Sharing experiences between Asia and the Pacific and Western and Central Africa

Achieving the Millennium Development Goal of Halving Poverty by 2015

Sharing experiences between Asia and the Pacific and Western and Central Africa

Sharing experiences between Asia and the Pacific and Western and Central Africa

The Context

• Millennium Development Goal 1– Targeted poverty levels in 2015:

• 15% in East and South-East Asia

• 20% in South Asia

• Between the early and late 1990s, the poverty headcount ratio fell from 34 to 24 per cent in Asia and the Pacific still 768 million people living on less than a dollar a day

• Several countries in East and South-East Asia (China, Indonesia, Viet Nam) have achieved targets

• Progress has been slower in South Asia (except India in the 1990s)

Sharing experiences between Asia and the Pacific and Western and Central Africa

Growth, Inequality and Poverty

• Strong link between growth and poverty reduction but variation by country in extent to which growth translates into poverty reduction

• In many countries, income inequality increased shift from rural and agricultural growth to growth centred on urban areas and driven by export industries

• Three scenarios of poverty outcomes (growth rates and inequality levels)

• For poverty reduction, some forms of inequality matter more than others (productive assets, human capital, financial capital, rural infrastructure)

Sharing experiences between Asia and the Pacific and Western and Central Africa

Prospects of Achieving MDG of Poverty Reduction

• UN (2003): The Asia and the Pacific region as a whole and a number of large countries within the region projected to achieve the target by 2015 (based on extrapolation of trend)

• No discussion of how agricultural growth, trade and institutional factors influence poverty through its effects on overall income growth no policy insights

• Econometric analysis to deepen our understanding of policy changes in attaining the MDG of poverty reduction

Sharing experiences between Asia and the Pacific and Western and Central Africa

Prospects of Achieving MDG of Poverty Reduction

• In East Asia, the actual economic growth rate exceeds that required to achieve the target. In South Asia, growth needs to accelerate

• Agricultural productivity growth makes substantial contribution to poverty reduction however, actual rates of growth markedly lower than required in both subregions

• Moderate growth with reduction of income inequality will have substantial poverty reduction

• Even modest improvements in institutional quality (transparency and accountability in local institutions, rule of law, political stability) are associated with significantly positive effects on income and consequently on poverty

Sharing experiences between Asia and the Pacific and Western and Central Africa

Towards a Strategy of Pro-Poor Growth and Institution-Building

• Credible and sound macro policy regime is an important prerequisite of growth

• Sequencing of policy reforms (e.g. measures to promote a competitive private sector prior to dismantling of public sector)

• Non-farm activities important in boosting employment and incomes in rural areas despite slight increase in income inequality (e.g. Bangladesh)

• Need for diversification of farm and non-farm portfolio for higher incomes and ability to cope with economic crisis better (e.g. Thailand)

• Improvements in institutional quality

Sharing experiences between Asia and the Pacific and Western and Central Africa

Towards a Strategy of Pro-Poor Growth and Institution-Building

• Domestic institutions of conflict management can mitigate hardships as a result of an external shock (Republic of Korea and Thailand vs. Indonesia)

• Transitional institutions do not necessarily block further reforms and may pave the way for more extensive and durable reforms (e.g. dual-track liberalization in agriculture in China)

• Need for political and institutional continuity (Viet Nam)

• Potential of public-private partnership (Bangladesh, India, Viet Nam)

Sharing experiences between Asia and the Pacific and Western and Central Africa

Issues for Discussion

• Need to accelerate overall economic growth and agricultural growth for rural poverty reduction

• Need to ensure that disadvantaged groups (women, ethnic minorities, the landless) benefit from diversification of rural economies through non-farm activities

• Reduction in income inequality by correcting inequity in the distribution of assets and rural infrastructure

• Improvements in institutional quality (transparency and accountability in local institutions, rule of law, political stability)