poverty and hunger reduction – a new mix of growth and social protection policies is needed to...

Poverty and Hunger Reduction –

a new mix of growth and social protection

policies is needed to achieve MDG1

Joachim von Braun

Director General

International Food Policy Research Institute

Session “MDG 1: Halving Income

Poverty and Hunger”; Department for

International Development, workshop,

London, October 3, 2007

Joachim von Braun, IFPRI, October 2007

Overview

1. Progress towards MDG 1

2. Pro-poor growth, poverty and hunger

3. Social protection for poverty

reduction and growth

4. The way forward


Urbanization of poverty? …very slowly

199318.88

81.13

2002

24.67

75.33

urban share of the poor (%)

rural share of the poor (%)

Source: Ravallion et al., 2007

Note: Poverty line is set at $1.08/day

Urban and rural share of the poor (%)


Mixed evidence: Poverty at $1 (PPP)

as % of total population

0

10

20

30

40

50

1981 1984 1987 1990 1993 1996 1999 2002 2004

East Asia & Pacific Europe & Central Asia

Lat. America & Caribb. Middle East & N. Africa

South Asia Sub-Saharan Africa

Source: WDI 2007


Looking beneath the dollar-a-day line

Subjacent poor

($0.75 and <$1):

485 mln in 2004

Ultra poor

(<$0.50):

162 mln in 2004

Medial poor

($0.50 and <$0.75):

323 mln in 2004

ECA 1.1 mlnMENA

0.9 mlnLAC

16.6 mln

EAP

51 mlnSSA

90.2 mln

SA

162.9 mln

MENA

0.2 mlnECA 0.4 mln

LAC

11.5 mln

EAP

8.8 mln

SA

19.7 mln

SSA

121 mln

LAC

19 mln

ECA

3 mlnMENA

3.3 mln

EAP

109.3 mln

SSA

87.0 mln

SA

263.6 mln

Source: Ahmed et al. IFPRI, 2007


The share of the poorest in SSA is growing

-1.4

-0.9

-0.7

0.060.14

-2

-1.5

-1

-0.5

0

0.5

Developing World

East Asia & Pacific

South Asia

L America & Caribb.

Sub-Saharan Africa

% p

oin

t c

ha

ng

e

Source: Ahmed et al. 2007

Change in the share of poor living below .50$/day 1990-2004


Progress on MDG 1…mixed evidence

0.0

0.5

1.0

1.5

AP ECA LAC MENA SSA

Hu

ng

er

rati

o:

[2002-0

4/1

990-9

2]

0.0

0.5

1.0

1.5

2.0

2.5

EAP ECA LAC MENA SA SSA

Po

verty

rati

o:

[2002-0

4/1

990-9

2]

MDG Target

MDG Target

Based on data from FA0 2006; World Bank 2007

Prevalence of poverty Prevalence of undernourishment


Hunger: Regional and country progress

East Africa

Central America

Ghana

Kenya

Tanzania

Central Africa

South Asia

CaribbeanW. Africa

SE Asia

Middle East

S. America

Mexico

N. AfricaChina

India

Nigeria

Uganda

Southern Africa

EthiopiaMozambique

0.0

0.5

1.0

1.5

2.0

0 10 20 30 40 50 60

Prevalence of undernourishment 2002-04 (%)

Hu

ng

er

rati

o:

[2002-0

4/1

990-9

2]

Reg

ress

Pro

gre

ss

MDG Target

Based on data from FA0 2006


Global hunger

227

23

52

37

300

213

0

5

10

15

20

25

30

35

-4 -3 -2 -1 0 1 2

Annual change in prevalence of undernourishment 1992-2004 (%)

Pre

va

len

ce

of

un

de

rno

uri

sh

me

nt

20

04

(%

)

L America &

Caribb

E Asia &

Pacific

S Asia

Sub-S Africa

M East &

N AfricaEurope &

C Asia

Source: FAO 2006, World Bank 2007


What Hunger?

Global food and nutrition challenges

Source: Based on data from FAO 2006, Micronutrient Initiative and UNICEF 2005, UNICEF 2006, WHO 2006

Type Causes People affected

Hunger Deficiency of calories

and protein

0.9 billion

Children

underweight

Inadequate intake of

food

and frequent disease

146 million

Micro-nutrient

deficiency

Deficiency of vitamins

and minerals

More than

2 billion

…and their mortality effects (ca. 50 % of <5 mortality)


Limitations of MDG 1

The MDGs help to focus, but lack…

• Vision

• Realism

• Adequate policy instruments

• Reliable monitoring process

• Accountability


Overview





4. The way forward


Framework of challenges for poverty reduction

The Critical Square

Innovation

& Capacity

Economic

GrowthGovernance &

Conflicts

Productivity (e.g.

in agriculture)


What type growth?

Comparison of Poverty-Growth Elasticity

Agriculture-

led growth

scenario

Non-agr.-led

growth

scenario

Staple-led

growth

scenario

Ag-export-

led growth

scenario

Ethiopia

(2003-15)-1.7 -0.7 -1.8 -1.4

Ghana

(2003-15)-1.8 -1.3 -2.1 -1.1

Rwanda

(2003-15)-1.4 -0.8 - -

Uganda

(1999-2015)-1.6 -1.1 -1.4 -1.4

Zambia

(2001-15)-0.6 -0.4 -0.6 -0.5

Sources: Simulation results from economy-wide multi-market models for Ethiopia, Ghana, Rwanda

and CGE models for Uganda and Zambia (Diao and Thurlows, IFPRI 2005)


Continent-wide Ag GDP and GDP Growth rates have been steady

and growing since 1992

-3

0

3

6

9

1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006

Perc

en

t (%

)

Agriculture, value added (annual % grow th)

GDP grow th (annual %)

Fan, draft, IFPRI, 2007


But: Mixed picture

of agricultural growth in Africa

Source: IFPRI/CAADP using UNSD Database


Progress against CAADP’s 6% goal (2005)

-12 -6 0 6 12 18

Angola Ethiopia Eritrea Nigeria

Mauritania Mali

Senegal Kenya Chad

Guinea-DRC

Rw anda Tanzania

Uganda Gambia

Benin Cameroon

Ghana Togo

Burkina FasoGabon

Namibia Botsw ana

Guinea Congo, Rep.

C Af Rep. Madagascar Mozambique

Lesotho Sw aziland

Cote d'Ivoire Zambia Burundi Malaw i

Zimbabw e

annual percent growth (%)


Required Annual Agricultural Growth Rates

To achieve MDG1 (%)

2003 – 2015 6.20%

2005 – 2015 7.50%

Required Annual Growth in Agricultural Spending

To achieve MDG1 (%)

Past, 1992 - 2004 6.1%

Required, 2005 - 2015 21.0%

Required Annualized Spending (Billion Dollar, 2000

Price)

2005 – 2015 $32.5

Africa: Required effort is enormous

Source: Fan et al. IFPRI (work in progress)


… and this varies by country Required annual agricultural growth rates to meet MDG1

0

3

6

9

12

15

18Z

imbabw

e

Buru

ndi

Guin

ea-

Ma

dagascar

Kenya

Nig

er

Lesoth

o

To

go

Cote

d'Ivoire

Centr

al

Chad

Nam

ibia

Za

mbia

Benin

Guin

ea

Gam

bia

Ma

law

i

Senegal

Sw

aziland

Nig

eria

Ma

li

Burk

ina

Ta

nzania

Ma

urita

nia

Eth

iopia

Cam

ero

on

Uganda

Ghana

Mo

zam

biq

ue

Req

uir

ed

an

nu

al

Ag

Gro

wth

Rate

(%

)

Source: Fan et al., IFPRI (work in progress)


Growth matters: hunger - income linkageHunger and GDP/ capita in developing countries

Source: von Braun, regressions based on data from World Bank (2005) and FAO (2005)

0

10

20

30

40

50

0 1000 2000 3000 4000 5000 6000

GDP per Capita (in constant 2000 US$)

Undernourishme

nt (% of pop)Log. (1990-1992)

Log. (2001-03)

Log. (1995-1997)


Performance in hunger index and income –

selected big countries

0

5

10

15

20

25

30

35

40

45

0 2,000 4,000 6,000 8,000 10,000 12,000

Gross National Income per capita

Glo

bal H

unge

r Ind

ex

India

Bangladesh

China

Vietnam

Trends in the Global Hunger Index and Gross National Income per capita

(1981, 1992, 1997, 2003)

Brazil

Source: Wiesmann, IFPRI, 2007


Performance in hunger index and income –

Africa

Sub-Saharan Africa, Trends 1981-2003

0

5

10

15

20

25

30

35

40

45

50

0 500 1,000 1,500 2,000 2,500


Glo

ba

l H

un

ge

r In

de

x

Ghana

Mozambique

Ethiopia

Malawi

Zambia

SenegalUganda

Kenya

Source: Wiesmann, IFPRI, 2007


Government effectiveness

Green: Best quartile (over 75th percentile),

with top 10th colored in darker green

Yellow: second best quartile (over 50th)

Orange: third quartile (over 25th)

Red: fourth quartile, with bottom 10th in darker red

Source: Kaufmann et al. 2005


Decentralization and growth

Statistically significant correlations

between decentralization and growth

Administrative:

Responsibility for civil servants: 0.50

Fiscal:

Reliability of fiscal transfers from center to

local government: 0.45

Source: Birner 2007


Hunger, growth and governance

-3.0

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

-10 -5 0 5 10

Low gov effectiveness Higher gov effectiveness

Annual growth rate in GNI per capita, 1990-2004 (in %)

Pro

po

rtio

n o

f u

nd

ern

. p

rog

res

s i

nd

ica

tor

Congo, DR

Ethiopia

IndiaChina

Brazil

Ghana

Kenya

Nigeria

Tanzania

Uganda

Source: Wiesmann 2007

Low gov. effectiveness is assigned to countries in the lowest

quartile of Worldwide Governance Indicators

Joachim von Braun, IFPRI, October 2007 Source: Wiesmann, IFPRI, 2006

Hunger Index and Income, War, HIV/AIDSG

lob

al

Hu

ng

er

Ind

ex

Sub-Saharan Africa



• Growth remains key in Africa but the

kind of growth needs re-visiting

• Role of rural and agriculture growth in

Asia underestimated

• Discrimination and exclusion

underestimated

• The need for higher social protection

undervalued

Poverty comes down too slowly in the

general growth process


Overview





4. The way forward


To be kept in mind: The dynamic nature of

poverty

Study Period

% escaped

poverty

% fell into

poverty

Bangladesh Sen (2003) 1987-00 26 18

EgyptHaddad & Ahmed

(2003) 1997-99 6 14

India, Rajasthan Krishna (2004) 1976-01 11 8

Kenya, WesternKrishna et al

(2004) 1978-03 18 19

South AfricaCarter & May

(2001) 1993-98 10 25

UgandaDeininger & Okidi

(2003) 1992-00 29 12

Source: Krishna 2007


New Overlaps: More Shocks to

Social Safety of the Poor

• Increased food price inflation

• Health risks: multiple threats (avian flu, HIV/AIDS, TB, Malaria,…)

• Climate change risks

The need for social protection is rising


Types of social protection

• Health insurance

• Social security (e.g. pension for old-age)

• Safety nets (productive)

Nutrition support

Conditional/unconditional transfers

Employment guarantees

Microcredit / Microinsurance

Crop insurance


Social protection and MDG1

Targeted social protection makes four contributions to

the achievement of MDG1:

1. By transferring resources to poor households, it

has a direct effect on reducing poverty and hunger.

2. By protecting assets, it prevents households from

falling into poverty

3. By building community assets that are associated

with income growth

4. By making it possible for households to undertake

investments that lead to sustainable income

growth and reductions in poverty and hunger


Impact of social protection programs (1)

• Ethiopia (PSNP):Increased fertilizer use by 11% points (66% increase compared to control group) and use of improved seeds by 4.8% points (Gilligan et al. in prep.)

• India (NREGA):Provided employment = to 1 bn person-days/year(Drèze and Oldiges 2007)

• Bangladesh (FSVGD):Reduced extreme poverty by 30% points and increased per capita calorie intake by > 10% (Ahmed et al. 2007)


• South Africa (Old-age pension program):Pensions received by women improved health and nutrition of girls (weight-for-height) by 1.2 std. dev. (Duflo 2003)

• Mexico (Progresa / Opportunidades):CCTs reduced severity of poverty by 46% (Skoufias 2005)

• Guatemala (Childhood nutrition intervention):- Increased male wages by 46% in adulthood- Increased female grade attainment by 28%(Hoddinott et al. forthcoming)

Impact of social protection programs (2)


The need for nutrition interventions early

Shrimpton et al. 2001

Weight for age by region

NCHS

Reference

-2

-1.75

-1.5

-1.25

-1

-0.75

-0.5

-0.25

0

0.25

0.5

0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60

Age (months)

Z-s

core

(N

CH

S)

Africa Latin America and Caribbean Asia


Guatemala: Improving early childhood nutrition has large

impacts on adult education and economic productivity

Source: Hoddinott et al. Lancet (in revision)

20%

17%

8%

27%

0% 5% 10% 15% 20% 25% 30%

Income earned per

hour worked

(men)

Reading

comprehension

Cognitive ability

Grade attainment

(women)

Nutritional intervention

among Guatemalan children

0-7 years old (’69-’77)

Follow-up in adults 25-42

years old (’02-04)

Investments in early

childhood nutrition have a

long-term economic

growth effect


Findings

• Slow progress in reducing poverty and hunger

• Mixed success in reaching the poorest with growth ( the where, how matters)

• “business as usual” is not good enough to reach MDG1 and move beyond it

• What in addition and what next ?


Overview





4. The way forward


Interventions for the poorest to move out

of poverty and end hunger

1. Improved access to factor markets and basic services (employment; information)

2. Prevention of food price inflation (agric. growth)

3. Insurance against health shocks (innovative)

4. Preventing child malnutrition (comprehensive coverage)


Action and Research

on designing safety nets needed

1. Transactions costs: administrative capacity,

information, decentralization; PPP

2. Switching systems or adding components

(CCTs; employment guarantee)

3. Political sustainability: commitment,

structure of institutions

4. Innovation & optimization: learning by doing;

impact studies & experimental designs;

finding optimal mixes of social protection

policies


Can it be paid for?

Spending on social protection by rich and poor

• Health (% of GDP)

- Germany, France, Sweden: 7-8%

- India, Somalia, Georgia: < 1%

• Pensions (% of GDP)

- Austria, Greece, Poland: 11-13%

- Nigeria, Bangladesh, Mozambique: < 1%

• Social assistance (% of GDP)

- Pakistan, Peru, Colombia: < 1% Source: Dethier 2007

Mainly from domestic funding … not only a matter of more development aid


Hunger, poverty and growth: Conclusions

1. Growth has been key for poverty reduction …

but less so for hunger reduction

2. Re-balancing investment for growth and

social protection needed now

3. …and phasing in social protection earlier in

the growth process

– also in Africa


IFPRI 2020 Conference Oct 2007 Beijing on “Taking

action for the worlds poor and hungry people”

http://www.ifpri.org/2020chinaconference/index.htm

poverty and hunger reduction – a new mix of growth and social protection policies is needed to...

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