Posted by Ignacio on
Fri, 30/03/2007
As usual on Fridays, from Raj Nallari and Breda Griffith's lecture notes on Economic Policies for Poverty Reduction.
Global Initiatives for Education For All (EFA)
As mentioned in previous weeks, a number of global initiatives are on the table to achieve “education for all”. Today we will examine how close the EFA goal is to being achieved. This posting is based on research conducted by Bruns, Mingat and Rakotomalala (2003).
The MDG for education that was also agreed at the Dakar World Education Forum aims at:
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Ensuring that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling
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Eliminating gender disparity in primary and secondary education, preferably by 2005, and at all levels of education no later than 2015.
Completing a full-course of primary schooling would suggest a Universal Primary Completion (UPC) of 100. Based on the progress achieved over the 1990s, and projecting forward, Bruns et al., (2003) find that the global primary completion rate in 2015 would not exceed 83 percent. However, this rate masks enormous regional differences as illustrated in the exhibits below.
Primary Completion Progress in Africa, Middle East and North Africa and South Asia Regions, 1990-2015, Country-Weighted
Source: Bruns, Mingat and Rakotomalala, 2003
Just over half of all school-age children in Africa completed primary school by 2000; the increase over the decade for South Asia was stronger but the average completion rate remains around 70 percent. A decade of slight decline and stagnation marked the experience for Middle East and North Africa with the average completion rate in 2000 around 74 percent. Regional differences also mask country differences – South Africa, The Gambia registered increases in primary completion rates while Zambia, The Republic of Congo, Cameroon, Kenya, Madagascar, Qatar, the United Arab Emirates, Bahrain all registered significant declines. Afghanistan dropped from a low 22 percent in 1990 to 8 percent in 1999.
Primary Completion Progress in Latin America and the Caribbean, East Asia and Pacific and Europe and Central Asia Regions, 1990-2015, Country-Weighted
Source: Bruns, Mingat and Rakotomalala, 2003
Europe and Central Asia is closest to the goal of universal primary completion, registering 92 percent in 2000 and followed by Latin America and the Caribbean (85%) and East Asia and Pacific (84%). Intra-regional differences saw an increase in the ratio in Brazil, Nicaragua and Cambodia with declines in Venezuela.
Prospects for Universal Primary Completion by 2015
 Source: Bruns, Mingat and Rakotomalala, 2003.
Exhibit above examines the progress for 155 countries in achieving universal primary completion by 2015. The breakdown between low income countries (LICs) and middle income countries (MICs) is roughly equivalent with 82 and 73 countries respectively. Here it can be seen that the prospects for the LICs are not good. While 37 countries have already achieved, or are close to achieving, universal primary completion, the majority of these (26) are MICs. A further 32 are “on track,” again primarily MICs. The remaining 86 countries, more than 50 percent of the total are “at risk” for not achieving the MDGs in education. Some of these countries (43) are making good progress but stagnation in the 1990s or starting from a low base will make it difficult for them to achieve UPC by 2015. Again the majority (28) are LICs. More worryingly are those 27 countries—23 of which are LICs that are ‘seriously off-track’. At current trends, their completion rate will lie at or below 50 percent. No data were available for 16 countries including Somalia, Liberia and Myanmar, but it is highly likely that they are also in the “at risk” category.
Posted by Ignacio on
Thu, 29/03/2007
The latest issue of UNDP International Poverty Centre's journal, Poverty in Focus, is fully devoted to the analysis of pro-poor growth and its policy implications and results. The authors spell out and apply different definitions and measures in discussing various policy-related aspects of pro-poor growth.
Featured articles:
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Global Estimates of Pro-Poor Growth, by Hyun H. Son
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Pro-Poor Growth and Gender Inequality: Insights from new research, by Stephan Klasen
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Analysing the Distributional Pattern of Growth, by Andy McKay
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Promoting Pro-Poor Growth: Lessons from country experiences, by Louise Cord
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Integrated Economic Analysis for Pro-Poor Growth, by Susanna Lundström and Per Ronnas
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Employment and Pro-Poor Growth, by Azizur Rahman Khan
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Formalising Informal Firms: What can be done?, by Esther K. Ishengoma and Robert Kappel
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The Policy Origins of Poverty and Growth in India, by Timothy Besley, Robert Burgess and Berta Esteve-Volart
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Growth and Poverty in Asia: Prospects for achieving the MDGs, by John Farrington and Mark Robinson
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Poverty, Inequality and Labour Markets in Sub-Saharan Africa, by Germano Mwabu and Erik Thorbecke
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Pro-Poor Stagnation: The Brazilian paradox, by Nanak Kakwani, Marcelo Neri and Hyun H. Son
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Ten Commandments of Pro-Poor Growth, by Mwangi S. Kimenyi
Posted by Ignacio on
Fri, 23/03/2007
Posted by Ignacio on
Thu, 22/03/2007
Today is World Water Day. The theme this year is "Coping with Water Scarcity".
A good day to repost what writer Mario Vargas Llosa wrote recently about UNDP's Human Development Report 2006.
(my translation)
From this reading, the first conclusion I reach is that the emblematic object of civilization and progress is not the book, the telephone, Internet or the atomic bomb, but the toilet. Where human beings empty their bladder and intestines is the decisive factor to know if they still find themselves in the cruel underdevelopment or if they have started to make progress. The repercussions that this simple and very important fact has on people’s life are vertiginous…
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In Dharavi, a populous part of Mumbai, there is only one toilet per 1,440 people, and in the rainy season the water flooding the streets turns them into rivers of excrements. The abundance of the liquid element is, in this case as in many third world cities, a tragedy, because, given the condition in which people live, water, instead of being life is often times the instrument of sickness and death…
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In Les Miserables, Victor Hugo wrote that “sewers are the conscience of the city” and … he tried to do a strange interpretation of history through human excrement. This terrific report does something similar, without the poetry and eloquence of the great French romantic, but with a much better scientific knowledge.
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“We are born among feces and urine”, wrote Saint Agustin. A shiver should shake us when we think that a third of our contemporaries never leave the filth in which they came to this valley of tears.
Full article (in Spanish): El olor de la pobreza (the smell of poverty)
Posted by Ignacio on
Wed, 21/03/2007
Is Democracy the best setting for strong economic growth?
That is what the Wall Street Journal asked economists Daron Acemoglu and Ed Glaeser. You can read their debate on this very controversial issue in the WSJ online.
CIPE posted a quick summary of their discussion:
Glaeser: Data does not back up the idea that democracy is a key ingredient in economic growth
Acemoglu: There are different kinds of democracies, what you define as democracy matters. Further, the relationship between democracies and economic growth differs, depending which view you take (short-term vs. long-term)
Glaeser: Democracies are not necessarily more stable than dictatorships. More stable, successful democracies invest in human capital - and there is data to back this up.
Acemoglu: Education is important, but if you look around the world today it is evident that education is not necessarily more likely to consolidate democracy.
Glaeser: The link between education and democracy works, because: 1) educated people often lead political uprisings 2) educated people can craft better constitutions 3) educated people stand up and fight for democracy
Acemoglu: Educated countries may be more democratic and prosperous, but it does not mean that they are democratic and prosperous because they are more educated - the fact that they become more educated does not necessarily mean they are more likely to become more democratic.
Related: we reviewed Acemoglus and Robinson's book Economic Origins of Dictatorship and Democracy.
In this debate I think that sometimes we tend to forget that Democracy is (or should be) precious by itself. As someone (toppled by the military himself) once said “Freedom doesn’t make humans happy, it simply makes them human”
Posted by Ignacio on
Tue, 20/03/2007
Sarah Jane Hise writes in the CGD Blog about presidential candidate John Edwards and his Global Poverty Proposal launched last week: "Restoring America's Moral Leadership by Fighting Worldwide Poverty"
Three cheers for John Edwards for being the first presidential candidate of the 2008 campaigns to put forth his proposal on global poverty.
Owen also blogs about it:
It would be good news for development if this becomes an issue in the US Presidential elections.
We agree with both.
Posted by Ignacio on
Fri, 16/03/2007
Like every Friday, from Raj Nallari and Breda Griffith's lecture notes on Economic Policies for Poverty Reduction.
Education, Growth and Poverty Reduction
One of the major contributions to the new economic growth literature has been the recognition that human capital is critical in explaining growth differences across countries, with human capital in turn relying on a strong education system. Education directly benefits the individual and has positive spin-off effects for society in terms of increased productivity, higher rates of innovation and invention, and adaptation of new technologies. However, the focus on ‘school attainment’ has generated criticism in recent years. Researchers note that while school attainment may be correlated with economic growth, this does not suggest a causal relationship. Moreover, the relationship is sensitive to alternative estimates of school attainment and the underlying assumptions.
A broader measure of human capital that recognizes its development impact is the quality of schooling. Hanushek and Kimko (2000) gathered international test scores on mathematics and science knowledge from 1960 and formed these into a composite measure of ‘school quality’ and related this to differences in cross-country growth rates. Also included in the model were the level of income, quantity of schooling, and population growth. All of the variables helped in explaining differences in growth rates and the quality of schooling variable proved highly significant. One standard deviation difference in test performance was related to one percentage point difference in annual per capita GDP growth rates (Hanushek, 2005). Moreover, test scores as a measure of school quality are strongly linked to an individual’s earnings and productivity—the higher the test scores, the higher the earning advantage. Although the research has come predominantly from the developed countries, it appears to hold for developing economies also (Hanushek, 2005).
However, human capital in many developing economies starts from a very low base and it faces many challenges, both in terms of quantity and quality. Its importance for economic growth and poverty reduction is critical and this has been recognized in the global initiatives aimed at improving access and quality, e.g. the UPE Initiative (that aims for universal primary education for all by 2015) and the education goal in the MDGs as well as the Fast Track Initiative endorsed by the World Bank.
In terms of quantity, there are a number of reasons why school attainment remains of interest. Although overall education rates have increased, they hide disparities with regard to family income, gender and geographic location. Furthermore, the rates are often exaggerated due to the high incidence of repeat students.
Net Primary Enrollment Ratios
Source: Cohen and Bloom (2005)
Exhibit above examines net primary enrollment rates. The net enrollment rate (NER) is the ratio of the number of children in the official primary school age group enrolled in primary education to the population of the primary school age group. The NER for developed countries was 96 percent in 2002 compared to 83 percent for developing economies. Among the developing regions, Sub-Saharan Africa had the lowest NER, just 63 percent compared to 96 percent for Latin America and the Caribbean. The exhibit shows, however, that the NER has increased the most between 1998 and 2002 in Sub-Saharan Africa and South and West Asia reflecting increasing school attendance.
A less strict standard than the NER is the gross enrollment rate (GER), which captures the ratio of the number of children enrolled in primary education, regardless of age, to the population of the age group that corresponds to the nationally-defined ages for primary schooling.
GER for Africa, various years
Source: Compiled from Fredriksen, 2005
The GER for Africa has increased remarkably since the 1990s—from 73 percent in 1992 to 83 percent in 2000 and 91 percent in 2002, with partial data for more recent years confirming a continued increase. However, given the grade repetition rate of 20 percent, the Africa region needs a GER of 120 percent to enroll all children of primary school age (Fredriksen, 2005).
Other advances in school enrollment noted by Cohen and Bloom (2005) are the increase in literacy among developing countries, from 25 to 75 percent in the 20 th century and the increase in the average years of schooling from 2.1 to 4.4 years. Furthermore, the number of students enrolled in secondary school increased from 50 million to 500 million over the past 50 years.
Although overall education rates have increased in developing countries, they still remain far short of what is needed. Furthermore, enrollment in developing countries does not mean attendance and attendance is not necessarily an iron cast predictor of receiving an education, never mind a high quality education. Standardized test scores show a huge disparity between children from industrialized countries and those from developing countries. The global commitment to achieve UPE as outlined in the MDGs and even broader education goals agreed at Dakar for 2015 is a response to the unacceptable situation in which[1]:
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Over 100 million primary school-age children are out of school;
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Roughly 380 million children are not enrolled in school (28 percent of the age group, typically 6);
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Roughly 280 million children are absent from secondary school;
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Of school-age children who enter primary school in developing countries, more than one in four drops out before attaining literacy;
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Less than one-third of children in Africa and South Asia can read and write.
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One-in-five children in primary school repeat grade in Africa;
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150 million children in school are likely to drop out before completing primary school;
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More than half of all girls in Africa never enroll in school;
Posted by Ignacio on
Thu, 15/03/2007
Our colleagues from the Development Data Group at the World Bank have launched this online MDG Atlas.
Each map is supported by data tables, informative text, and charts in three languages: English, French, and Spanish.
Very useful, informative and easy to use. The option to have a map resized according to relative size of countries in relation to the various MDGs provides a very interesting and instant perspective.
Related: MDG website
Posted by Ignacio on
Tue, 13/03/2007
Terry McKinley and Alex Izurieta write about global economic imbalances in UNDP International Poverty Centre's February one pager.
According to this paper, the US is running a deficit about 3.5 times larger than the deficits of all other OECD countries combined. The average US current account deficit in recent years has been one third higher than the total GDP of sub-Saharan Africa.
Source: UNDP - International Poverty Centre
Current global imbalances not only pose huge dangers; they also cause a grossly inequitable distribution of global resources. Capital is ‘flowing uphill’ to rich countries—overwhelmingly to one rich country, the US.
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The money that many middle-income countries are now investing in the US could make a major contribution to development if it were redirected to poorer countries, or even kept within these middle-income countries. Because more goods and services would become available domestically, the population in such countries would enjoy a higher standard of living.
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Since the US is enjoying the fruits of this inequitable imbalance in resource flows, it has limited motivation to correct it. An impending US economic collapse is probably the main factor that could impel national policymakers into action. An alternative solution, mutually beneficial to all, could be a coordinated effort by both developed and developing countries to stimulate domestic demand in regions other than the US.
This and other crucial issues will be discussed in WBI's Global Senior Policy Seminar on "Capital Flows, Financial Integration and Stability" to be held on April 23-26, Paris France. For information and registration, please click here.
Posted by Ignacio on
Fri, 09/03/2007
Like every Friday, from Raj Nallari and Breda Griffith's lecture notes on Economic Policies for Poverty Reduction.
Educational attainment has a positive impact on economic growth and poverty reduction. The microeconomic literature has also established a clear relationship between educational attainment and individual income. Educational attainment is positively linked with technological adaptation, innovation, and increased productivity, generating positive spin-off and growth effects for the economy. Non-economic factors also posit a positive role for education: it is a basic human development capability. Yet for many of the world’s poor, access to education remains out of reach. Improvements have taken place in school attainment but many challenges remain.
Achieving universal primary education (UPE) by 2015 is a Millennium Development Goal. The failure to achieve UPE and reduced illiteracy rates by 2000 that was agreed by the global community at the World Conference on Education for all at Jomtien, Thailand, was again adopted by 180 nations at the World Education Forum at Dakar in 2000. Education helps in the achievement of all of the other Millennium Development Goals such as poverty reduction, gender equity, child and maternal health, lower HIV/AIDS and other communicable diseases, and environmental stability.
In upcoming weeks we will examine the progress being made by developing economies in achieving educational attainment, chiefly at the primary level and the challenges that confront these economies. We will also examine the initiatives aimed at achieving universal education and in particular universal primary completion, as well as the financial resources needed at the domestic and international donor level, the main challenge facing low income countries today.
Posted by Ignacio on
Thu, 08/03/2007
Today is International Women's Day.
A good day to remember that Gender Equality is not only desirable and fair per se, it is also Smart Economics, promoting growth and poverty reduction. (Full World Bank's Gender Action Plan)
Nicola Jones from ODI blog writes an interesting article about how to overcome Gender Fatigue.
But a smarter response would be to take occasions like International Women’s Day (March 8) to encourage school and university teachers to teach students about the history of the first and second wave women’s movements (in the North and South) and what these activists achieved, often at considerable personal and social cost. Too often there is a rather simplistic assumption that greater gender equality will simply follow economic development rather than being a dynamic process in which deliberate collective action efforts to reshape gender relations often play a critical role.
Posted by Ignacio on
Wed, 07/03/2007
We are organizing the second part of our Economic Literacy for Civil Society Internet course: "Economic Policies for Poverty Reduction in Developing Countries" (18 March to 13 April). The course is based on the teaching materials used in our Fridays Academy series.
The aim of this Internet course is to contribute to a deeper understanding of the areas that impact the lives of the poor. After describing the experience over the past several decades with development aid, which aims to place poor countries on a sustainable long-run sustainable growth path, the course turns to a discussion of external debt and how it became unsustainable in many low-income countries, crippling their growth potential and keeping millions in poverty. The remainder of the course examines four areas that can hinder the movement of the poor out of poverty. These areas—education, health, labor markets and land —are core components of public policy that need to be addressed if poverty is to be tackled effectively.
Full description
Apply online
Please note that deadline to apply is March 13th.
Posted by Ignacio on
Fri, 02/03/2007
Like every Friday, from Raj Nallari and Breda Griffith's lecture notes.
In September 1996, the World Bank and the IMF together launched the Initiative for the Heavily Indebted Poor Countries (HIPCs) with the ‘aim of reducing the external debt burden of all eligible HIPCs to a sustainable level in a reasonably short period of time’ and provided that the countries carried out a ‘strong programs of macroeconomic adjustment and structural reforms’ (Andrews et al., 1999). A country was judged to have reached a sustainable level of external debt if it could meet its current and future external debt-service obligations in full without accessing debt relief, rescheduling of debt, accumulation of arrears and without compromising growth. At the outset, 41 countries were identified as being heavily indebted poor countries; 32 of these had a GNP per capita in 1993 of $695 or less, a NPV of debt to exports of 220 percent or higher or a NPV of debt to GNP of 80 percent or higher. The remaining nine countries were those that had received or were eligible for concessional rescheduling from the Paris Club official creditors. Furthermore, these countries were eligible for IDA loans and for the ESAF and were required to show strong track records of performance under IMF and World Bank sponsored programs (Andrews et al., 1999).
The HIPC Initiative was based on the following principles:
- The initiative targets overall debt sustainability on a case-by-case basis, thus providing a permanent exit from the rescheduling process.
- Creditors envisage providing debt relief only after the debtor country has demonstrated the capacity to use prudently whatever debt relief is granted.
- Additional debt relief is granted on top of existing (traditional) debt relief mechanisms.
- Debt-relief measures under the Initiative are coordinated among all creditors involved, with broad and equitable participation
- Steps taken by multilaterals are in line with their status as preferred creditors and will preserve their financial integrity.
- New financing for the HIPCs is on appropriately concessional terms.
In 1999, the HIPC was enhanced and was then known as the Enhanced HIPC Initiative. Based on a review and consultation exercise incorporating the World Bank, IMF and a public consultative process, the enhanced HIPC provided deeper, faster and broader debt relief and a stronger focus on poverty reduction through the preparation and adoption of a new vehicle - the poverty reduction strategy paper (PRSP).
Deeper debt relief provided for lowering the NPV of debt to export target to 150 percent from 250 percent and dropping the requirement for a country-specific vulnerability analysis; lowering the NPV of debt-to-fiscal revenue target to 250 percent from 280 percent; a lowering of the export to GDP ratio from 40 to 30 percent and revenue to GDP ratio from 20 to 15 percent and changing the basis for debt relief to actual data based on the year prior to the decision point (rather than on projections for the completion point).
Faster debt relief allowed interim relief by the international financial institutions between the decision and completion points and the introduction of floating completion points which allowed assessment of a country’s performance to be based on specific outcomes of policy reform and macroeconomic stability rather on the length of track record.
Broader debt relief facilitated a ‘greater safety margin for the achievement of debt sustainability providing a clear and permanent exit from unsustainable indebtedness at the completion point’ (Andrews et al., 1999).
Poverty reduction and improvement in social indicators of well-being was an integral part of the HIPC Initiative and for many countries reaching their completion points substantial progress was made in these areas. However, the fact that progress was very uneven—not all countries developed poverty reduction strategies and/or identified specific targets for improvements in poverty and social indicators—led to the requirement for a specific nationally-owned Poverty Reduction Strategy Paper (PRSP) when a country reached its decision point under the Enhanced HIPC Initiative. A nationally-owned comprehensive poverty reduction strategy would recognize that (i) rapid economic growth, macroeconomic stability and structural reforms are critical for poverty reduction, and (ii) the identification of specific goals in the context of the MDGs for 2015 are essential for the design of the PRSP. The PRSP is carried out in consultation with community groups, non-government organizations and donor groups.
As of August 2005, 38 countries potentially qualified for HIPC assistance. Thirty-two of these countries are in Sub-Saharan Africa. Eighteen countries had reached ‘completion point’ and were receiving irrevocable debt relief. Ten countries had reached their decision points’ and were receiving interim relief. Social difficulties including internal civil strife, cross-border armed conflict and governance challenges hamper the progress of the remaining ten countries in achieving debt relief.
In June 2005, the G-8 proposed debt cancellation to Heavily Indebted Poor Countries under the Multilateral Debt Relief Initiative (MDRI). The MDRI will provide additional financial support to countries that have graduated from the Enhanced HIPC Initiative. Unlike the HIPC the MDRI does not propose any parallel debt relief on the part of official bilateral, private creditors or multilateral organizations beyond the IMF, IDA and the AfDF. The MDRI is aimed to help these graduated countries along the path to achieve the MDGs and also to preserve the financial capacity of the international financial institutions (IFIs). It is envisaged that the bulk of the debt relief be provided by IDA, which is expected to implement the MDRI in July 2006 at the start of its financial year. The IMF began implementation in January of 2006. Each relevant IFI can decide for itself its approach to the coverage and implementation of the MDRI. The IMF Executive Board modified the original G-8 proposal to include all countries with per capita income of US$380 a year or less, whether HIPC or not, to receive MDRI debt relief financed by the IMF’s own resources. HIPCs with per capita income above that threshold will receive MDRI relief from bilateral contributions administered by the IMF (IMF, 2006). The full stock of debt owed to the IMF at end 2004 that remains outstanding when the country qualifies for relief is eligible for MDRI. Requirements for qualification include having reached the HIPC completion point and also showing satisfactory performance in (i) macroeconomic policies; (ii) implementation of a poverty reduction strategy; (iii) public expenditure management. Based on these criteria, 19 countries are deemed eligible for MDRI. These include 17 HIPCs that had reached completion point and 2 non-HIPC countries whose per capita income was below $380. The cost of the debt relief amounted to US$3.4 billion that included remaining HIPC assistance and was delivered on January 6, 2006.
Conclusion
Mounting external debt adversely affects economic growth and the capacity for poverty reduction. The debt overhang hypothesis point to the role played by investment in affecting economic growth – large debt stocks reduce investment that in turn reduces growth. Reduced government resources, because of commitments to debt servicing/reducing debt stocks directly affect spending for poverty reduction. Beginning from the late 1980s, debt stocks became unsustainably high in many low-income countries. The international financial community realized that debt stocks would remain high in the environment of few growth opportunities, weak macroeconomic adjustment and stability, threats from civil strife and unacceptable high levels of poverty unless deep debt relief was introduced.
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