Economic Growth, Inequality and Poverty: Concepts and Measurement

Size: px
Start display at page:

Download "Economic Growth, Inequality and Poverty: Concepts and Measurement"

Transcription

1 Economic Growth, Inequality and Poverty: Concepts and Measurement Terry McKinley Director, International Poverty Centre, Brasilia Workshop on Macroeconomics and the MDGs, Lusaka, Zambia, 29 October 2 November

2 A Quick Review of Basic Concepts A Starting Point: World Development Report 2006: Equity and Development 1. Equity has intrinsic value BUT ALSO 2. Equity promotes long-term development 3. Equity means equal opportunities to pursue a life of one s own choosing 4. But the distribution of wealth and power causes an unequal distribution of opportunities 5. And such inequality has economic costs 2

3 Are Equity and Prosperity Complementary? Start with GDP per capita as a measure of Economic Development Assumptions: : 1) Maximize total welfare 2) total welfare is equal to total income Are we maximizing total income or equity? Maximizing Equity could imply maximizing the welfare of those with minimum income (the poor) 1. But is maximizing equity the best way to maximize total welfare (i.e., total income)? 2. Maybe not: equity and growth are different objectives 3

4 Are Equity and Prosperity Complementary? Equity might well enhance long-term growth or or it might not. Do we know yet? Should we justify equity on the basis of promoting growth? Probably a Bad Idea. How do we simultaneously maximize two different objectives equity equity & growth? (a combination of macroeconomic, structural and equity-enhancing enhancing policies) Could maximizing equity entail a sacrifice of growth? Hopefully not, but possibly. 4

5 The Debate on Pro-Poor Poor Growth What are the inter-relationships relationships among Poverty, Growth and Inequality? The Objective: Poverty Reduction The Means: Faster Growth and Greater Equity Pro-Poor Poor Growth (PPG) includes both aspects Are both absolute and relative improvements necessary? Growth in mean income per person hides various changes across the distribution The mean is biased towards higher-income income groups 5

6 The Debate on Pro-Poor Poor Growth Nanak Kakwani of the International Poverty Centre: Pro-Poor Poor Growth: Concepts and Measurement (2004) povertycentre.org Martin Ravallion of the World Bank: Pro-Poor Poor Growth: A Primer (2004) Two definitions of PPG: 1. PPG #1: : The incomes of the poor grow faster than those of the non-poor (i.e., a relative improvement) (identified with Kakwani s position) 2. PPG #2: : growth is poverty-reducing reducing (Ravallion s( position) In practice, the definitions of PPG by Kakwani and Ravallion are similar: We should maximize poverty reduction: often this involves a combination of both faster growth (absolute improvements) and greater equity (relative improvements) 6

7 The Debate on Pro-Poor Poor Growth Greater equity can be valued as an end in itself 1. Insist on relative improvements among the poor as well as absolute improvements Or greater equity can be valued instrumentally: 1. It facilitates poverty reduction 2. It promotes economic growth (a relatively new position) The three major stylized determinants of poverty reduction: 1. Faster growth 2. A reduction in inequality (ideally at the bottom of the distribution) tion) 3. Lower initial inequality Lower initial inequality and/or a reduction of inequality have: 1. A direct impact on poverty (growth more directly affects the poor) 2. An indirect impact by stimulating faster growth 7

8 The Debate on Pro-Poor Poor Growth The Ravallion and Chen (2003) definition of PPG: The Rate of PPG = the actual rate of growth X (a constant term X (1 an inequality index) a ) The Kakwani, Khandker,, Son 2004 definition of PPG (IPC Working Paper #1): The Poverty Equivalent Growth Rate = the actual growth rate X (the total poverty elasticity/poverty elasticity of growth Elasticity of poverty with respect to income: : percentage change in the poverty headcount over the percentage change in income per capita (growth) Elasticity of poverty with respect to inequality: : percentage change in the poverty headcount over the percentage change in the Gini Coefficient (inequality) Total poverty elasticity: the combined effect 8

9 The Debate on Pro-Poor Poor Growth Both definitions incorporate growth and inequality factors: Maximize the total poverty elasticity (with respect to both growth and inequality) The Complication The Complication: What is the interaction term between greater equity and faster growth? Is it positive (complementary)? Or negative (a trade-off)? Micro-economic research suggests a positive link but cross-country country regressions are inconclusive. Examine the case of growth and distribution in Thailand (Kakwani, Khandker,, Son 2004) 9

10 10

11 Example: : The Poverty Equivalent Growth Rate in Thailand In the early 1990s, growth was high (8%) but inequality was rising: the Poverty Equivalent growth rate was lower than the actual growth rate In the mid 1990s, economic growth slowed (4%) while inequality dropped: The Poverty Equivalent growth rate was higher than the actual rate But was there a trade-off at work, for example in ? 1996? Which period was better??? 11

12 The Debate on Pro-Poor Poor Growth Conclusion: Maximize the total poverty elasticity The target could be MDG #1: halving extreme income poverty by 2015 Beware of Poverty Elasticities: : they differ (based on initial conditions income income and inequality) and change over time (based on varying growth and inequality) Changing structural factors and cyclical dynamics could cause elasticities to shift (they are not constant over time) 12

13 Mounting 1990s Evidence of Rising Inequality Full data for the 1990s began to reveal a pattern of rising inequality Lopez (2006) finds a significant positive correlation between growth and inequality A 1% rate of growth is associated with a % 0.5% increase in the Gini coefficient (for growth spells exclusively in the 1990s) Growth has become less pro-poor poor (if not anti-poor) in the 1990s In a typical LAC country, for every 1% in growth, the poverty headcount fell 1% less in the 1990s than earlier 13

14 The Need for Pro-Poor Poor Growth Over the medium term, distributional changes can cause sizeable changes in poverty Especially in middle-income, income, high-inequality inequality countries (e.g., Latin America) Growth is more important for low-income, low- inequality countries Country specificity of policies matters a great deal What is the optimal mix of growth policies and inequality-reducing policies for each country? 14

15 Combining Growth and Inequality Reduction Middle Income Countries Low Income Countries Low Inequality High Inequality Growth and Containing Inequality Emphasize Inequality Emphasize Growth Both Growth and Inequality Reduction 15

16 The Interaction between Growth and Distribution Development causes structural changes in both growth and distribution (Lewis/Kuznets legacy) Development implies dramatic changes in: 1. The distribution of resources and productivities across economic sectors 2. The distribution of factor endowments and factor returns across economic agents Such structural transformations underlie both growth and distribution 1. Growth and distribution are the results of such structural changes, instead of being independent causes 2. Avoid generalizations about the relationship between growth and distribution (as though such abstractions are motive forces) 16

17 The Interaction between Growth and Distribution There is room for policy interventions in determining the distributional impact of growth But such public policies usually need to modify the structural features of the economy to have any definitive impact Influence technologies, relative productivities, the distribution of assets and resources (McKinley) 17

18 The Reverse Impact of Inequality and Poverty on Growth Bourguignon (2004), De Ferranti et al. (2004) ( Inequality in Latin America: Breaking with History ) From Vicious to Virtuous Circles: Growth and Poverty Reduction in Latin America (2006) High Inequality is due to: 1) unequal market returns based on an unequal distribution of assets (including human capital) and 2) regressive public expenditures Wealth inequality has become more important 18

19 The Reverse Impact of Inequality and Poverty on Growth The poor are constrained in many ways from building up assets The WB identifies Imperfect Markets as often the principal problem (Stiglitz( Stiglitz): Lack of access to credit markets, so productive investments (such as in education) are not made Lack of access to land (faulty rental markets, lack of titling, land concentration) Lack of access to insurance markets (to protect against income losses) 19

20 The Reverse Impact of Inequality and Poverty on Growth Pro-Growth Poverty Reduction has become as important as Pro-Poor Poor Growth This creates a virtuous circle of growth-poverty reduction-growth Otherwise there could be a vicious circle ( poverty trap ): high poverty-low growth-persistently high poverty (Sachs analysis for SSA) Poverty Traps are based on insufficient asset holdings, reinforced by lack of access to credit and insurance: Amassing human capital enables escape from the Trap (e.g., completing secondary school) Is this enough? 20

21 The Reverse Impact of Inequality and Poverty on Growth Estimating equations become more complicated: PR = y + g + Y -1 + G -1 + yg + (P -1 Y -1 ) PR = Poverty Reduction Y = income, y = growth G = Gini,, g = change in Gini yg = interaction term P -1 Y -1 = Poverty-income interaction (lagged) 21

22 The Policy Implications of the Poverty-Growth Growth-Inequality Triangle The WB view: : there is a limit to promoting asset accumulation (e.g., land, capital) Wealth inequality is pronounced even in developed social-democratic countries (e.g., Sweden) The alternative: emphasize social services and transfer systems (e.g., Conditional Cash Transfers): The European model Redistribution through taxes and transfers Complement with physical infrastructure (roads, energy) Raise more taxes (from income & property ) for expenditures 22

23 Reaction and Re-Evaluation: Inclusive Growth What Is Inclusive Growth?: More emphasis on growth per se? Less emphasis on greater equity? (Growth( with Equity of the 1970s) Equity means not leaving the poor behind : the rate of change of the income of the poor is equivalent, at least, to the rate of change of mean income per person Some analysts claim that inclusive growth is a more progressive term (??) Example: Faster Growth and more Social Inclusion? 23

24 Policies for Growth, Employment and Poverty Reduction 1. The Need for Three Sets of Policies for Growth, Employment and Poverty Reduction A. Macroeconomic Policies to provide the conditions for investment and growth (with macro stability as a constraint rather than the objective) B. Structural Policies to influence the pattern of growth (the elasticity of poverty with respect to income) C. Equity-Enhancing Enhancing Policies to improve the access of poor workers to expanding economic opportunities 24

25 Investment-Focused Macroeconomic Policies Example: IPC Policy Research Brief #4, The Macroeconomic Implications of MDG-Based Strategies in Sub-Saharan Saharan Africa 1. Fiscal Policies: : A) More Expansionary B) More focused on public investment (expanding opportunities) and C) More reliant on the mobilization of domestic revenue A stronger focus on the supply side (e.g., expanding productive capacity, mobilizing domestic resources, including revenue and savings) 2. Exchange-Rate Policies: A) A managed instead of a laissez : A) A managed instead of a laissez-faire regime B) Focus on containing external shocks (terms-of of-trade or capital outflow shocks) and C) Maintaining a competitive exchange rate (slightly( undervalued, if possible) Exchange-rate management takes precedence over monetary policies (such as setting low-inflation targets) in open low-income countries 25

26 Investment-Focused Macroeconomic Policies Monetary Policies: A) supportive of fiscal expansion and export promotion B) provide adequate liquidity to a growing economy C) foster low but positive real rates of interest for private (and public) investment Strict inflation targeting (especially a low inflation target, e.g., under 5%) is inconsistent with such an approach Moderate inflation (at least up to 15% per annum) is not detrimental to growth, nor to export promotion (if the exchange rate can be managed) (Managing the capital account is a corollary of this approach for capital-outflow shocks) Macroeconomics Policies are broad, blunt instruments 26

27 Complementary Structural Policies Policies that structure the access to economic opportunities and employment 1. Fiscal Policies: : Their impact can be differentiated by economic sector or employment category (e.g., the location of public investment in infrastructure) 2. Financial Policies: : access to financial services can be differentiated (e.g., increasing access in rural areas) 3. Industrial Policies: : resources can be channeled differentially to various economic sectors or subsectors (e.g., to tradables) 4. The Trade Regime: : Tariffs can be adjusted by sector or subsector (e.g., protecting agriculture) 5. Public-Sector Provision of Services: : Expanding access to services (e.g., water or electricity to rural areas or poor peri-urban areas) 27

28 Structural Policies and Limitations Structural policies can be calibrated to help foster productive employment (e.g., by supporting employment (e.g., by supporting employment- intensive sectors or increasing employment intensity within sectors) Crtiically,, such policies involve a Differential Allocation of Economic Resources However, liberalisation and privatisation remove this discretionary power of the state, leaving resource allocation to market mechanisms The limits of structural policies: Economic opportunities can be expanded without guarantees that poor workers will take advantage of them 28

29 Equity-Enhancing Enhancing Policies There is thus a need for Equity- Enhancing Policies: They often involve enhancing access of the working population to education, skill development, technology and, importantly, land and other productive assets and resources Households are often poor precisely because their working members lack such access Often it is a case of reshaping or refocusing the impact of structural policies, such as providing micro-finance or micro- insurance Sometimes it can involve focusing resources on certain social groupings, e.g., unemployed or underemployed workers Examples: : a) an employment guarantee programme b) a cash transfer programme 29

30 Inclusive versus Pro-Poor Poor Growth Spreading the benefits of growth through structural policies can make growth more inclusive, i.e., not leaving the poor behind Equity-Enhancing Enhancing policies can help make growth more pro-poor, poor, i.e., benefiting poor workers and households more than proportionately. However, this requires focusing resources on such beneficiaries It also requires a more bottom-up approach to integrate poor workers with available employment opportunities 30

Assessing Development Strategies to Achieve the MDGs in the Arab Region

Assessing Development Strategies to Achieve the MDGs in the Arab Region UNDP UN-DESA THE WORLD BANK LEAGUE OF ARAB STATES Assessing Development Strategies to Achieve the MDGs in the Arab Region Project Objectives and Methodology Inception & Training Workshop Cairo, 2-52 April,,

More information

WHAT WILL IT TAKE TO ERADICATE EXTREME POVERTY AND PROMOTE SHARED PROSPERITY?

WHAT WILL IT TAKE TO ERADICATE EXTREME POVERTY AND PROMOTE SHARED PROSPERITY? WHAT WILL IT TAKE TO ERADICATE EXTREME POVERTY AND PROMOTE SHARED PROSPERITY? Pathways to poverty reduction and inclusive growth Ana Revenga Senior Director Poverty and Equity Global Practice February

More information

What is Inclusive growth?

What is Inclusive growth? What is Inclusive growth? Tony Addison Miguel Niño Zarazúa Nordic Baltic MDB meeting Helsinki, Finland January 25, 2012 Why is economic growth important? Economic Growth to deliver sustained poverty reduction

More information

Growth Diagnostics: Theory and Practice

Growth Diagnostics: Theory and Practice Growth Diagnostics: Theory and Practice Leonardo Garrido PREM-ED October 1 st, 2011 Outline Growth Diagnostics Foundations Principles of differential diagnosis Inclusive Growth vs Growth Diagnostics Going

More information

Ghana: Promoting Growth, Reducing Poverty

Ghana: Promoting Growth, Reducing Poverty Findings reports on ongoing operational, economic and sector work carried out by the World Bank and its member governments in the Africa Region. It is published periodically by the Africa Technical Department

More information

Inequality in China: Recent Trends. Terry Sicular (University of Western Ontario)

Inequality in China: Recent Trends. Terry Sicular (University of Western Ontario) Inequality in China: Recent Trends Terry Sicular (University of Western Ontario) In the past decade Policy goal: harmonious, sustainable development, with benefits of growth shared widely Reflected in

More information

The Eternal Triangle of Growth, Inequality and Poverty Reduction

The Eternal Triangle of Growth, Inequality and Poverty Reduction The Eternal Triangle of, and Reduction (for International Seminar on Building Interdisciplinary Development Studies) Prof. Shigeru T. OTSUBO GSID, Nagoya University October 2007 1 Figure 0: -- Triangle

More information

Rodrigo Orair International Policy Centre for Inclusive Growth (IPC-IG) Institute for Applied Economic Research (IPEA), Brazil

Rodrigo Orair International Policy Centre for Inclusive Growth (IPC-IG) Institute for Applied Economic Research (IPEA), Brazil SASPEN and FES International Conference Sustainability of Social Protection in the SADC: Economic Returns, Political Will and Fiscal Space 21 Oct 2015 How Brazil has cut its Inequality through Fiscal Policy:

More information

Executive Summary. Trends in Inequality: Globally and Nationally. How inequality constraints growth

Executive Summary. Trends in Inequality: Globally and Nationally. How inequality constraints growth Trends in Inequality: Globally and Nationally Global inequalities remain unacceptably high at Gini coeffi cient of 0.70 as a measure of dispersion of income across the whole population. Though there is

More information

Benchmarking Global Poverty Reduction

Benchmarking Global Poverty Reduction Benchmarking Global Poverty Reduction Martin Ravallion This presentation draws on: 1. Martin Ravallion, 2012, Benchmarking Global Poverty Reduction, Policy Research Working Paper 6205, World Bank, and

More information

Poverty and Inequality Dynamics in Manaus: Legacy of a Free Trade Zone?

Poverty and Inequality Dynamics in Manaus: Legacy of a Free Trade Zone? Poverty and Inequality Dynamics in : Legacy of a Free Trade Zone? Marta Menéndez (LEDa DIAL, Université Paris-Dauphine) Marta Reis Castilho (Universidade Federal do Rio de Janeiro, Brazil) Aude Sztulman

More information

The trade balance and fiscal policy in the OECD

The trade balance and fiscal policy in the OECD European Economic Review 42 (1998) 887 895 The trade balance and fiscal policy in the OECD Philip R. Lane *, Roberto Perotti Economics Department, Trinity College Dublin, Dublin 2, Ireland Columbia University,

More information

International Monetary and Financial Committee

International Monetary and Financial Committee International Monetary and Financial Committee Thirty-Third Meeting April 16, 2016 IMFC Statement by Guy Ryder Director-General International Labour Organization Urgent Action Needed to Break Out of Slow

More information

2. Data and Methodology. 2.1 Data

2. Data and Methodology. 2.1 Data Why Does the Poor Become Poorer? An Empirical Study on Income Growth, Inequality and Poverty Reduction in Rural China Lerong Yu, Xiaoyun Li China Agricultural University, Beijing, China, 100193 Based on

More information

CIE Economics A-level

CIE Economics A-level CIE Economics A-level Topic 3: Government Microeconomic Intervention b) Equity and policies towards income and wealth redistribution Notes In the absence of government intervention, the market mechanism

More information

Will Growth eradicate poverty?

Will Growth eradicate poverty? Will Growth eradicate poverty? David Donaldson and Esther Duflo 14.73, Challenges of World Poverty MIT A world Free of Poverty Until the 1980s the goal of economic development was economic growth (and

More information

Development. AEB 4906 Development Economics

Development. AEB 4906 Development Economics Poverty, Inequality, and Development AEB 4906 Development Economics http://danielsolis.webs.com/aeb4906.htm Poverty, Inequality, and Development Outline: Measurement of Poverty and Inequality Economic

More information

GROWTH, INEQUALITY AND POVERTY REDUCTION IN RURAL CHINA

GROWTH, INEQUALITY AND POVERTY REDUCTION IN RURAL CHINA Available Online at ESci Journals International Journal of Agricultural Extension ISSN: 2311-6110 (Online), 2311-8547 (Print) http://www.escijournals.net/ijer GROWTH, INEQUALITY AND POVERTY REDUCTION IN

More information

An overview of the South African macroeconomic. environment

An overview of the South African macroeconomic. environment An overview of the South African macroeconomic environment 1 Study instruction Study Study guide: study unit 1 Study unit outcomes Once you have worked through this study unit, you should be able to give

More information

Growth and Poverty Reduction in Tanzania

Growth and Poverty Reduction in Tanzania Finn Tarp The Third Voice of Social Sciences Conference (VSS) University of Dar es Salaam, Tanzania, 24-25 November 2016 Growth and Poverty Reduction in Tanzania Introduction General context Recent Afrobarometer

More information

Constraints and Opportunities for Growth in the LDCs: Research to Support Action

Constraints and Opportunities for Growth in the LDCs: Research to Support Action Constraints and Opportunities for Growth in the LDCs: Research to Support Action John S. Wilson Development Economics Research Group Trade and International Integration World Bank April 19, 2012 1 Outline

More information

Growth and Poverty Revisited from a Multidimensional Perspective

Growth and Poverty Revisited from a Multidimensional Perspective Growth and Poverty Revisited from a Multidimensional Perspective María Emma Santos (UNS-CONICET, OPHI) Carlos Dabús (UNS-CONICET) and Fernando Delbianco (UNS-CONICET) Depto. Economía, Universidad Nacional

More information

SESSION 8 Fiscal Incidence in South Africa

SESSION 8 Fiscal Incidence in South Africa DG DEVCO Staff Seminar on Social Protection - from strategies to concrete approaches - 26-30 September 2016, Brussels SESSION 8 Fiscal Incidence in South Africa Jon JELLEMA Associate Director for Africa,

More information

Wits School of Governance

Wits School of Governance Wits School of Governance Prof Alex van den Heever Chair in the Field of Social Security Alex.vandenheever@wits.ac.za Maputo Social Protection Colloquium Launch Lecture 1 September 2014 ECONOMICS OF SOCIAL

More information

Growth with structural transformation: A post development agenda

Growth with structural transformation: A post development agenda The Least Developed Countries Report 2014 Growth with structural transformation: A post- 2015 development agenda David Woodward DEVCO, Brussels, 28 November 2014 The Post-2015 Agenda and the LDCs The

More information

Simulation Model of the Irish Local Economy: Short and Medium Term Projections of Household Income

Simulation Model of the Irish Local Economy: Short and Medium Term Projections of Household Income Simulation Model of the Irish Local Economy: Short and Medium Term Projections of Household Income Cathal O Donoghue, John Lennon, Jason Loughrey and David Meredith Teagasc Rural Economy and Development

More information

Financing strategies to achieve the MDGs in Latin America and the Caribbean

Financing strategies to achieve the MDGs in Latin America and the Caribbean UNDP UN-DESA UN-ESCAP Financing strategies to achieve the MDGs in Latin America and the Caribbean Rob Vos (UN-DESA/DPAD) Presentation prepared for the inception and training workshop of the project Assessing

More information

Trade and Development and NAMA

Trade and Development and NAMA United Nations Conference of Trade and Development Trade and Development and NAMA International Trade and the Doha Round New York, December 2007 Santiago Fernández de Córdoba Economist UNCTAD Content Part

More information

Shifting Wealth and What It Means for Development Policy

Shifting Wealth and What It Means for Development Policy Multi-year Expert Meeting on International Cooperation: South South Cooperation and Regional Integration 23 25 February 2011 Shifting Wealth and What It Means for Development Policy by Mr. Andrew Mold

More information

Income inequality an insufficient consumption in China. Li Gan Southwestern University of Finance and Economics Texas A&M University

Income inequality an insufficient consumption in China. Li Gan Southwestern University of Finance and Economics Texas A&M University Income inequality an insufficient consumption in China Li Gan Southwestern University of Finance and Economics Texas A&M University 目 1 An Introduction of CHFS Contents 2 3 Inequality and Consumption A

More information

Income distribution and the allocation of public agricultural investment in developing countries

Income distribution and the allocation of public agricultural investment in developing countries BACKGROUND PAPER FOR THE WORLD DEVELOPMENT REPORT 2008 Income distribution and the allocation of public agricultural investment in developing countries Larry Karp The findings, interpretations, and conclusions

More information

Tools for analysing growth and poverty: An introduction

Tools for analysing growth and poverty: An introduction This document was prepared as part of the Operationalising Pro- Poor Growth work programme, a joint initiative of AFD, BMZ (GTZ, KfW Entwicklungsbank), DFID and The World Bank. Tools for analysing growth

More information

COMMENTS ON SESSION 1 AUTOMATIC STABILISERS AND DISCRETIONARY FISCAL POLICY. Adi Brender *

COMMENTS ON SESSION 1 AUTOMATIC STABILISERS AND DISCRETIONARY FISCAL POLICY. Adi Brender * COMMENTS ON SESSION 1 AUTOMATIC STABILISERS AND DISCRETIONARY FISCAL POLICY Adi Brender * 1 Key analytical issues for policy choice and design A basic question facing policy makers at the outset of a crisis

More information

Assessing Labor Markets in the Developing World

Assessing Labor Markets in the Developing World Assessing Labor Markets in the Developing World David Newhouse, Labor Economist Social Protection and Labor, World Bank Labor Market Core Course May 6, 2013 Labor Market Assessment I. Indicators (10) II.

More information

The Knowledge Problem

The Knowledge Problem The Knowledge Problem March 28, 2014 copies of this presentation can be found at www.antonydavies.org www.antonydavies.org 1 The Players and the Goals In this experiment, each of you is a member of a community.

More information

Household Heterogeneity in Macroeconomics

Household Heterogeneity in Macroeconomics Household Heterogeneity in Macroeconomics Department of Economics HKUST August 7, 2018 Household Heterogeneity in Macroeconomics 1 / 48 Reference Krueger, Dirk, Kurt Mitman, and Fabrizio Perri. Macroeconomics

More information

MDGs Example from Latin America

MDGs Example from Latin America Financing strategies to achieve the MDGs Example from Latin America Workshop Tunis 21-24 24 January,, 2008 Rob Vos Director Development Policy and Analysis Division Department of Economic and Social Affairs

More information

Creating Labor Market Diagnostics in LICs and MICs

Creating Labor Market Diagnostics in LICs and MICs Creating abor Market Diagnostics in ICs and MICs March 2009 otation ational level variables: P- Poverty measure population U number of unemployed in the economy number of economically active (employed

More information

National Minimum Wage in South Africa: Quantification of Impact

National Minimum Wage in South Africa: Quantification of Impact National Minimum Wage in South Africa: Quantification of Impact Asghar Adelzadeh, Ph.D. Director and Chief Economic Modeller Applied Development Research Solutions (ADRS) (asghar@adrs-global.com) Cynthia

More information

POLICY INSIGHT. Inequality The hidden headwind for economic growth. How inequality slows growth

POLICY INSIGHT. Inequality The hidden headwind for economic growth. How inequality slows growth POLICY INSIGHT Inequality The hidden headwind for economic growth Economists often talk of headwinds the swirling oppositions and uncertainties that may hamper economic growth. We hear of the slowdown

More information

ECON MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University. J.Jung Chapter 8 - Economic Growth Towson University 1 / 64

ECON MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University. J.Jung Chapter 8 - Economic Growth Towson University 1 / 64 ECON 202 - MACROECONOMIC PRINCIPLES Instructor: Dr. Juergen Jung Towson University J.Jung Chapter 8 - Economic Growth Towson University 1 / 64 Disclaimer These lecture notes are customized for the Macroeconomics

More information

Income and Wealth Inequality A Lack of Equity

Income and Wealth Inequality A Lack of Equity Income and Wealth Inequality A Lack of Equity Increasing inequality in the distribution of income and wealth is an example of market failure. Resources are not distributed equitably. Income Income is a

More information

PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE July 21, 2017 Report No.: MG Public Finance Sustainability and Investment II DPO

PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE July 21, 2017 Report No.: MG Public Finance Sustainability and Investment II DPO Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized PROGRAM INFORMATION DOCUMENT (PID) CONCEPT STAGE July 21, 2017 Report No.: 120763 Operation

More information

Macroprudential Regulation and Economic Growth in Low-Income Countries: Lessons from ESRC-DFID Project ES/L012022/1

Macroprudential Regulation and Economic Growth in Low-Income Countries: Lessons from ESRC-DFID Project ES/L012022/1 February 26, 2017 Macroprudential Regulation and Economic Growth in Low-Income Countries: Lessons from ESRC-DFID Project ES/L012022/1 Integrated Policy Brief No 1 1 This policy brief draws together the

More information

EXTREME POVERTY ERADICATION IN THE LDCs AND THE POST-2015 DEVELOPMENT AGENDA

EXTREME POVERTY ERADICATION IN THE LDCs AND THE POST-2015 DEVELOPMENT AGENDA EXTREME POVERTY ERADICATION IN THE LDCs AND THE POST-2015 DEVELOPMENT AGENDA For presentation at the Special Event Launch of the OHRLLS Flagship Report State of the Least Developed Countries 2014 Thursday,

More information

Chapter 5 Poverty, Inequality, and Development

Chapter 5 Poverty, Inequality, and Development Chapter 5 Poverty, Inequality, and Development Distribution and Development: Seven Critical Questions What is the extent of relative inequality, and how is this related to the extent of poverty? Who are

More information

Fiscal policy for inclusive growth in Asia

Fiscal policy for inclusive growth in Asia Fiscal policy for inclusive growth in Asia Dr. Donghyun Park, Principal Economist Economics and Research Department, Asian Development Bank PRI-IMF-ADBI Tokyo Fiscal Forum on Fiscal Policy toward Long-Term

More information

Issue Paper: Linking revenue to expenditure

Issue Paper: Linking revenue to expenditure Issue Paper: Linking revenue to expenditure Introduction Mobilising domestic resources through taxation is crucial in helping developing countries to finance their development, relieve poverty, reduce

More information

Business and Economic Analysis

Business and Economic Analysis Business and Economic Analysis 7. Macroeconomic Forces 7.1. The Circular Flow 7.2. Macroeconomics 7.3. Macroeconomic Failures 7.3.1.Unemployment 7.3.2. Inflation 7.3.3. The Business Cycle 7.3.4. Inequality

More information

vio SZY em Growing Unequal? INCOME DISTRIBUTION AND POVERTY IN OECD COUNTRIES

vio SZY em Growing Unequal? INCOME DISTRIBUTION AND POVERTY IN OECD COUNTRIES vio SZY em Growing Unequal? INCOME DISTRIBUTION AND POVERTY IN OECD COUNTRIES Table of Contents Introduction 15 Parti MAIN FEATURES OF INEQUALITY Chapter 1. The Distribution of Household Income in OECD

More information

Automated labor market diagnostics for low and middle income countries

Automated labor market diagnostics for low and middle income countries Poverty Reduction Group Poverty Reduction and Economic Management (PREM) World Bank ADePT: Labor Version 1.0 Automated labor market diagnostics for low and middle income countries User s Guide: Definitions

More information

KEY CHALLENGES FOR ERRADICATING POVERTY AND OVERCOMING INEQUALITIES: Alicia Bárcena

KEY CHALLENGES FOR ERRADICATING POVERTY AND OVERCOMING INEQUALITIES: Alicia Bárcena KEY CHALLENGES FOR ERRADICATING POVERTY AND OVERCOMING INEQUALITIES: A LATIN AMERICAN AND CARIBBEAN PERSPECTIVE INTERAGENCY REPORT: ECLAC, ILO, FAO, UNESCO, PAHO/WHO, UNDP, UNEP, UNICEF, UNFPA, WFP, UN-HABITAT,

More information

Fiscal Policy and Inequality: What Do We Know? Benedict Clements International Monetary Fund

Fiscal Policy and Inequality: What Do We Know? Benedict Clements International Monetary Fund Fiscal Policy and Inequality: What Do We Know? Benedict Clements International Monetary Fund Outline of the presentation q Trends in Inequality and the Redistributive Role of Fiscal Policy q Lessons from

More information

Rethinking Macroeconomic Policies for Inclusive and Sustainable Development

Rethinking Macroeconomic Policies for Inclusive and Sustainable Development ESCAP High-level Policy Dialogue Ministry of Finance of the Republic of Indonesia International Economic Summit 2013 Eleventh Bank Indonesia Annual International Seminar Macroeconomic Policies for Sustainable

More information

How would an expansion of IDA reduce poverty and further other development goals?

How would an expansion of IDA reduce poverty and further other development goals? Measuring IDA s Effectiveness Key Results How would an expansion of IDA reduce poverty and further other development goals? We first tackle the big picture impact on growth and poverty reduction and then

More information

Pro-Poor Growth in Turkey

Pro-Poor Growth in Turkey Pro-Poor Growth in Turkey RAZİYE SELİM Istanbul Technical University and FAHRİYE YILDIZ * Maltepe University ABSTRACT The objective of the study is to examine whether growth performance in Turkey is pro-poor

More information

Research Report No. 69 UPDATING POVERTY AND INEQUALITY ESTIMATES: 2005 PANORA SOCIAL POLICY AND DEVELOPMENT CENTRE

Research Report No. 69 UPDATING POVERTY AND INEQUALITY ESTIMATES: 2005 PANORA SOCIAL POLICY AND DEVELOPMENT CENTRE Research Report No. 69 UPDATING POVERTY AND INEQUALITY ESTIMATES: 2005 PANORA SOCIAL POLICY AND DEVELOPMENT CENTRE Research Report No. 69 UPDATING POVERTY AND INEQUALITY ESTIMATES: 2005 PANORAMA Haroon

More information

Inequality and Fiscal Policy

Inequality and Fiscal Policy Inequality and Fiscal Policy Sanjeev Gupta International Monetary Fund G24 meeting - March 3, 2016 Outline of the presentation q Trends in Inequality and the Redistributive Role of Fiscal Policy q Lessons

More information

Poverty, Inequality and the Welfare State

Poverty, Inequality and the Welfare State Poverty, Inequality and the Welfare State Lectures 3 and 4 Le Grand, Propper and Smith (2008): Chp 9 Stiglitz (2000): Chp 14 Connolly and Munro (1999): Chp 14, 15, 16, 17 Outline Income and wealth defined

More information

ECONOMICS EXAMINATION OBJECTIVES

ECONOMICS EXAMINATION OBJECTIVES ECONOMICS EXAMINATION OBJECTIVES The following objectives of the examination are to test whether the candidates have acquired a basic understanding of economics with special emphasis on Hong Kong conditions

More information

Coping with Trade Reforms: A Developing Country Perspective of the On-going WTO Doha Round of Negotiations

Coping with Trade Reforms: A Developing Country Perspective of the On-going WTO Doha Round of Negotiations United Nations Conference of Trade and Development Coping with Trade Reforms: A Developing Country Perspective of the On-going WTO Doha Round of Negotiations United Nations New York, 8 July 2008 Santiago

More information

Inter temporal macroeconomic trade offs and payoffs of human development strategies: An economy wide modelling analysis

Inter temporal macroeconomic trade offs and payoffs of human development strategies: An economy wide modelling analysis Inter temporal macroeconomic trade offs and payoffs of human development strategies: An economy wide modelling analysis Marco V. Sánchez (UN DESA/DPAD) Development Strategy and Policy Analysis Development

More information

Chapter 6 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS

Chapter 6 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS Chapter 6 SUMMARY, CONCLUSIONS AND RECOMMENDATIONS 6.1. Summary Poverty, inequality and unemployment are realities within the South African economy, and policy intervention is called for. One policy intervention

More information

DOMESTIC RESOURCE MOBILIZATION

DOMESTIC RESOURCE MOBILIZATION DOMESTIC RESOURCE MOBILIZATION AND PUBLIC FINANCING FOR HEALTH Ajay Tandon Lead Economist Global Practice on Health, Nutrition, and Population World Bank JLN DRM Launch June 2017 12 Fiscal Space : Original

More information

Macroeconomic Policies for Resource-Rich Countries

Macroeconomic Policies for Resource-Rich Countries G-24 Policy Brief No. 71 04/12/2012 Degol Hailu & John Weeks Macroeconomic Policies for Resource-Rich Countries At a superficial level, the design of macroeconomic policy for resource-rich countries would

More information

"Concepts and Operationalisation of Pro-Poor Growth: A Usable PPG Index" Inequality

Concepts and Operationalisation of Pro-Poor Growth: A Usable PPG Index Inequality "Concepts and Operationalisation of Pro-Poor Growth: A Usable PPG Index" Inequality Mario Negre UNU-WIDER, Helsinki 20 Sep 2013 Introduction 1/2 Inequality increasingly recognised as key factor for Poverty

More information

EFFECTS OF THE APPLICATION OF TARGETING THE EXCHANGE RATE POLICY IN MACEDONIA

EFFECTS OF THE APPLICATION OF TARGETING THE EXCHANGE RATE POLICY IN MACEDONIA EFFECTS OF THE APPLICATION OF TARGETING THE EXCHANGE RATE POLICY IN MACEDONIA PROF. KRUME NIKOLOSKI PHD GOCE DELCHEV UNIVERSITY - STIP, REPUBLIC OF MACEDONIA E-mail: krume.nikoloski@ugd.edu.mk SANJA PANOVA

More information

Introduction. industrialization (ISI) to export-oriented growth was due to numerous supply side

Introduction. industrialization (ISI) to export-oriented growth was due to numerous supply side Lindberg 1 Constraints of ISI in the Kenyan Economy Introduction I argue that Kenya s inability to naturally transition from import substitute industrialization (ISI) to export-oriented growth was due

More information

IB Economics Development Economics 4.1: Economic Growth and Development

IB Economics Development Economics 4.1: Economic Growth and Development IB Economics: www.ibdeconomics.com 4.1 ECONOMIC GROWTH AND DEVELOPMENT: STUDENT LEARNING ACTIVITY Answer the questions that follow. 1. DEFINITIONS Define the following terms: Absolute poverty Closed economy

More information

Santi Chaisrisawatsuk 16 November 2017 Thimpu, Bhutan

Santi Chaisrisawatsuk 16 November 2017 Thimpu, Bhutan Regional Capacity Building Workshop Formulating National Policies and Strategies in Preparation for Graduation from the LDC Category: Macroeconomic Modelling for SDGs in Asia and the Pacific Santi Chaisrisawatsuk

More information

Poverty and Income Distribution

Poverty and Income Distribution Poverty and Income Distribution SECOND EDITION EDWARD N. WOLFF WILEY-BLACKWELL A John Wiley & Sons, Ltd., Publication Contents Preface * xiv Chapter 1 Introduction: Issues and Scope of Book l 1.1 Recent

More information

SENSITIVITY OF THE INDEX OF ECONOMIC WELL-BEING TO DIFFERENT MEASURES OF POVERTY: LICO VS LIM

SENSITIVITY OF THE INDEX OF ECONOMIC WELL-BEING TO DIFFERENT MEASURES OF POVERTY: LICO VS LIM August 2015 151 Slater Street, Suite 710 Ottawa, Ontario K1P 5H3 Tel: 613-233-8891 Fax: 613-233-8250 csls@csls.ca CENTRE FOR THE STUDY OF LIVING STANDARDS SENSITIVITY OF THE INDEX OF ECONOMIC WELL-BEING

More information

FINANCE, INEQUALITY AND THE POOR

FINANCE, INEQUALITY AND THE POOR POLICY OPTIONS AND CHALLENGES FOR DEVELOPING ASIA PERSPECTIVES FROM THE IMF AND ASIA APRIL 19-20, 2007 TOKYO FINANCE, INEQUALITY AND THE POOR THORSTEN BECK THE WORLD BANK ASLI DEMIRGUC-KUNT THE WORLD BANK

More information

Fiscal policy and inequality

Fiscal policy and inequality Fiscal policy and inequality John Hills, London School of Economics Bank of England, 18 th May 2017 Chief Economists Workshop: The distributional effects of central bank policies Structure of talk Talk

More information

Commodity price volatility and growth inclusiveness in LICs

Commodity price volatility and growth inclusiveness in LICs Commodity price volatility and growth inclusiveness in LICs François Bourguignon Paris School of Economics IMF high level seminar, Washington, September 2011 1 700 600 500 400 300 200 100 0 Real international

More information

Pensions, Economic Growth and Welfare in Advanced Economies

Pensions, Economic Growth and Welfare in Advanced Economies Pensions, Economic Growth and Welfare in Advanced Economies Enrique Devesa and Rafael Doménech Fiscal Policy and Ageing Oesterreichische Nationalbank. Vienna, 6th of October, 2017 01 Introduction Introduction

More information

World Economic Situation and Prospects asdf

World Economic Situation and Prospects asdf World Economic Situation and Prospects 2019 asdf United Nations New York, 2019 South Asia GDP Growth 8.0 8.0% 6.1 6.0% 6.6 4.8 4.0% total 5.6 5.4 per capita 4.4 4.1 5.9 4.7 projected 2.0% 2016 2017 2018

More information

ILO World of Work Report 2013: EU Snapshot

ILO World of Work Report 2013: EU Snapshot Greece Spain Ireland Poland Belgium Portugal Eurozone France Slovenia EU-27 Cyprus Denmark Netherlands Italy Bulgaria Slovakia Romania Lithuania Latvia Czech Republic Estonia Finland United Kingdom Sweden

More information

Social safety nets in good and bad times

Social safety nets in good and bad times Social safety nets in good and bad times François Bourguignon Paris School of Economics 1 Definition of safety nets Insurance mechanism: preventing people to fall into poverty and poverty traps cushioning

More information

Public Employment Programmes: Are They Working? Rudi Dicks 5 December 2016

Public Employment Programmes: Are They Working? Rudi Dicks 5 December 2016 Public Employment Programmes: Are They Working? Rudi Dicks 5 December 2016 What did we inherit in 1994 SA economy had been shaped by apartheid policies and by a dependence on mining exports The apartheid

More information

BOX 1.3. Recent Developments in Emerging and Developing Country Labor Markets

BOX 1.3. Recent Developments in Emerging and Developing Country Labor Markets BOX 1.3 Recent Developments in Emerging and Developing Country Labor Markets GLOBAL ECONOMIC PROSPECTS JUNE 215 chapter 1 3 BOX 1.3 Recent Developments in Emerging and Developing Country Labor Markets

More information

Employment & Poverty

Employment & Poverty Employment & Poverty Presentation to Jobs & Poverty Campaign Workshop Johannesburg June 18, 2007 Dr. Miriam Altman Executive Director Employment, Growth & Development Initiative maltman@hsrc.ac.za This

More information

KENYA'S VISION 2030: AN AUDIT FROM AN INCOME AND GENDER INEQUALITIES PERSPECTIVE. SID Society for International Development

KENYA'S VISION 2030: AN AUDIT FROM AN INCOME AND GENDER INEQUALITIES PERSPECTIVE. SID Society for International Development KENYA'S VISION 2030: AN AUDIT FROM AN INCOME AND GENDER INEQUALITIES PERSPECTIVE SID Society for International Development I Contents Section 1 List of Abbreviations and Acronyms x Executive Summary xiv

More information

The transmission mechanism of monetary policy in Peru

The transmission mechanism of monetary policy in Peru The transmission mechanism of monetary policy in Peru Javier de la Rocha Overview The far-reaching structural transformation that began in August 1990 has significantly changed the way in which monetary

More information

Mongolia The SCD-CPF Engagement meeting with development partners September 1 and 22, 2017

Mongolia The SCD-CPF Engagement meeting with development partners September 1 and 22, 2017 Mongolia The SCD-CPF Engagement meeting with development partners September 1 and, 17 This is a brief, informal summary of the issues raised during the meeting. If you were present and wish to make a correction

More information

PUBLIC SPENDING, GROWTH, AND POVERTY ALLEVIATION IN SUB-SAHARAN AFRICA: A DYNAMIC GENERAL EQUILIBRIUM ANALYSIS

PUBLIC SPENDING, GROWTH, AND POVERTY ALLEVIATION IN SUB-SAHARAN AFRICA: A DYNAMIC GENERAL EQUILIBRIUM ANALYSIS 3/21/05 PUBLIC SPENDING, GROWTH, AND POVERTY ALLEVIATION IN SUB-SAHARAN AFRICA: A DYNAMIC GENERAL EQUILIBRIUM ANALYSIS Hans Lofgren Sherman Robinson International Food Policy Research Institute May 21,

More information

What we know about monetary policy

What we know about monetary policy Apostolis Philippopoulos What we know about monetary policy The government may have a potentially stabilizing policy instrument in its hands. But is it effective? In other words, is the relevant policy

More information

IJPSS Volume 2, Issue 4 ISSN:

IJPSS Volume 2, Issue 4 ISSN: Poverty and inequality in Services Sector of Sudan Ali Musa Abaker* Ali Abd Elaziz Salih** ABSTRACT: This research paper aims to address income poverty and inequality in service sector of Sudan. Poverty

More information

2 A Conceptual Framework for Understanding Poverty and Social Impacts

2 A Conceptual Framework for Understanding Poverty and Social Impacts 2 A Conceptual Framework for Understanding Poverty and Social Impacts This chapter presents the main concepts underlying poverty and social impact analysis. It addresses seven key areas: What is being

More information

Globalization and the Feminization of Poverty within Tradable and Non-Tradable Economic Activities

Globalization and the Feminization of Poverty within Tradable and Non-Tradable Economic Activities Istanbul Technical University ESRC Research Papers Research Papers 2009/02 Globalization and the Feminization of Poverty within Tradable and Non-Tradable Economic Activities Raziye Selim and Öner Günçavdı

More information

Open Working Group on Sustainable Development Goals. Statistical Note on Poverty Eradication 1. (Updated draft, as of 12 February 2014)

Open Working Group on Sustainable Development Goals. Statistical Note on Poverty Eradication 1. (Updated draft, as of 12 February 2014) Open Working Group on Sustainable Development Goals Statistical Note on Poverty Eradication 1 (Updated draft, as of 12 February 2014) 1. Main policy issues, potential goals and targets While the MDG target

More information

Progress Evaluation of the Transformation of China's Economic Growth Pattern 1 (Preliminary Draft Please do not quote)

Progress Evaluation of the Transformation of China's Economic Growth Pattern 1 (Preliminary Draft Please do not quote) Progress Evaluation of the Transformation of China's Economic Growth Pattern 1 (Preliminary Draft Please do not quote) Si Joong Kim 2 China has been attempting to transform its strategy of economic

More information

Understanding Income Distribution and Poverty

Understanding Income Distribution and Poverty Understanding Distribution and Poverty : Understanding the Lingo market income: quantifies total before-tax income paid to factor markets from the market (i.e. wages, interest, rent, and profit) total

More information

Comment on Counting the World s Poor, by Angus Deaton

Comment on Counting the World s Poor, by Angus Deaton Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized Comment on Counting the World s Poor, by Angus Deaton Martin Ravallion There is almost

More information

The poverty and inequality nexus in Ghana: a decomposition analysis of household expenditure components

The poverty and inequality nexus in Ghana: a decomposition analysis of household expenditure components The poverty and inequality nexus in Ghana: a decomposition analysis of household expenditure components Jacob Novignon * Economics Department, University of Ibadan, Ibadan-Nigeria Email: nonjake@gmail.com

More information

Financial Sector Reform and Economic Growth in Zambia- An Overview

Financial Sector Reform and Economic Growth in Zambia- An Overview Financial Sector Reform and Economic Growth in Zambia- An Overview KAUSHAL KISHOR PATEL M.Phil. Scholar, Department of African studies, Faculty of Social Sciences, University of Delhi Delhi (India) Abstract:

More information

Income Inequality and Poverty (Chapter 20 in Mankiw & Taylor; reading Chapter 19 will also help)

Income Inequality and Poverty (Chapter 20 in Mankiw & Taylor; reading Chapter 19 will also help) Income Inequality and Poverty (Chapter 20 in Mankiw & Taylor; reading Chapter 19 will also help) Before turning to money and inflation, we backtrack - at least in terms of the textbook - to consider income

More information

FINANCE FOR ALL? POLICIES AND PITFALLS IN EXPANDING ACCESS A WORLD BANK POLICY RESEARCH REPORT

FINANCE FOR ALL? POLICIES AND PITFALLS IN EXPANDING ACCESS A WORLD BANK POLICY RESEARCH REPORT FINANCE FOR ALL? POLICIES AND PITFALLS IN EXPANDING ACCESS A WORLD BANK POLICY RESEARCH REPORT Summary A new World Bank policy research report (PRR) from the Finance and Private Sector Research team reviews

More information

Evaluation of Budget Support Operations in Morocco. Summary. July Development and Cooperation EuropeAid

Evaluation of Budget Support Operations in Morocco. Summary. July Development and Cooperation EuropeAid Evaluation of Budget Support Operations in Morocco Summary July 2014 Development and Cooperation EuropeAid A Consortium of ADE and COWI Lead Company: ADE s.a. Contact Person: Edwin Clerckx Edwin.Clerck@ade.eu

More information

Macro vulnerabilities, regulatory reforms and financial stability issues IIF Spring Meeting

Macro vulnerabilities, regulatory reforms and financial stability issues IIF Spring Meeting 25.05.2016 Macro vulnerabilities, regulatory reforms and financial stability issues IIF Spring Meeting Luis M. Linde Governor I would like to thank Tim Adams, President and Chief Executive Officer of

More information