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Key development issues for the post- 2015 development agenda - Resources for

delivery of basic services

ESCAP/ADB/UNDP Sub-regional Workshop on Millennium Development Goals and the Post-2015 Development Agenda for South- East Asia

Bangkok, 21-23 November 2012

Sudip Ranjan BasuEconomic Affairs Officer

Macroeconomic Policy and Development DivisionUN-ESCAP

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OutlineOutline• Delivery of basic services

• Sources of financing for post-2015 development agenda• External • Domestic • New and innovative

• Global ‘new’ partnership for development

• Way forward for Asia-Pacific region

•Issue 1•• Issue 1Issue 1 Delivery of basic services Delivery of basic services

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Providing universal access to basic services • Economic: Ensure equal economic opportunities

• Jobs guarantee, access to sustainable public infrastructure• ICT services

• Social: Access to social services• Providing equal access to education, healthcare, social protection

including unemployment and disability insurances• Protection for informal and migrant workers

• Environment: Access to sustainable energy for all • Access to modern cooking and electricity and green-jobs creation• Access to clean water, sanitation• Providing access to affordable new technology sources

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Resources: Financial, human and natural• Financial: Targeting 3 pillars of sustainable development

• International development assistance, FDI, remittances • Domestic resources (public and private)• Building resilient and creative economy

• Human resources: Improving quality of inputs• Education: trained skilled teachers• Health: Well trained doctors, nurses, midwives • Labour market: qualified youth job seekers

• Natural resources: Ensuring low-carbon development• Climate change related fund, and natural disasters• Emphasis on conservation and sustainable use

MDG challengesMDG challenges• Persistent Problems: Poverty, low food

security, growing inequalities, vulnerable jobs, low social protection

• Emerging Issues: Trans-boundary issues such as financial crises, commodity price volatility, natural disasters & climate change

• “New Normal”: Global turbulence, uncertainty, and volatility

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Challenge: FuelChallenge: Fuel--Food prices in AsiaFood prices in Asia--PacificPacific• Rising trend since 2000,

punctuated by the global economic crisis• Prices have increased from 1.8% to

17.4% per year

• The commodity boom can be seen in the context of the rise of emerging economies, including in Asia-Pacific 0

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Commodity prices indicesreal 2005 US dollar terms (1960=100)

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• MDGs as a development framework have strengths and weaknesses

• Five gaps identified in achievement of MDGs, and relevant for post-2015 development agenda

* Policy gap* Strategy gap * Growth gap* Resource gap* Implementation gap

Barriers to achieve MDGsBarriers to achieve MDGs

Source: ESCAP/ADB/UNDP 2006 regional MDG Report

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Asia-Pacific is the learning site: Inclusive and sustainable development

• Asia-Pacific has increasingly emphasized inclusive and sustainable development as a development priority: • “Sufficiency philosophy” and “creative economy” (e.g., universal

health) in Thailand• Emphasis on sustainable development and social equity in Vietnam• Social transfer programmes to enhance access to education and

healthcare services in the Philippines• Right to food and employment pillars of inclusive development in

India• Maximizing “gross national happiness” in Bhutan• “Harmonious society” and growth with equity in China

•Issue 2•• Issue 2Issue 2 Sources of financing for post-2015 development agenda

Sources of financing for post-2015 development agenda

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Sources of financingSources of financing• External financing

– ODA– Other sources of financing

• FDI, and other capital flows• South-South cooperation • Remittance• Innovative finance• Domestic financing

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Resource flows Resource flows • Aid flows volatile & declining, especially for LDCs

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External financingExternal financing• ODA commitments not met • Quality of ODA, increase its development impact,

reducing transactions costs, and improve accountability and transparency

• Increase effectiveness of the Global Environment Facility to support simplifications of procedures and assistance

• Situation may change if global crisis continues, and need to use external borrowing productively

• Debt relief for development, but debt burden is still the lowest in the region

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Foreign Direct InvestmentForeign Direct Investment• More stable, but concentrated in few developing

countries• Moving to extractive sectors• Policies:

– Direct to productive sectors, avoid race to the bottom

– Negotiate better revenue sharing from extractive FDI

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Other flowsOther flows• Short-term capital flows – volatile, sudden stops; constrain

policy space– Manage capital flows – improves policy space &

reduced financial sector fragility• Illicit capital flights - 48 Poorest Countries Lost US$197 Billion

during 1990-2008; (3 top are in AP)– The UN Model Double Taxation Convention for curtailing cross-

border tax evasion and avoidance and capital flight through improved exchange of information (article 26)

– Close down tax havens

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RemittanceRemittance

• Remittances rising & steady• Better utilization of remittances, • Better training of migrant workers (sending

country), • Protection of migrant labour rights (receiving

countries)

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Innovative financeInnovative finance• Estimated $37 -60 billion generated for

development assistance in 2002-2011

• Mostly used to prioritize financing global public goods rather than domestic development needs

•• Insignificant relative to the overall external

financing even in the poorest countries.

• An array of potentially large innovative sources of development financing proposed, but not agreed upon by the international community.

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SouthSouth--South cooperationSouth cooperation• Becoming increasingly important in the region• Emerging countries participation:

– China between $2 and $3 billion – India $488 millions

• But the nature, modalities and responsibilities that apply to South-South co-operation differ from those that apply to North-South co-operation.

• Mostly going to resource rich countries• Also tied to procurement requirements

Domestic borrowingDomestic borrowing• Countries have also been adapting the framework to the

country-specific priorities and budgets, adjusting the goals and targets to their national context– Tax administration, institutional mechanisms

• Significant increase overtime social services, and now to focus on economic and environmental services

• Policy concerns:– Macroeconomic instability, and crowding out– Inflationary – bad for growth; hurts poor– Debt sustainability and governance

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Macroeconomic instability? Macroeconomic instability? • Inflation-Growth, 40 developing countries,

1960-2010

Ample space for mobilizing domestic resources

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•Issue 3•• Issue 3Issue 3 Global ‘new’ partnership for developmentGlobal ‘new’ partnership for development

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MDGs 8: Develop a global partnershipMDGs 8: Develop a global partnership• Develop further an open, rules-based, predictable, non-

discriminatory trading and financial system: • Address special needs of LDCs, LLDCS, SIDS, and HIPC• Deal comprehensively with the debt problems of developing

countries, debt sustainability• Provide access to affordable essential drugs in developing

countries (in cooperation with pharmaceutical companies)• Make available the benefits of new technologies, especially ICT

(in cooperation with the private sector)• Criticisms: the least well-defined goal

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New development partnershipNew development partnership• Targeted approach of international financial support:

– Official development aid (ODA) from donors to social infrastructures and services

– Tapping new donors and philanthropy, trade-related assistance• Improving the productive capacity of the economies

– At the same time, the amount of ODA allocated to the production sector only increased 12 per cent

• Countries with Special Needs:– The simultaneous decrease in the proportion of ODA towards

production sector may have had consequences yet to be clearly identified, especially in terms of the impacts on the productivecapacities of LDCs, LLDCs and SIDS

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Partnership for sustainable development

• Partnership for domestic resource mobilization• Tax administration, illicit capital flight, tax cooperation

Partnership for public external resources• ODA, debt relief, orderly debt work-out mechanisms

Partnership for private resources• Lowering remittances costs, maximizing and improving the quality

of investment

• Mainstream partnerships under each of the thematic goals (i.e., Goals 1-7), allowing a stronger link between the desired outcomes and means for achieving them

•Issue 4•• Issue 4Issue 4 Way forward for the Asia-Pacific regionWay forward for the Asia-Pacific region

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To support the capacity of developing countries in the region to:

Formulate/design ImplementEvaluate/monitoring

home grown sustainable development policies sustainable development policies

Country ownership of the implementation process

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Policy implications

• National policies options: – Expand tax base and progressivity – expand fiscal space– Accept moderate inflation (say, upto 15%) – will expand fiscal

space – borrow from central bank

• Policies for new sources of financing– Functional finance – focus on productivity of expenditure

components, instead of aggregate debt/deficit

• New global partnerships could consider more delineated responsibilities for all stakeholders

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Resources for reducing development gaps– Priority support for countries with special needs [LDCs, LLDCs,

SIDS], including working with the g7+ group of fragile states

– Undertake reforms to build a more development-friendly international financial architecture and governance

• Create new financial resources for global development partnership

– Working closely with private sector• Public Private Partnership (PPP), Philanthropy and UN Global Compact

– Front loading development cooperation partnership

– A more inclusive, sustainable and resilient future 29

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Thank youhttp://www.unescap.org/pdd/calendar/CSN-MDG-NewDelhi-Nov-

2011/MDG-Report2011-12.pdf

Email: basu@un.org

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Discussion in Session 5

Key development issues for the post- 2015 development agenda - Resources for delivery of

basic services

Issue 1: What are challenges in generating resources domestically for meeting the post-2015 development agenda?

Issue 2: How can you generate more resources for countries with special needs?

Thank you!