Sustainable and inclusive growth

Transcription

1 GDP and Growth, poverty, inequalities, and Agence Française de Développement Paris School of Economics 2013 Sustainable and inclusive The role of public policies GDP and MACRO 1: introductory workshop to the main macro concepts countries eligibility to budget support identify the macro vulnerabilities assess the adequacy of implemented policies dialogue with the authorities stabilization policies MACRO 2: follow-up workshop dialogue with the authorities stabilization policies (going further) policies going further on the concepts discussed (redistribution, political economy)

2 , a multidimensional concept GDP and : Sen 1999 Broadening choices and reducing deprivations: hunger, illiteracy, health problems, insecurity, humiliation, access to basic infrastructures, political rights and freedom of speech : World Bank Qualitative changes and restructuring of a country s economy, in conjunction with social and technological progress. Largely linked to., a multidimensional concept GDP and Three main dimensions of standard of living households purchasing power distribution of wealth poverty and inequalities social health, education social protection political individual freedoms and human rights political freedoms and democracy quality of regulation and corruption

3 Growth, a multidimensional concept as well x:hdi et y:gdp/cap in PPP in Africa GDP and Source: AS from the World Bank and UNDP Objective of this sequence GDP and Gather the whole set of relevant to characterize The production of wealth its nature and determinants of this wealth poverty and inequalities The social barriers to health, education and social security The political process / the business environment Formulate a first diagnosis relative to the challenges a country faces, social and political stakes main barriers to

4 Course outline GDP and 1 2 GDP and 3 4 The gross domestic product - GDP GDP and Defined as the market value of all final products and services produced on the national territory over one year (usually the calendar year).

5 GNP, GNI GDP and GNP goods and services produced thanks to labor and assets supplied by the nationals of a country More pragmatically: GDP + income on factors abroad income of non-national in a country GNI GNP indirect taxes (VAT) < GNP strongly correlated with GNP. Since the implementation of the ESA 95 (consistent with the SNA 93), GNI is usually preferred Short term cycles potential, output gap, overheating Real and nominal Inertia of the productive sector Potential, real, output gap GDP and Source: AS as from Mauritius INS. x:year, y:%

6 Overheating example: Vietnam 2008 GDP and Source: AS as from the World Bank. Green:. Black: inflation. x:year, y:% Vietnam (continued) Inflows in excess GDP and Source: AS as from the World Bank. FDI, portfolio, others, balances of the BP. x:year, y:% of GDP

7 Sectoral decomposition GDP and GDP = GDP sect Sectoral decomposition If we decompose the Mauritian GDP, it gives: GDP and Source: AS as from Mauritian INS. y: %

8 First country-case: Mauritania Sectoral decomposition of GDP GDP and Source: AS as from the World Bank Mauritania (continued) Sectoral decomposition of GDP and Source: AS as from the World Bank: y:%

9 Second country-case: Madagascar Sectoral decompostion of GDP GDP and Source: AS from the World Bank Madagascar (continued) Sectoral contributions to GDP and Source: AS as from the World Bank. y:%

10 Third country-case: El Salvador Sectoral decomposition of GDP GDP and Source: AS as from the World Bank El Salvador (continued) Sectoral contributions to GDP and Source: AS as from the World Bank. y:%

11 Decomposition by GDP and Y = C + I + X M = C pub + C priv + I pub + I priv + S + X M Decomposition by GDP and Source: AS as from the Maurician INS. y:%

12 Mauritania (end) Contributions of to GDP and Source: AS as from the World Bank. y:% Madagascar (end) Contributions of to GDP and Source: AS as from the World Bank. y:%

13 El Salvador (end) Contributions of to GDP and Source: AS as from the World Bank. y:% LT and investment GDP and Source: AS as from the World Bank. y:% of GDP

14 Decomposition by income GDP and GDP can be considered as the sum of the income derived from the various production factors / institutional sectors Labor: wages Capital: profits, after taxes Public sector: taxes on production and imports subsidies Course outline 1 GDP and 2 GDP and 3 4

15 First model: the hope of convergence the neoclassical model (Solow-Swan) GDP and Solow (1956) Technical change and the aggregate production function, RES 39(3), Decreasing marginal productivity of capital Saving vs. pop. / capital depreciation Steady states Empirical predictions convergence flows to developing countries accounting framework y = Ak α Second model: endogenous Romer: augmented Solow model GDP and Romer (1986) Increasing returns and long-run, JPE, 94(5), Mankiw, Romer, Weil (1992) A contribution to the empirics of, QJE 107(2), y = k α h β Investment is made both in human and physical capital. Explain much better global panel data Does not explain the conditional convergence

16 Immediate causes (proximate) accounting framework Multiplicative model Y = AK α L 1 α GDP and In per capita terms and log-linearised: y = ln A + αk GDP Growth Capital Labor Innovation Source: Rojid et Seetanah (2009) Taking stock Describe GDP and cycles, output gap, nominal and real effects sectoral decomposition decomposition by decomposition by income accounting framework

17 Underlying causes Why do countries get richer? GDP and investment, technical progress, education, economies of scale are not determinants of : they ARE institutions the structure of incentives institutions de jure and de facto different levels of exogeneity Course outline 1 GDP and 2 GDP and 3 4

18 First measure of the Indicators of households income GDP and GDP or GNP at Purchasing Power Parity per capita according to the Atlas method (World Bank) The trajectory of 2 exceptional countries World Bank classification GDP and

19 GDP and A full-fledged objective for policy which takes very different forms depending on societies income redistribution land reform, universal medical coverage, free education, etc. focus on poverty reduction employment and unemployment access to financial services... Measures of poverty Absolute / relative poverty Share of population under the poverty line (poverty headcount) Poverty gap, etc. GDP and Source: UNDP. % of population in absolute poverty

20 Variable poverty lines GDP and poverty line headcount gap DRC 38 88% 53% Mexico % 38% South Africa 38 14% 2% Switzerland % 39% Denmark 955 5% 24% Multidimensional poverty GDP and The HDI can be interpreted as a composite poverty index The MDGs indicate several important dimensions of poverty This philosophical tradition dates back to Perroux, Sen

21 inequalities Lorenz curve Deciles / quintiles Gini coefficient GDP and Source: World Bank Other dimensions of inequalities GDP and inequalities only offer a partial view Source: UNDP inequalities in terms of human capital access to administrative services access to public infrastructures access to education and basic health services

22 Measuring inequalities GDP and Classical inequalities and poverty Gini index Poverty headcount poverty gap Inclusive GDP and Absolute or relative pro-poor often call on redistribution mechanisms Inclusive implies an increase in productivity and new employment opportunities Sustainable = largely spread according to sectors, and call on the idea of resilience Inclusive = equality of opportunities (access to markets, resources and fair regulation)

23 The challenge of inclusive in mineral-rich countries GDP and Dutch disease Mining generates little formal employment The productive diversification is blocked by a low competitiveness Conflict Rent-seeking behaviors, corruption and institutional failure Measuring social and political GDP and Common governance quality Worldwide Governance Indicators (World Bank) Global Competitiveness Index (World Economic Forum) Doing Business (World Bank) Common social Human Index (UNDP)

24 Human Index 2011 GDP and Source: PNUD. Darker = HDI is higher HDI and GDP/capita in PPP in Africa GDP and Source: AS as from the World Bank and UNDP. x:hdi, y:gdp/capita in PPP