integration in labor and capital
markets.
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IDB’s Five Institutional Priorities
5. Protecting the Environment and Responding to
Climate Change
– Institutional and regulatory frameworks to allow
investments in sustainable transport, alternative fuels,
renewable energy and energy efficiency;
– Climate change adaptation in priority sectors;
– Development and use of renewable energy sources,
energy efficiency technology and practices;
– Preparation and application of climate change
standards for specific sectors, for example, IDBfinanced coal power plants.
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Strengthening the IDB to Meet its
Institutional Priorities
15
• On going strengthening of technical expertise in key areas:
– Gender and Diversity, Climate Change and Labor Markets units;
– Regional Economic Advisors;
– Sector Economic Advisors.
• Building the Knowledge and Capacity platform as a core
business of the Bank, comparable to its lending products;
• Improving the Development Effectiveness of interventions;
• Attracting and retaining the best possible talent.
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Addressing the Needs of the Poorest Countries
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Renewed commitment for the poorest and most
vulnerable countries in the region
• IDB has played a catalytic role in mobilizing international support
around bold agendas to lift these countries out of poverty and will
continue to do so;
• Renewed efforts to address the the substantial development gaps
between countries in the region (Bolivia, Guatemala, Guyana, Haiti,
Honduras, Nicaragua and Paraguay);
• IDB’s commitment for the poorest countries in LAC should start by
renewing its ability to lend under pricing and repayment conditions
that are consistent with the debt sustainability frameworks;
• IDB’s support to poorer and smaller countries should also be
reflected in sector priorities for Bank lending and in the development
of special programs and products tailored to these countries' needs.
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Development Challenges and the Businesses
Cycle
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• In contrast to the past, LAC entered the current crisis --the largest shock
faced by the region in over half a century--, with stronger fundamentals;
• Given the large-scale and systemic nature of the crisis, it is difficult to predict
its duration and depth;
• As of 2009 and going forward, LAC governments confront the challenge of
protecting core public expenditures and providing continuity to policies and
programs that tackle key developmental challenges in spite of the cyclical
behavior of revenues;
• IDB can provide funding to protect reforms and support continuity of policies
and programs, particularly targeting the most vulnerable.
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