marwa bg ecosoc - google docs · 2017. 9. 10. · india and discussed in ecosoc since it aims for...

Dear Delegates,

Welcome to ECOSOC, the United Nations Economic and Social Council set up in 1945. Our

names are Aditya Mori and Ricardo Del Rio and we are pleased to chair such an important

and necessary committee.

ECOSOC is one of 6 main bodies that make up the UN and deals with the economic and

social coordination of the 15 specialised agencies of the UN such as UNESCO and WHO. In

addition to this, it also holds a fourweek session every year in July to discuss the economic

and social issues around the world and draw up policies to advise countries as well as to

resolve the issues. ECOSOC has 54 members, elected in the general assembly, for

overlapping periods of three years with the member countries being seated based on the

continent they form part of. The council is headed by the president who is elected every year

from small and medium sized powers represented in the ECOSOC.

For this year’s ChrisMUN’s ECOSOC, we will be discussing two very crucial topics:

Issue 1 Discuss how to effectively deal with the impacts of demonetization in India

Issue 2 – Create a strategy through which sustained economic growth may be

possible in countries with high dependency ratios.

Delegates, we expect you to come informed and otherwise prepared to collaborate in order

to create imaginative yet effective solutions to these delicate issues. We look forward to

some energetic and productive discussion.

Your chairs,

Ricardo Del Rio & Aditya Mori

Issue 1: Dealing with the consequences of demonetization in India

On 8 November 2016, the Government of India announced the demonetization of all 500

(US$7.80) and 1,000 (US$16) banknotes of the Mahatma Gandhi Series. The government

claimed that their action would curtail the shadow economy and crack down on the use of

illicit and counterfeit cash to fund illegal activity and terrorism.

"This (demonetization) has proved to be one of the most disruptive experiments in recent

economic history and one from which Modi's administration now risks learning all the wrong

lessons," wrote author James Crabtree, for the magazine Foreign Affairs. Such exercise

heeds consequences, some of which are exceedingly detrimental, that must be dealt with by

India and discussed in ECOSOC since it aims for the socioeconomic stability of the world.

This will take place at the Operational Activities and Development Segment forum,

providing overall coordination and guidance on the prescribed issue.

Background “ Demonetised ” means taken out of circulation.

The scrapped 500 and 1000rupee bank notes made up 86% of all rupees in circulation

Indians had until December 30th to exchange their old banknotes for new ones or deposit

them in their accounts.

Voiding the majority of a country’s currency will have obvious impacts on its immediate

growth prospects. Consumers, companies and investors all wobbled in late 2016. The lack

of currency in the system and therefore in the hands of the ordinary Indian caused demand

to reduce since the 500 and 1000 rupees notes were the most common and widely used

notes in the market. Fastmoving consumer goods, usually a reliable growth sector,

retrenched by 11.5% in November, according to Nielsen, a research group. Biggerticket

items seem to have been hit harder. Yearonyear sales at Hero MotoCorp, the biggest

purveyor of twowheelers, slid by more than a third in December. Firms’ investment

proposals fell from an average of 2.4trn rupees ($35bn) a quarter to just 1.25trn rupees,

according to Centre for Monitoring Indian Economy, a data provider. As a result,

corporatecredit growth, already anaemic, had reached its lowest rate in at least 30 years.

Another impact which is a result of the lack of demand and corporate investment proposals

is the slow down in the growth of India in the shortterm. Along the way will also have other

side impacts such as a shortterm rise in unemployment caused because large companies

will see a fall in sales due to people not being able to afford goods and services. Therefore,

the companies will be forced to lay off workers because they wouldn’t be able to sustain

wages either. In addition to this, the life in rural areas was brought to a standstill because

they could not withdraw money since they do not have bank accounts and they could not

buy products because the intrinsic value of money that makes exchanges using currency

was lost as well. This caused great stress to the livelihoods to a majority of Indians since

70% live in rural areas. To a very limited extent, another negative impact of this move was

the fall in the tax revenue earned by the government because sales and transactions fell. As

a result, the dividend that the Reserve Bank of India provides to the government also halved

from over 60 crores to 30 crores, reducing the budget of the government by over 30 crores.

However, the ultimate failure of demonetization is the fact that the very informal economy

that Narendra Modi was trying to suffocate, will be able to rise back due to the lack of any

measures put into place which would compel people to record transactions as being official

and pay taxes on them. Government initiatives to introduce electronic payments have been

woefully slow due to the interests of the politicians that lobby against such measures. What’s

even worse is that the harm caused to the people in rural areas where most of the

unrecorded cash transaction takes place could have been avoided by giving forewarning to

the people while still achieving the same aim of getting rid of ‘black’ money by monitoring

and backtracking unusually large transactions.

The benefits on the other hand were highlighted in the speech given by Narendra Modi, the

prime minister, announcing the measure.

They were broadly combating corruption and untaxed wealth. It has been claimed that

demonetization will repair India's counterfeiting problem for the near to midterm. The

cashcentric black market for the most part will cease to function with the nullification of the

bulk of its currency. It has also, been reported that the new 500 and 2,000rupee notes are

less vulnerable to

counterfeiting, having advanced security features. It is also thought that the drive will wipe

out a measure of corruption and tax evasion in India’s real estate market. Gangsters and

profiteers with suitcases full of money would be left stranded.

But reports suggest that nearly 15trn rupees of the 15.4trn rupees taken out of circulation

are now accounted for. So, either the rich weren’t hoarding as much “black money” as was

supposed, or they have proven adept at laundering it. Demonetisation proponents point to

increased lending, and more importantly, Indians will move from living cash in hand into the

taxed formal economy. 98% of transactions in India is done in cash, and economists reckon

that India’s black economy accounts for at least 20% of GDP.

Issue 2: Creating a strategy to sustain economic growth of countries

with high dependency ratios The dependency ratio relates the number of children (014years old) and older persons (65 years or over) to the workingage population (1564 years old). Dependency ratios indicate the potential effects of changes in population age structures for social and economic development, pointing out broad trends in social support needs. A high dependency ratio indicates that the economically active population and the overall economy face a greater burden to support and provide the social services needed by children and by older persons who are often economically dependent. A high youth dependency ratio, for instance, implies that higher investments need to be made in schooling and childcare.

The need to ensure access to basic services, such as education and health, as well as to ensure the economic security of children and older persons has been emphasized in many international conferences and summits, including the World Summit for Children (1990), the International Conference on Population and Development (1994), the World Summit for Social Development (1995), The United Nations Millennium Declaration and the World Assembly on Ageing (2002).

How are countries facing high dependency ratios going to prepare for

their futures and the economic burdens that follow? High dependency ratios could mean lower tax revenues: retired people pay lower income

tax; therefore, the working age population has a greater responsibility to pay tax. There is a

need for higher government spending, where the government is committed to paying a state

pension and related benefits such as a minimum income guarantee. In underdeveloped

countries, there is high dependency ration because there is a high birth rate and as a result,

there are more people under the age of 15. Thus, governments are forced to also spend

more on the education, healthcare and the children’s fund. Therefore, there are greater

demands placed on government spending by a rise in the dependency ratio.

The pressures on government finances could lead to higher tax rates on a declining working

population, which could create disincentives to work and reduce disposable income. The

government may be forced to use collect more revenue from indirect taxes. It could also

lower pension funds. Because of the rising percentage of retired people, pension funds are

having to stretch further than before. Many pension funds haven’t planned for the rapid rise

in the dependency ratio. Combined with the credit crisis and lowinterest rates, the average

income retired people can expect has fallen and will continue to fall due to an increase in the

number of retired individuals.

There is also pressure to the raise retirement age because of the increased cost of

pensions. Raising it means people will have to work longer than before.

Raising the state pension age will have different effects. Some people with a substantial

private pension will not be really affected because they can still choose to retire when they

want. However, others with no or minimal state pension will have to work longer.

The economic burdens that follow a higher dependency ratio include social,

economic, and labour market implications. A higher dependency ratio could lead to labour

shortages as firms struggle to recruit sufficient numbers of workers. Firms may have to

respond by encouraging older workers to stay in work for longer. There may be an increase

in ‘semiretirement’ – where older workers stay in work parttime to supplement smaller

pensions.

A higher dependency ratio is likely to reduce productivity growth. A growth in the

nonproductive population will diminish productive capacity and could lead to a lower rate of

economic growth in the long run. If the government fails to tackle issues relating from a

higher dependency ratio, there could be increased pressures placed on government

finances, leading to higher borrowing or higher taxes which also reduce economic growth.

The retired population will make up a bigger share of the population. Therefore, they will

have a bigger political voice. Yet all countries are yet to meet or cater to the various

demands the ageing population makes of its society and government, both of which have not

evolved a market or a function for them.

These are the textbook implications of higher dependency ratios. It will obviously vary with

each country’s political and economic stability and geographical location. It is, however, the

first step in understanding what to research. Here is a place to start:

1. http://www.nationsencyclopedia.com/

2. http://data.worldbank.org/indicator/SP.POP.DPND

For this reason, each delegate has also been suggested with what we consider the most

important metrics to provide guidance as to which issues demand the most attention. For

example, a country could consider food security and improved nutrition, or inclusive and

equitable quality education, gender equality, access to energy, promote sustainably

economic growth and full productive employment, build resilient infrastructure,

industrialisation and foster innovation.

You can use this website:

http://www.theglobaleconomy.com/ for all available metrics on each country and definitions.

Afghanistan ● According to the World Bank, the age dependency ratio was 86.95% in 2015

● The unemployment rate was 8.54% in 2016

● The capital investment as percent of GDP was 19.78% in 2015

● The corporate tax rate was 20% in 2016

● The personal income tax rate was 20% in 2014

● There is no indirect tax rate

● The public spending on education, percent of GDP, was 4.62% in 2014

● The latest health spending as a percent of GDP was 8.18% in 2014

● The life expectancy, in years was 60.37 in 2014

● The number of births per 1,000 people, per year was 34.2 in 2014

● The death rate, per 1,000 people, per year was 8.23 in 2014

Algeria ● According to the World Bank, the age dependency ratio was 52.62% in 2015


● The capital investment as a percent of GDP was 45.61% in 2014



● The indirect tax rate was 17% in 2016


● The latest health spending as a percent of GDP was 7.21% in 2014

● The life expectancy, in years, was 74.81 in 2014

● The number of births per 1,000 people, per year was 24.31 in 2014

● The death rate, per 1,000 people, per year was 5.13 in 2014

Belgium

● According to the World Bank, the age dependency ratio was 54.25% in 2015







● The latest health spending as percent of GDP was 10.59% in 2014


● The number of births per 1000 people, per year was 11.10 in 2014

● The death rate, per 1000 people, per year was 9.3 in 2014

Brazil ● According to the World Bank, the age dependency ratio was 44.66% in 2015





● The published indirect tax rate was 19% in 2016






Burkina Faso ● According to the World Bank, the average age dependency ratio was 92.18% in 2015



● The corporate tax rate was 41.3% in 2015






Chile ● According to the World Bank, the age dependency ratio was 45.24% in 2015





● The published indirect tax rate was 19% in 2016






Czech Republic ● According to the World Bank, the age dependency ratio was 49.52% in 2015





● The indirect tax rate is 21% in 2016


● The health spending as percent of GDP was 7.14% in 2014




Estonia ● According to the World Bank, the age dependency ratio was 53.49% in 2015











France ● According to the World Bank, the age dependency ratio was 60.27% in 2015











Ghana ● According to the World Bank, the age dependency ratio was 73.04% in 2015











Germany ● According to the World Bank, the age dependency ratio was 51.81% in 2015











Greece












Honduras












India ● According to the World Bank, the age dependency ratio was 52.45% in 2015











Italy ● According to the World Bank, the age dependency ratio was 56.54% in 2015











Japan ● According to the World Bank, the age dependency ratio was 64.47% in 2015









● The number of births per 1000 people, per year was 8 in 2014

● The death rate, per 1000 people, per year was 10 in 2014

Iraq ● According to the World Bank, the age dependency ratio was 78.7% in 2015











Lebanon ● According to the World Bank, the age dependency ratio was 47.34% in 2015











Nigeria ● According to the World Bank, the age dependency ratio was 88% in 2016.






● Public spending on education, percent of GDP was 3.06% in 1975

● Health spending as percent of GDP was 3.67% in 2014

● Life expectancy, in years was 52.75 in 2014


● Death rate, per 1000 people, per year was 12.92% in 2014

Pakistan ● According to the World Bank, the age dependency ratio was 65% in 2016.






● The public spending on education, percent of GDP was 2.45% in 2014




● The death rate, per 1000 people was 7.41 in 2014

Republic of Moldova ● According to the World Bank, the age dependency ratio was 34.55% in 2015.









● The number of births per 1000 people, per year was 10.73% in 2014

● Death rate, per 1000 people, per year was 11.31% in 2014

South Africa ● According to the World Bank, the age dependency ratio was 57% in 2016.



● The corporate tax rate during 20062016 was 28% in 2016








Trinidad and Tobago ● According to the World Bank, the age dependency ratio was 57% in 2016.

● The unemployment rate was 4% 2016










Vietnam ● According to the World Bank, the age dependency ratio was 57% in 2016.








● The life expectancy in years was 75.63 in 2014

● The number of births per 1000 people per year was 17.16 in 2014

● The death rate per 1000 people per year was 5.82 during in 2014

United States of America ● According to the World Bank, the age dependency ratio was 57% in 2016.

● The unemployment rate was 4.91% in 2016.







● The life expectancy in years was 78.94 in 2014

● The number of births per 1000 people per year was 12.50 in 2014

● The death rate per 1000 people per year was 8.10% in 2014

marwa bg ecosoc - google docs · 2017. 9. 10. · india and discussed in ecosoc since it aims for...

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