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ECON 3510 ECON 3510 African Economic Development African Economic Development Spring 2009 Spring 2009 Poverty, Income Poverty, Income Distribution and Distribution and Development Development (Text, Chapter 7) (Text, Chapter 7) A. R. M. Ritter May 20, 2010
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ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

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Page 1: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

ECON 3510ECON 3510

African Economic DevelopmentAfrican Economic DevelopmentSpring 2009Spring 2009

Poverty, Income Distribution and Poverty, Income Distribution and DevelopmentDevelopment (Text, Chapter 7)(Text, Chapter 7)

A. R. M. RitterMay 20, 2010

Page 2: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Agenda

1. Significance of Topic2. Concept and Measurement

Poverty MeasuresIncome Distribution Measures

3. Equity, Poverty and Well-Being4. Comments on Evidence re Poverty and

Income Distribution5. The Roots of Poverty and Income Mal-

distributionKuznet’s “Inverted U Hypothesis”

6. Policies for Pro-Poor Growth7. Milennium Development Goals

Page 3: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

1. Significance of TopicCentral development issue in Africa: reduce

poverty!

“Make poverty history!”

Central focus of development efforts and of this course

The focus of the “Millennium Development Goals”

Is Poverty a “bad thing”? Why?Amartya Sen’s concepts of capabilities and choice

Income and Basic Human Need Fulfillment

Page 4: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Income Distribution: Central to our ideas of fairness and justice

A more equitable income distribution is supportive of both Growth and Poverty Reduction

Growth generally reduces Poverty; But Growth is “Neutral” regarding the “fairness” of income distribution ……..

Unless major efforts are made to achieve distributional objectives simultaneously with growth,

Page 5: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

2. Concept and Measurement2. Concept and MeasurementProblems of Measuring Real Incomes

Income or consumption?

Accurate Information: sources

Definition of income:Market generated Income? Or

Market generated Income + Transfers Or

Market generated Income + Transfers – Taxes? Or

Market Income + Transfers –Taxes + In-Kind Subsidies? Or

Market Income + Transfers –Taxes + In-Kind Subsidies + Publicly-provided Education + Health Services?

Market Income + Transfers –Taxes + In-Kind Subsidies + Education + Health + Home-Produced G $ S

Other complications: Home-produced G&S; Differing prices

Differing needs in different circumstances

Page 6: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

A. Poverty Concepts and Measures

1. The United Nations “Human Poverty Index” Attempts to measure poverty with a composite index including:

1. Probability of not surviving to age 40;2. Adult illiteracy rate;3. Population without access to improved water source4. Underweight children under age five.

2. Arbitrary Income “Cut-Offs” or Measures e.g. population with real incomes (PPP) below

some threshold such as $US 1.00 or $2.00

Page 7: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

A. Poverty Concepts and Measures, cont’d

3. Calculations of real income necessary to meet basic human needs (used in Latin America – ECLA - and national measures)

4. Canada: “LICO” or lower income cut-off, i.e. 50% of median income; (more a measure of distribution than of poverty)

5. Composite measures of Basic Need Fulfillment in real terms (access to water, literacy, child mortality, etc. (as in example in text)

Page 8: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Poverty Measures for Some African Countries, 2005

Country & Country & HDI RankHDI Rank

Human Poverty Human Poverty Index (UNDP)Index (UNDP)

Per CentPer Cent

GDPpc GDPpc (PPP)(PPP)$US$US

Population Population below US$1.00 below US$1.00

per day, per day, Per CentPer Cent

65. Mauritius 11.4% 12.715 11.9%

121. South Africa 23.5 11,110 10.5

135. Ghana 32.3 2,480 44.8

148. Kenya 30.8 1,240 22.8

151. Zimbabwe 40.3 2.038 56.1

154. Uganda 34.7 1,454 11,9

158. Nigeria 37.3 1.128 70.8

159. Tanzania 32.5 744 57.8

169. Ethiopia 54.9 1,055 23.0

177. Sierra Leone 51.7 806 57.0

81. China 11,7 7,100 9.9Source: UNDP. Human Development Report, 2007/2008

Page 9: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Human Development Indices, Africa, 1975-2005

Country 1974 1985 1995 2005

Mauritius na .692 .751 .804

South Africa .650 .690 .745 .674

Ghana .442 .482 .542 .553

Kenya .466 .534 .544 .521

Zimbabwe .550 .615 .613 .513

Uganda na .420 .433 .545

Nigeria .321 .391 .432 .470

Tanzania na na .419 .467

Ethiopia na .311 .347 .406

China .530 ,595 .691 .777

Source: UNDP. Human Development Report, 2007/2008

Page 10: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3. Equity, Poverty and Well-Being3. Equity, Poverty and Well-Being

The Broad-Based Sense of “Fairness”The Broad-Based Sense of “Fairness”– Religious BasisReligious Basis– Economistic “Games” showing that Economistic “Games” showing that

generally people prefer Fairnessgenerally people prefer Fairness– Design of Human InstitutionsDesign of Human Institutions

The law;The law;

United NationsUnited Nations

Welfare states & income taxationWelfare states & income taxation

Democracy and human rightsDemocracy and human rights

Development assistanceDevelopment assistance

– Survey data (see charts)Survey data (see charts)

Page 11: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.
Page 12: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Income Distribution: Central to our ideas of fairness and justice

A more equitable income distribution is supportive of both Growth and Poverty Reduction

Growth generally reduces Poverty; But Growth is “Neutral” regarding income distribution ……..

Unless major efforts are made to achieve distributional objectives simultaneously with growth,

Incentives and income Distribution

Page 13: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Vote !!

Page 14: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Income Distribution Concepts and Income Distribution Concepts and MeasuresMeasures

1. Income shares of groups in the population (quintiles or deciles)

2. Ratios of shares, e.g. income share of top 10% / income share of

poorest 10%

3. Lorenz Curve (See text, pp37-41)

4. Gini Coefficient (in class)

Page 15: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Income Distribution Measures Income Distribution Measures for Some African Countriesfor Some African Countries

Country Gini Coefficient

Income Share of Richest 20%

Poorest 20 %

Income Share of

Poorest 20%

Income Share of Richest

20%

South Africa .578 17.0 3.5% 62.2

Ghana .408 8.4 5.6 46.6

Kenya .425 8,2 6.0 49.1

Zimbabwe .501 12.0 4.6 55.7

Uganda .357 9.2 5.7 52.5

Nigeria .429 9.1 5.1 48.6

Tanzania .346 5.8 7.3 42.4

Ethiopia .399 4.3 9.1 39.4

Sierra Leone .629 57.6 1.1 63.4

China .570 12.2 4,3 51.9

Canada .326 5.5 7.2 39.9

Source: UNDP. Human Development Report, 2007/2008

Page 16: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

4. Evidence re Poverty and Income Distribution

Some International Comparisons

Page 17: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.
Page 18: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.
Page 19: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

“Who are the “’Poor’” in Africa?

Domestic Aspects– Rural character– Regional dimension– Gender & children– Indigenous dimension

Characteristics of the poor:– Assets; – Human capital; – Income vulnerability– Weak access to public services, – Environmentally hostile environments, – Lack of supportive networks

Page 20: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

5. The Roots of Income Mal-5. The Roots of Income Mal-distribution in Africa distribution in Africa (and Poverty to (and Poverty to some extent)some extent)

1. Historical Inheritance and its Momentum:A.A. Pre-Colonial Social StructuresPre-Colonial Social Structures

Significant levels of equality in pre-colonial Significant levels of equality in pre-colonial eras;eras;

High equality for “hunting and gathering” High equality for “hunting and gathering” peoplespeoples

Page 21: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

B.B. Impacts of ColonialismImpacts of Colonialism

– Unequal property rights and institutions Unequal property rights and institutions imposed by colonial powersimposed by colonial powers

– Imperial country living standards for Imperial country living standards for colonizers; traditional levels for Africanscolonizers; traditional levels for Africans

– Public services directed at settler peoples, Public services directed at settler peoples, not indigenous peoplesnot indigenous peoples

– Colonial hierarchies: Social stratification Colonial hierarchies: Social stratification based on Race and Ethnicitybased on Race and Ethnicity

Page 22: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

2. Political Factors:– Disproportionate power and influence of

elites and moneyed interests (e.g. property, gender, and literacy qualifications to the vote until recently)

Result: – Public Policy has often been shaped in their

interests

Thus: – “Urban bias” – “Upper and middle income class bias” and – “Modern sector bias” in public policypolicy

Page 23: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3. The Nature of the “Modernization” 3. The Nature of the “Modernization” Process:Process:

Does a “Rising Tide Lift all Boats”?Does a “Rising Tide Lift all Boats”?

Would you expect that a process of Would you expect that a process of modernization / development would improve modernization / development would improve everyone’s living standards simultaneously?everyone’s living standards simultaneously?

What forces generate “Inequities”? “Equities”?

Page 24: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Note the Latin American

Effect

Page 25: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3. The Nature of the “Modernization” 3. The Nature of the “Modernization” process: Forces Generating process: Forces Generating InequalitiesInequalities

– “Scarce capital” generates high returns for its owners;

– Scarce skilled labour generates higher incomes for those with crucial skills;

– Abundant unskilled labour generates low wages and incomes;

Page 26: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3. The Nature of the “Modernization” process: Forces Generating Inequalities, cont’d

– International technological transfer: much recent vintage technology is “labour-saving,” thereby reducing the demand for labour and thus wages and incomes.

– “Backwash Effects” of “modernization” and tech. change

– Uneven access to opportunities

Prior Elites;

Regional Advantages;

Personal Advantages

Page 27: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3.3. continued: continued: The Nature of the “Modernization” Process: The Nature of the “Modernization” Process:

Forces Generating Greater Forces Generating Greater EqualitiesEqualities

The exhaustion of surplus labour in agriculture The exhaustion of surplus labour in agriculture and the informal economy?and the informal economy?

Increasing productivity generally promotes Increasing productivity generally promotes rising incomes in supporting service-type rising incomes in supporting service-type activitiesactivities

Broadening Tax Base permits social programs & Broadening Tax Base permits social programs & welfare state type programswelfare state type programs

Broadening human development (education Broadening human development (education health etc.) broadens earning capabilitieshealth etc.) broadens earning capabilities

Regional and rural-urban spread effects Regional and rural-urban spread effects • rising demand for goods and services from elsewhere; rising demand for goods and services from elsewhere; • linkage effectslinkage effects

Page 28: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Emphasis on Human

Development

South Korea: Causal Factors Shaping Income Distribution and Growth

Successful Export

Promotion

GoodMacroeconomic

Management

Good Private-Public

Gov’t Market Mix

Land Reform Coops;

Well Qualified Labour Force

Population Deceleration

Lower LF Growth Rate

Rapid Job Creation

Egalitarian Urban Income Distribution

Rural-Urban Equity

Egalitarian Rural Distribution;

Income Growth

Rural UrbanBalance

Agricultural Expansion

Rapid Growth of Manufacturing

Rapid Growth, Distributional Equity, Poverty Reduction[HDI: # 28; 1970: .707; 2005 .901; Gini: 0.316; Growth pc, 1975-03: 6.1% pa]

Price Policy

Activist and Expanding Social Policies

Increasing Taxes

Page 29: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Empirical Validity of Kuznets” Hypothesis?

Which effects predominate?

– Debatable;Debatable;– Latin American effect in Kuznets “U”Latin American effect in Kuznets “U”– Positives and negatives simultaneously;Positives and negatives simultaneously;– Other factors operateOther factors operate– Ultimately “Public Policy” is paramountUltimately “Public Policy” is paramount

Page 30: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

4. Nature of Development Strategies 4. Nature of Development Strategies (and Theorizing):(and Theorizing):

Early Theorizing: Early Theorizing: Capital-Centered theories, Capital-Centered theories, Dualistic Development Models (W.A. Lewis) Dualistic Development Models (W.A. Lewis) The Soviet Model, The Soviet Model, Prebisch - UN ECLAC) Prebisch - UN ECLAC) Rostow ………….Rostow ………….

All emphasizedAll emphasized Growth first; income distribution later;Growth first; income distribution later;

Investment in the Modern Sector, esp. Industry; Investment in the Modern Sector, esp. Industry; Import-substituting industrialization;Import-substituting industrialization;Investment in physical capitalInvestment in physical capitalDe-emphasize traditional economy and informal De-emphasize traditional economy and informal sectorsector

Page 31: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

– ““Neo-Liberal” or “Washington Neo-Liberal” or “Washington Consensus” approach focused on Consensus” approach focused on growth first.growth first.

Escape from hyper-inflation, macro-Escape from hyper-inflation, macro-economic and external sector economic and external sector unsustainability and debt, led to “structural unsustainability and debt, led to “structural adjustment” programsadjustment” programs

which often generated “short-term pain” which often generated “short-term pain” hopefully but not always for “long term hopefully but not always for “long term gain”gain”

Page 32: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

5. Demographic and Sociological Factors:5. Demographic and Sociological Factors:– “The Poor Have More Children:” large family

size among the poor

reduces family investment per child and

reduces possible inheritances per child vis-à-vis the rich;

– Labour force participation for poor women is low vis-à-vis rich women;

Higher female labour force participation rates for better-off women raise family incomes for better-off groups.

– The rural poor sometimes have little alternative to damaging their own environment, often resulting in

worsening future poverty..

Page 33: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

6. “Market Power”6. “Market Power”

– Concentrated ownership patterns Concentrated ownership patterns – Monopoly and oligopoly power of Monopoly and oligopoly power of

enterprise and individualsenterprise and individuals– The power of professional associations The power of professional associations

and unionsand unions– Political power determining income Political power determining income

patternspatterns

Page 34: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

7. International Factors7. International Factors

– Multinational Enterprise: islands of Multinational Enterprise: islands of modernity and higher incomesmodernity and higher incomes

– Technological Transfer of modern capital-Technological Transfer of modern capital-intensive machinery and equipment intensive machinery and equipment higher higher incomes for someincomes for some

– Internationally transferable skills help Internationally transferable skills help generate international income levels for generate international income levels for some, while the unskilled remain with low some, while the unskilled remain with low incomes.incomes.

Page 35: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Policies for Pro-Poor GrowthPolicies for Pro-Poor GrowthPossible Approaches and Components of Poverty Possible Approaches and Components of Poverty

Reduction and Equity-Oriented ProgramsReduction and Equity-Oriented Programs

1. Achieve Sustained Economic Growth1. Achieve Sustained Economic GrowthExceedingExceeding population growth rates;population growth rates;• Permitting rising levels of personal or family Permitting rising levels of personal or family

income and tax revenues;income and tax revenues;• Permitting significant levels of domestic & Permitting significant levels of domestic &

national savingsnational savings

[Note: this is a necessary but insufficient condition for [Note: this is a necessary but insufficient condition for enduring reductions enduring reductions inin poverty] poverty]

Page 36: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

2. Strive for “Equity with Growth”

– Make the growth process compatible with equity, that is poverty reduction, improved income distribution and human development for low income groups

– Focus sharply on the poorest.

– HOW?

Page 37: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

3. 3. Emphasize Investment in Human Development

– Fairly Allocated– Education, Health, Nutrition, Clean Water,

Sanitation, – Family Planning

– Build the capabilities of the state to provide necessary public goods

[i.e. effective and efficient

Tax Administration

– Plus effective and incorruptible public administration.]

Page 38: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.
Page 39: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.
Page 40: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

4. Increase Demand for the abundant 4. Increase Demand for the abundant resource of the poor, namely labour, [i.e. resource of the poor, namely labour, [i.e. rapid rapid job creation] creation]

– Improve the appropriateness of technology;

– At an Appropriate Time, Switch from Import Substituting Industrialization to Job-creating Export Promotion

– Promote labour intensive public works and infrastructure, especially that serving the needs of the poor;

Page 41: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

5. Invest in the Physical Assets of the 5. Invest in the Physical Assets of the PoorPoor

Support the “Informal Sector” [in various ways;]Support the “Informal Sector” [in various ways;]– Note the role of “Micro-credit”Note the role of “Micro-credit”

Support Urban Development for low income Support Urban Development for low income neighbourhoods [water, sanitation, sidewalks, neighbourhoods [water, sanitation, sidewalks, streets, electricity, security, etc.]streets, electricity, security, etc.]

Support Agriculture and Rural Development, Support Agriculture and Rural Development, focusing on low income rural peoplesfocusing on low income rural peoples

– Rural roads; water & sanitation; drainage & irrigation; Rural roads; water & sanitation; drainage & irrigation; electrification in timeelectrification in time

Page 42: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

6. Combat “Modern sector bias” in 6. Combat “Modern sector bias” in public policy;public policy;

[[plus “Urban Bias”, “Industrial sector bias,” and plus “Urban Bias”, “Industrial sector bias,” and “Middle class bias”]“Middle class bias”]

Reconsider Reconsider

Tax policyTax policy

Government expenditures and social Government expenditures and social benefits and their allocationbenefits and their allocation

Tariff policy and protectionismTariff policy and protectionism

Infrastructure finance and allocationInfrastructure finance and allocation

Credit policiesCredit policies

All types of subsidization of the All types of subsidization of the modern urban sectormodern urban sector

Page 43: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

– Avoid megalo-cephalic urbanization

– Agriculture & Rural Development

– Regional Development;

Page 44: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

7. Redistribute Assets7. Redistribute Assets

– Land Reform of various sorts; Land Reform of various sorts;

– Democratic ownership patterns;Democratic ownership patterns;Cooperative Property formsCooperative Property forms

Taxation towards equityTaxation towards equity

Favour small & local enterprise?Favour small & local enterprise?

Democratization of private ownershipDemocratization of private ownership

– Support Territorial Claims of Support Territorial Claims of Indigenous Peoples;Indigenous Peoples;

Page 45: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

8. Construct Safety Nets and Transfers 8. Construct Safety Nets and Transfers as as possible [for middle income countries]possible [for middle income countries]

– Target the neediest groups;Target the neediest groups;

– Support Human development –promoting Support Human development –promoting activities activities [e.g. as in Brazil under Lula, financial support for [e.g. as in Brazil under Lula, financial support for

the poorest families that keep their children in the poorest families that keep their children in school; school;

or as in Chile, where school lunches programs are or as in Chile, where school lunches programs are provided in low income neighbourhoods]provided in low income neighbourhoods]

Page 46: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

The Millennium Development GoalsThe Millennium Development Goals

Millennium Development Goals Website http://www.un.org/millenniumgoals/

Introduction:UN Millennium Declaration (UN September 2000.)committed its signatories to strive to

reduce poverty, improve health, promote peace, improve Human Rights, and improve the environment.

Specific measurable targets, to be achieved by 2015;Most OECD and lower income countries were signatories

Page 47: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

A Focus on the Neediest Countries is given top A Focus on the Neediest Countries is given top priority. priority. This included: This included:

–38 countries in Africa, – 4 in East Asia/Pacific; 4 in East Asia/Pacific; – 2 in South Asia;2 in South Asia;– 6 Arab States; 6 Arab States; – 4 Latin American and Caribbean States, and 4 Latin American and Caribbean States, and – 5 in East 5 in East Europe. Europe.

How can they escape their poverty traps? This How can they escape their poverty traps? This is easy to state but hard to implement. is easy to state but hard to implement. Included in the relevant policy areas are Included in the relevant policy areas are

Page 48: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

• How can they escape their poverty traps? This How can they escape their poverty traps? This is easy to state but hard to implement.is easy to state but hard to implement.

• IncludedIncluded in the in the relevant policy areas relevant policy areas are are Investing in human developmentInvesting in human development;;

Helping Helping small farmers small farmers raise their productivity raise their productivity and thence their incomes;and thence their incomes;

Investment in Investment in infrastructure in lagging areasinfrastructure in lagging areas;;

Promote non-traditional and especially Promote non-traditional and especially small-small-scale enterprisescale enterprise (informal sector ) (informal sector )

Emphasize Emphasize social equity social equity and strengthen the and strengthen the “voice” of marginalized peoples (aboriginal “voice” of marginalized peoples (aboriginal peoples, rural peoples, and women and girls in peoples, rural peoples, and women and girls in some countries.) some countries.)

Environmental SustainabilityEnvironmental Sustainability

Page 49: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Millennium Development Goals and Targets for 2015– Goal 1: Eradicate Extreme Poverty and Hunger

Target 1: 50% reduction in extreme poverty (Income below $1.00 per day.)

Target 2: 50% reduction in hunger.

– Goal 2: Achieve Universal Primary Education Target 3: 100% coverage for primary education for Males and Females

– Goal 3: Promote Gender Equality and Empower Women

Target 4: Eliminate gender disparities in education.

– Goal 4: Reduce Child Mortality Target 5 : reduce it by 67%.

Page 50: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

– Goal 5: Goal 5: Improve Maternal HealthImprove Maternal HealthTarget 6: reduce it by 75%.Target 6: reduce it by 75%.

– Goal 6: Goal 6: Combat HIV/AIDS, Malaria and other Combat HIV/AIDS, Malaria and other DiseasesDiseases

Target 7: Reduce the spread of HIV/AIDS by 2015.Target 7: Reduce the spread of HIV/AIDS by 2015.

Target 8: Halt and reduce incidence of Malaria and Target 8: Halt and reduce incidence of Malaria and other major diseases.other major diseases.

– Goal 7: Goal 7: Ensure Environmental SustainabilityEnsure Environmental SustainabilityTarget 9: Reduce by 50% those lacking access to safe Target 9: Reduce by 50% those lacking access to safe water.water.

Target 10: Incorporate Sustainable Development Target 10: Incorporate Sustainable Development practices in all policies and programs’practices in all policies and programs’

Page 51: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

– Goal 8: Goal 8: A Global Partnership for A Global Partnership for DevelopmentDevelopment

Target 12: Target 12: Open rule-based International Open rule-based International trading and financial systemstrading and financial systems’’

Target 13: Target 13: Special treatment for the poorest Special treatment for the poorest countries re trade, debt, technology transfercountries re trade, debt, technology transfer

Target 14: Special treatment for Target 14: Special treatment for remote and remote and land-locked countries.land-locked countries.

Target 14: Target 14: Debt relief Debt relief where needed.where needed.

Target 15: Special access to Target 15: Special access to pharmaceuticalspharmaceuticals for poorest countries. for poorest countries.

Target 18: Special access to Target 18: Special access to IT IT for poorest for poorest countriescountries

Page 52: ECON 3510 African Economic Development Spring 2009 Poverty, Income Distribution and Development (Text, Chapter 7) A. R. M. Ritter May 20, 2010.

Implementing the Millennium Implementing the Millennium Development Goals and TargetsDevelopment Goals and Targets

For Low Income Countries:For Low Income Countries:– focus on focus on general poverty reduction general poverty reduction and meeting and meeting

“Basic Human Needs”“Basic Human Needs”– emphasize achievable goals and implementable emphasize achievable goals and implementable

policies;policies;– focus on resource mobilizationfocus on resource mobilization

For Middle Income Developing Countries:For Middle Income Developing Countries:– focus efforts on intractable pockets of povertyfocus efforts on intractable pockets of poverty

For International Financial institutions (IFIs):For International Financial institutions (IFIs):– put the Millennium Goals at the centre of their put the Millennium Goals at the centre of their

analytical, advisory, and financing activities;analytical, advisory, and financing activities;– support effective policy making in developing support effective policy making in developing

countries.countries.

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For Donor Countries:For Donor Countries:– developing countries should “own” their strategies developing countries should “own” their strategies

for meeting the millenium goals, but with support for meeting the millenium goals, but with support from donor countries;from donor countries;

– more and better utilized aidmore and better utilized aid;;– trade liberalizationtrade liberalization for exports of interest to for exports of interest to

developing countries;developing countries;– end protectionist subsidiesend protectionist subsidies

Note: the world failed in this endeavour at the Note: the world failed in this endeavour at the Doha Round of trade negotiations Doha Round of trade negotiations

For NGOs: For NGOs: – participate in the design of strategies, participate in participate in the design of strategies, participate in

implementation as appropriateimplementation as appropriate– serve as “watchdogs” re target and goal fulfillment.serve as “watchdogs” re target and goal fulfillment.

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Evaluation of MDG ApproachEvaluation of MDG Approach

1.1. Are targets and goals realistic?Are targets and goals realistic? I Is it s it too ambitious? too ambitious?

2.2. Focus on measurable targets is Focus on measurable targets is laudable for focusing energies.laudable for focusing energies.

3.3. Emphasis on poorest countries is Emphasis on poorest countries is appropriate;appropriate;

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4. Will the focus on these targets lead to 4. Will the focus on these targets lead to improvements or deformations of national improvements or deformations of national objectives?objectives?

5. Will the MD approach help improve coordination 5. Will the MD approach help improve coordination among donors, IFIs and national governments?among donors, IFIs and national governments?

6. Little is actually said re. Governance, despite its 6. Little is actually said re. Governance, despite its importance for the high priority countries.importance for the high priority countries.

7. Implementation: need for secondary and higher 7. Implementation: need for secondary and higher education is ignorededucation is ignored

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MDG Goals and Achievement: Poverty

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MDG Goals and Achievement: Education

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Gender disparity is measured by the ratio of girls to boys enrolled in primary and secondary schools. Most regions are on track to achieve this target by 2015.

MDG Goals and Achievement: Gender DisparitiesMDG Goals and Achievement: Gender Disparities

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MDG Goals and Achievement: Child Mortality

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MDG Goals and Achievement: Water & Sanitation

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MDG Goals and Achievement: Maternal Mortality

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Concludsion?Concludsion?

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MDG Global Monitoring Report, 2009MDG Global Monitoring Report, 2009– http://web.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTGLOBALMONITOR/EXTGLO

MONREP2009/0,,menuPK:5924413~pagePK:64168427~piPK:64168435~theSitePK:5924405,00.html#

NDG IndicatorsNDG Indicatorshttp://mdgs.un.org/unsd/mdg/Host.aspx?Content=Data/Trends.htm

““Gapminder” presentation of Gapminder” presentation of MDGsMDGs

• http://mdgs.un.org/unsd/mdg/Host.aspx?Content=Data/Trends.htm

• Then go to “Data” then “ Gapminder”Then go to “Data” then “ Gapminder”