Better Sharing, Bigger Pie: Planning for Inclusive Growth

Biplove ChoudharyUNDP Asia-Pacific Regional Centre, Bangkok

Conference on Public Sector Management in Support of the MDGs 13-15 June 2012, UNESCAP, Bangkok, Thailand

PRESENTATION OUTLINE:

The presentation would strive to address the following three inter-related questions:

What is inclusive growth? What are the key emerging challenges

to inclusive growth in the region? What are the major areas of planning

for inclusive growth?

What is inclusive growth?

Simply put, inclusive growth refers to the pattern and pace of economic growth over time

Allows people to participate in and benefit from economic growthCreate equal economic opportunities for all

segments of society especially women, marginalized social groups

Needs to be seen as both a process and an outcome

Economic growth should lead to poverty reduction

ILLUSTRATIVELY, GROWTH IS INCLUSIVE WHEN: It addresses poverty in a multi-dimensional sense It is broad-based and takes place in sectors

where bulk of the poor work (e.g., agriculture, informal sector)

It is regionally balanced and focuses specially on relatively poorer areas

It uses the factors of production that poor possess (e.g., unskilled labour) leading to employment creation

It keeps prices of food and other essential services affordable to the poor

What are the key emerging challenges to inclusive growth in the region?

ASIA-PACIFIC HAS SEEN IMPRESSIVE ECONOMIC GROWTH RATES

Annual Per Capita Growth Rates World Regions (1970-2009)

1970s 1980s 1990s 2000s

South Asia 0.55 3.23 3.33 4.96

East Asia & Pacific 5.03 5.97 6.82 8.00

Middle East & North Africa 3.46 -0.67 2.01 2.40

Sub-Saharan Africa 1.26 -0.73 -0.67 2.00

Latin America & Caribbean 3.19 -0.24 1.15 1.85

Europe & Central Asia n/a n/a -2.60 4.89

World 2.09 1.37 1.25 1.34

Source: World Development Indicators, 2011

SIMULTANEOUSLY, INEQUALITY HAS BEEN RISING

0102030405060

37.5 40.6 51.833.6 38.2

43.41

Gini Index by Developing Regions1980-83 1990-93 2005-08

• Rate of poverty reduction has been high in Asia• It has accelerated in East Asia but slowed-down in South Asia• Growth impact of poverty has been relatively low and declining in South

Asia

South Asia East Asia Africa China India

-10

-8

-6

-4

-2

0

2

Annual rate of poverty reduction slowed down in India and South Asia

1981-901990-99

1999-2005

Cha

nge

in P

over

ty r

ate

( $1.

25 a

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DECLINING SHARE OF AGRICULTURE IN AGGREGATE VALUE-ADDED IN THE REGION

0

10

20

30

40

50

60

1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008

% o

f GD

P

Agriculture Industry Services

Source: World Development Indicators, World Bank

Growth in the non-agri sectors was 2-3 times higher than that of agriculture

75% of the Asian poor live in rural areas, but growth has been concentrated in urban/coastal areas.

Employment elasticity of growth has been low

SERVICES AND INDUSTRY HAVE GROWN MUCH FASTER THAN AGRICULTURE

UNDP, RBAP 2011

• Women’s labour force participation rate is low: 33 % in South and Southeast Asia compared to 77 % of men

• Women earn only 34 % of men’s wages in South Asia

• Women own only 7% of farms in Asia versus 18% in Africa

• Inheritance and property rights remain unequal

Gender disparities limit women from fully participating in the growth process

% of women owning land is lowest

Source: UNDP

VULNERABILITY OF THE URBAN POOR IS HIGH: ASIA’S SETTLEMENTS ARE POISED TO BE MAINLY URBAN BY 2026

Cities densely populated; high proportion of the poor live in slums

Poor inhabitants are extremely exposed to climate impacts (flooding, heat, sea level rise) but have limited capacity to adapt

Poor access to social services means they pay disproportionately more for lower quality of services

Interlinked infrastructure of transport, energy, communications can be simultaneously hit, disrupting lives, livelihoods, wealth, public assets

What are the major areas of planning for inclusive growth?

CROSS BORDER COOPERATION HAS SOME WAY TO GO

National policies alone are inadequate for the 13 LDCs and countries with a narrow economic base

Some of the larger countries have LDC-like conditions inside

External markets and resources are essential

No country benefits from a deprived neighbour

Many issues cross borders – crises, climate change, water

THE QUALITY OF ECONOMIC GROWTH NEEDS TO POSSESS AT LEAST THREE INTERLINKED ATTRIBUTES Inclusive: growth promotes

equality of opportunity among people and improved distribution

 Resilient: growth pattern has

the ability to deal with shocks

Environmentally sustainable: growth can be sustained without further natural resource degradation environment

KEY AREAS FOR PLANNING INTERVENTIONS

Planning from an inclusive growth perspective especially for the women and marginalized groups; focus especially on socio-economic empowerment of women which acts as a multiplier

Narrow the gaps on health and education access through improved inter-sectoral coordination, governance and enhanced public spending that reach the poor

Focus explicitly on employment creation in the through rural non-farm and SME activities in towns and small cities including for low skilled workers

Strengthen a social protection for the poor to better manage multiple risks and vulnerabilities

MANY COUNTRIES ARE HEADED IN THE RIGHT DIRECTION

Recent development plans focus on inclusive growth• 11th Five-Year Plans of China and India

Cash transfers designed to reduce disparity in gender, education and health indicators• Bangladesh, Cambodia, Indonesia, and Philippines

Employment and health linked social protection operates• China’s “Minimum Livelihood Guarantee Scheme”• India’s “National Rural Employment Guarantee Scheme”• Thailand’s “Universal Health Insurance Scheme”

Some are increasing resource allocation to agriculture and rural development

THANK YOU!