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‘IBSA and Inclusive Growth’

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1 ‘IBSA and Inclusive Growth’

2 Structure of the presentation
Part I: IBSA IBSA background IBSA in the present IBSA achievements and challenges Part II: Inclusive Growth The concept of Inclusive Growth How to achieve Inclusive Growth? The measurement of Inclusive Growth Part III: IBSA and Inclusive Growth IBSA and trends in Inclusive Growth IBSA current efforts for promoting Inclusive Growth Issues which need to be further discussed: How Inclusive is Inclusive Growth? LAIA In our presentation we will talk on the one hand about IBSA Dialogue Forum, and on the other hand about Inclusive Growth. The presentation will be structured as follows. 1- First we will analyze IBSA origins, main objectives and functioning. Moreover, we will explore the main initiatives that have taken place till the present and we will conclude this part by pointing out the achievements as well as the challenges the forum faces in the future. 2- In the second part we will talk about inclusive growth. We will first define the concept of inclusive growth, then, we will analyze the strategies to achieve inclusive growth and will finish this part by identifying ways of measuring inclusive growth. 3- In part three, we merge both part I and part II and we identify to which extent IBSA countries have been promoting inclusive growth in the last years as well as which are the current efforts IBSA countries are doing in the present to promote inclusive growth.

3 Part I IBSA: ‘A unique model of trans-national cooperation’ The World Development Report 2008

4 IBSA background Origins of IBSA:
India, Brazil and South Africa share important economic and political attributes, being large democracies very active in the global scale Given their status as developing countries, they share common development challenges As a result, in June 2003, the IBSA Dialogue Forum was created and was formalized with the adoption of the Brasilia Declaration in June 2003 LAIA - We all know that since the 1990s, India, Brazil and South Africa have developed a very active role in worldwide issues. Furthermore, they share very important attributes: they are large middle-income economies with consolidated democracies - Moreover, given their status as developing nations they face many common development challenges. - In consequence, given the convergence of interests among them and given the potential areas of cooperation between them, in 2003 they decided to create the IBSA Dialogue Forum. - The Forum, is conceived as a trilateral developmental initiative between India, Brazil and South Africa to promote South-South cooperation

5 IBSA background IBSA mainly perceived as a political initiative to elevate the concerns of developing countries on the global agenda. Imperative issues: The reform of the UN Security Council Balance the multilateral trade system in the framework of the WTO Doha round Besides political cooperation: Commercial and technological exchange covering several sectors Strong focus on Social development and poverty eradication through IBSA Fund LAIA The main objectives: As stated on its first declaration, IBSA focuses on two global issues: the reform of the UN Security Council and the need to balance the multilateral trade system in the context of the WTO Doha round. Thus, the alliance is mainly perceived as a political initiative to elevate the issues and concerns of developing countries on the global agenda Besides political cooperation, there is also important cooperationn other sectors such as energy (biofuels, wind, solar and nuclear energy), transport (aviation and maritime connections) and information technologies. And lastly, without ignoring the “third-world” approach, the forum also has an important social development agenda through the IBSA fund

6 IBSA as an unprecedented South-South alliance
Previous South-South initiatives not successful because of: Lack of resources, institutional weaknesses, excessively large and amorphous memberships But in IBSA: Group of like-minded countries which share very similar interests, skills and needs It brings together three of the largest and fastest growing economies in the world IBSA should also be differentiated from BRIC LAIA IBSA is usually described as a unique model of transnational cooperation. But why? First of all, we know that in the past, many number of South-South initiatives were launched. However, most of them were unsuccessful because a lack of resources, institutional weaknesses and because memberships were too large and country members too different. However, in the case of IBSA it is different: Firstly, IBSA is a group of similar countries that are at similar stages of development and that have very similar interests and needs. Moreover, it brings together three of the fastest growing economies in the world. Thus, the combined economic weight of its members together with the convergence of interests among them is what makes IBSA an unprecedented alliance in the context of South-South cooperation. At this point is important to say that the forum needs also to be distinguished from BRIC Contrary to IBSA, there is no consensus on the BRIC project: It is no clear how it should evolve, what issues should be considered and each of the four countries have very different interests within BRIC. Moreover, BRIC is strongly focused on economic issues and is not engaged on social development while ibsa has a strong development focus.

7 IBSA in the present Cooperation in IBSA is being built on 4 pillars:
1) Political Forums and Coordination: - UN Security Council Reform - Trade 2) Sectoral Cooperation, through 16 Working Groups: - Agriculture - Science & Technology 3) IBSA fund for the Alleviation of Poverty and Hunger: Agriculture Project in Guinea-Bissau - Waste Disposal in Haiti - Infrastructure in Cape Verde - Other projects in Burundi, Palestine and Cambodia. 4) Other Forums: - Academic Forum - Businessmen’s Forum ELLIE: IBSA has a political structure that is divided into 3 parts: The Summits – which is when the Heads of State meet, 4 have happened so far; The Trilateral Joint Commissions – which is when the Ministers of Foreign Affairs meet, 6 have happened so far; and the Focal Points which is when Senior Officials meet. The focal points meet twice a year, before the ministerial meetings. The cooperation within IBSA is divided into 4 parts: is the political coordination which is the outcome of the head of state meetings and ministerial meetings. Then the 16 working groups, the IBSA fund – to which every member contributes a minimum of 1 million dollars and the forums, like the Academic Forum which we organized. The first 3 pillars are more prominant, with political coordination being the most emphasized. The countries take common position regarding many issues, the most important ones being the reform of the UN security council and multilateral trade negotiations, namely the WTO Doha round of negotiations- more generally they wish to reform multilateral institutions to make them more representative of developing countries. Other important areas of cooperation are social development, peace and security and climate change, taking common positions in important events and conferences around the globe. Then there’s the 16 working groups. All of the working groups have a memorandum of understanding, however a lot of them don’t have any tangible results. The most prominent working group, with the most work being done is the S&T. They have 3 ongoing projects in nanotechnology and HIV/Aids and one in oceanography. The Agriculture group has also been active, with the coordination of a major Joint Development Project in Guinea Bissau to improve agricultural yields and food self-sufficiency – the project employed 4,500 people (60% of them being women) . It is also important to mention the trade working group – though there has not been great progress within trade coordination, there has been an agreement in terms of a common action plan to facilitate intra-IBSA trade and a Preferential Trade Agreement was put into force between MERCOSUR and India and between MERCOSUR and SACU (the Southern Africa Customs Union). IBSA Fund: the three countries each contribute a minimum of $1 million per year to the fund. Agricultural project, the collection of solid waste project in Haiti in order to reduce the incidence of disease and environmental impact of waste – employs 385 people with around 200 being women. Cape Verde involved refurbishing health units in Cape Verde so that residents have access to health. HIV aids project in Burundi, sports centre in Palestine. Forums: The Academic Forum which we all know about. The Businessmen’s Forum has been quite successful which targets cooperation within the Small and Medium Enterprises amongst the three countries – they are organizing a tri-nation summit for small business development to share expertise and enable them to effectively compete in a global environment.

8 IBSA achievements Convergence of key areas is what makes IBSA so powerful IBSA’s Working Groups have had mixed results: The Science and Technology Working Group has been the most successful IBSA Development Fund has been successful Among the forums, the Business Forum stands out Although there has been some progress in social and economic cooperation, IBSA’s success is political coordination, specially within the framework of WTO negotiations ELLIE There has been substantial progress in terms of political coordination – particularly in the WTO Doha round, with the 2003 negotiations failing due to the common stance of the IBSA countries demanding a relaxation of the subsidies of the developed countries. This was the first time that developing countries took a common stance against the North, thus systematically changing the North South relations. In the UN there is also evidence of coordination with 96 percent note convergence between the IBSA countries. The working groups have not had great results – and a criticism of IBSA has been that there is too many working groups which lacks focus. The IBSA Fund has carried out projects which seem to have been successful, creating employment opportunities in various regions in the developing world. Among the forums the Business forum stands out. Economic cooperation is minimal and has potential to significantly improve. Overall the main outcome of IBSA is of political coordination and critics argue that in order for IBSA to become more successful and powerful within the global order it must also strengthen ties economically.

9 IBSA challenges Producing a Coordinated Plan of Action and a Greater Strategic Focus 2) Achieving a Comprehensive Economic Partnership Trade Facilitation Agriculture Cooperation Other Potential Areas for Future Cooperation: Energy, Manufacturing and Services, R&D, Commodities Expanding the Development Fund 4) Integrating Social Development Strategies ELLIE So far IBSA has declared common positions on a number of issues, but tangible and economic results and cooperation has been minimal. A greater focus needs to be taken in terms of the working groups and of course economically. Trade: While trade has more than quadrubled since 2002 it still is only 3 percent of total IBSA exports to the world! And while the countries share a huge share of the world’s GDP there is immense potential for trade and economic ties to strengthen. Few moves have been taken in terms of Preferential Trade Agreements, however a lot more needs to be done to facilitate trade relations: Transport links, Procedures and standards need to be standardized and the lack of business information needs to be addressed. There is also great potential in the area of agricultural cooperation which is discussed in a recently published article by IBSA. Some areas are food processing and safety, agricultural R&D and capacity building. The IBSA Fund could also be enlarged in order for IBSA to expand its relations with other countries and and engage better with the rest of the developing world. The integration of social development strategies could also be a powerful tool to deal with some development challenges amongst the three countries, which face high levels of poverty and inequality. The sharing of development expertise is essential.

“If we cannot make globalization work for all, in the end it will work for none.” Kofi Annan ELLIE In this section we will talk about Inclusive Growth – quite a novel concept and has emerged in the recent years and has seemed to replaced pro-poor growth as a target. Working at IPC we are all very aware of the challenge to make growth a participatory process – all IBSA countries have enjoyed very high growth rates in the recent years, accompanied with high levels of poverty and inequality! Rising inequality, that is more than often accompanied with high growth rates, as only a small fraction of the population benefit from growth, pose a danger to social and political stability, therefore a danger to the sustainability of the growth process. Thus, in order for growth to be sustainable, it needs to be evenly distributed across the population - and an inclusive growth process would not only be sustainable it would also be accompanied with low criminality, high literacy rates, low mortality rates. Thus it is critical to make globalization work for all!

11 The Concept of Inclusive Growth
Definition: A growth process that ensures equal access to opportunities for all segments of society regardless of their individual circumstances. Thus, inclusive growth is about providing the poor with a starting point that can enable them to enjoy the fruitfulness of economic growth. ELLIE Inclusive growth is about equality of opportunity. Inclusive growth is achieved when there is equal access to opportunities. SO the key word here is : equality of opportunity across the whole population, regardless of their individual circumstances (that means, equal access independently of the economic, social and biological factors of each individual). If growth is inclusive, everyone participates in and benefits from growth – thus with growth, there would be a rise in incomes and hence a decrease in poverty. Growth and poverty are interlinked and analyzed simultaneously, and therefore, need to be addressed together.

12 How to achieve inclusive growth?
Growth accelerators strategies for growth + Equalizing accelerators which make the growth more equitable and thus, more inclusive Source: World Bank Development Policy Review ELLIE While reform that accelerate growth are important, in order to achieve inclusive growth we require policies that make growth more equatable - across sectors and groups where it is needed the most. Macroeconomic stability is a precondition for inclusive growth, enhancing the capabilities of the people is essential.

13 Achieving inclusive growth
Core strategy to make growth inclusive: Eliminating circumstance-based inequalities in order to ensure equality of opportunity How? Productive Employment Capacity Enhancement Social Protection + without forgetting Growth Accelerators ELLIE Inclusive growth seeks to eliminate inequalities in outcomes, to ensure that the benefits of growth are equally distributed across the population. Differences in outcomes occurs due to differences in efforts which are under the control of the individual, and differences in circumstances which occur due to different economic, social or biological factors outside of the control of the individual. Inclusive growth strategies seek to deal with these differences in circumstances and thus eliminate circumstance-based inequalities. The main instruments of inclusive growth are: productive employment, capacity enhancement and social protection: 1 – Productive employment ensure the creation of new opportunities 2- These new opportunities would be equally shared across the population through the enhancement of capabilities, thus ensuring equal access to education and public services such as health, sanitation and credit and employment markets. 3 – Finally, there is still a need for social protection to protect the chronically poor who are still unable to participate in the growth process, regardless of an equalized access to opportunity. This needs to be combined with a growth policy, such as investment in infrastructure and innovation in order to enhance growth itself. This implies the cooperation of planning, finance and social development ministries.


15 Inclusive Growth vs. Pro-poor Growth (Ravallion and Chen, 2003)
Relative definition of pro-poor growth: incomes of the poor grow faster than those of the population as a whole and thus, poverty and inequality are reduced Absolute definition of pro-poor growth: incomes of the poor increase as an economy is experiencing growth and thus, poverty is reduced, but not necessarily does inequality In consequence, Inclusive Growth is in line with the absolute definition of pro-poor growth, but not necessarily the relative definition: The incomes of the poor increase with growth but not necessarily faster than the rest of the population. The important point is that everybody is experiencing growth LAIA Before we proceed to explain how inclusive growth should be measured, it is important to distinguish the concepts of inclusive growth and pro-poor growth As Ravallion and Chen suggest, we can define two concepts of pro-poor growth: absolute pro-poor growth and relative pro-poor growth. Under the relative definition of pro-poor growth, a growth is pro-poor when the incomes of the poor grow faster than those of the population as a whole, and thus, inequality is reduced. Under the absolute definition of pro-poor growth, a growth is pro-poor when the incomes of the poor increase as an economy is growing and thus, poverty is reduced Then, Ravallion and Chen define Inclusive Growth as a growth process where the whole population is experiencing increase in income and thus, poverty is reduced In consequence, inclusive growth is in line with the absolute definition of pro-poor growth, but not necessarily with the relative one.

16 Measuring Inclusive Growth
Most studies measure whether a growth process is inclusive by analyzing income growth among the whole population However, we believe it is not correct to just look at income distribution to assess whether a growth process is inclusive or not Inclusive growth is about ensuring equality of opportunities Increase in incomes is a necessary condition for inclusive growth, but not a sufficient one: while income of the poor might increase with growth, equality of opportunity might not The essential condition for growth to be inclusive is to ensure that there are equality of opportunities among the population LAIA According to this definition of inclusive growth, we see that most of the studies who measure inclusive growth, focus on analyzing whether the incomes across the whole population are increasing as the economy is growing. However, we believe it is not correct to just look at income to assess whether a growth process is inclusive or not. Why??? As we have defined earlier, inclusive growth is about ensuring equality of opportunities. So, if we just focus on income, it can be that income of the poor increase with growth, but not necessarily does equality of opportunity. In consequence, we can say that an increase in incomes is a necessary but not sufficient condition for growth to be inclusive. What we need to look is at equality of opportunities directly.

17 Measuring Inclusive Growth : Ali and Son
LAIA A good example, is the paper by Ali and Son. This paper proposes a methodology for measuring inclusive growth based on access to opportunities, which are understood in terms of access to education, health services, employment, etc. First of all, in the horizontal axis, they arrange the population in ascending order of their incomes, with population (p) going from 0 to 100%. In the vertical axis, we have the average access to a specific opportunity, which means the percentage of the population who enjoys a given opportunity. Then, for each cumulative share of the population, they calculate the percentage of the population who is enjoying the opportunity. And they obtain the opportunity curve. To see an example, we have these two opportunity curves. In the first one, opportunities are distributed equitably (because the opportunities available to the poor are more than those available to the non poor, and the other one being very inequitable (because the poor enjoy less opportunities than the non-poor). So, what does the opportunity curve tell us about inclusive growth? By comparing two opportunity curves of two periods of time, we can assess whether the growth process has been inclusive or not, and the degree of inclusiveness. How? First of all, for growth to be inclusive, the opportunity curve needs to shift upwards at all points, that is, everybody enjoys an increase in opportunities. Then, the degree of inclusiveness will depend on two factors: how much the curve is shifting upwards, how much overall opportunities are increased. in which part of the income distribution the shift is taking part. For example, if the opportunity curve shifts upwards in the lowest quintiles, this means opportunities available are more equally distributed than before, and thus, the degree of inclusivenness is higher. And the opposite. However, to know the exact magnitude of inclusivenness, we need to use some indicators. Because we don’t have time, I won’t present them but those interested, can have a look at the paper.

18 Part III: IBSA and Inclusive Growth
Laia In this last section, we merge both part I and part II and we try to identify to which extent IBSA countries have been promoting or not inclusive growth policies in the last years as well as which are the current efforts IBSA countries are doing in order to promote

19 IBSA and IG: trends All three countries have recognized the inequitable distribution of the gains of globalization and growth and the need to adopt inclusive growth policies They have affirmed in repeated occasions their commitment to pursuing policies for inclusive growth. Although their strong commitment to inclusive growth, they are in different stages Laia - First of all, it’s worth noting that all three countries have affirmed in several occasions the need to adopt inclusive growth policies and have committed to undertake them. - However, as we will see, their progress in terms of inclusive growth has been quite different, and each country shows a different picture.

20 Inclusive Growth in INDIA: trends
It has shown a clear commitment to inclusive growth policies over the years Huge increase in expenditure on social services From 2000 to 2005, about 47 million work opportunities were created However, India’s big challenge still remains widespread growth An unprecedented 6.5 annual GDP growth hasn’t brought about even 1% point of annual reduction in poverty In consequence, although the efforts and the improvements in some indicators, India’s growth hasn’t been inclusive LAIA In the case of India, the country has shown a clear commitment to inclusive growth policies. For example, some indicators are the following: There has been a huge increase in social services expenditures In terms of employment, from 2000 to 2005, about 47 million work opportunities were created Although all the efforts, a major concern of India is still the challenge of widespread growth because while it has experienced huge growth, this hasn’t been proportionally reflected in poverty reduction. For example, although it has experienced a 6.5% annual GDP growth, this hasn’t been traduced even in 1% point of annual reduction in poverty

21 Inclusive Growth in SOUTH AFRICA: trends
Since 1993: Growth averaged about 3% from and has reached 5% in 2005. Employment creation But… Income inequalities have increased since 1993 Employment remains high (26%) Poverty persists at acute levels South African Growth hasn’t been inclusive LAIA In the case of south Africa the situation is much worst: Between growth averaged about 3%, a much higher rate than the previous period, and in 2005 it reached 5%. With the faster growth rate there has been employment creation. However, at the same time: South Africa has become a very unequal society, and according to the gini coefficient, is the second most unequal country of the world. Moreover, although there has been employment creation, the unemployment rate is still very high at 26%. And in terms of poverty indicators, they haven’t improved and are still very high.

22 High inequality persists in South Africa
LAIA To have an idea of the magnitude of inequalities, see the following table, which shows how much inequality has increased from 1993 till 2008 by race and geotype. In consequence, South Africa has still a long way to go in order to achieve inclusive growth. Source: AGISA 2006

23 Inclusive Growth in BRAZIL: trends
Brazil’s growth pattern can be defined as inclusive Gini coefficient has been declining in the last decade as well as poverty Growth of the income of the poor has been higher than the growth of the income of the rich Reasons for decline in income inequality: More equitable access to education Increasing integration of labor markets Increasing generosity of contributory and non-contributory government transfers Bolsa Familia as a key program for reducing inequality and extreme poverty LAIA In the case of Brazil, the picture is different and we can define it’s growth pattern as being pro-poor and inclusive. Why? Because Brazil’s Gini coefficient has been falling considerably And poverty has also been falling in the last years. Moreover per capita income of the poorest 10 percent grew 7 percent per year, while that of the richest 10 percent grew only 1.1 percent. Main reasons for the decline in income inequality: i) more equitable access to education ii) more integration of labor markets iii) government transfers are more generous. At this point It is worth to mention the importance of Bolsa Familia as a major contributor to the decline in income inequality in Brazil \

24 Income Inequality in Brazil falling but Remains High
LAIA -Overall, although the progress has been successful, we need to keep in mind that although Brazil’s Gini coefficient has been falling, it still has one of the highest levels of income inequality in the world and thus, further efforts should be done in order to ensure an even more inclusive society.

25 Assessment of inclusive growth by looking at poverty and inequality dimensions instead of access to opportunities Although these studies can be indicative, in order to assess with exactitude the inclusiveness of IBSA’s economies, access to opportunities over time needs to be explored Before we move forwards, I just want to point out that we have assessed whether IBSA’s growth is inclusive by looking at poverty and inequality dimensions instead of access to opportunities. Thus, it seems that we have analysed the economies more in terms of pro-poor growth rather than in terms of inclusive growth. In consequence, although these studies can be orientative, in order to assess the inclusiveness of IBSA’s economies, it is essential to explore access to opportunities over time. Because of a lack of time and because of insufficient data, we haven’t been able to carry out this kind of study, but we strongly encourage other who might be interested to engage on it. I have looked at past trends and now Ellie will talk about the current efforts they are taking to promote inclusive growth.

26 Current efforts for the promotion of Inclusive Growth: INDIA
Anti-poverty and Employment generation policies: The National Rural Employment Guarantee Act (NREGA) SGSY: to encourage self-employment for the rural poor SJSRY: employment to the urban unemployed or underemployed poor b) Rural infrastructure development: Bharat Nirman: basic infrastructure in rural areas Total Sanitation Campaign c) Education : RMSA scheme to enhance secondary education d) Health: National Rural Health Mission (NRHM): health services in rural areas JSY: Aimed at lowering MMR ELLIE India has strongly shown and it is showing its commitment to inclusive growth. As an example, Inclusive Growth is stated as a priority in the Planning Comission’s Eleventh Five Year Plan and the last Union Budget is strongly focused towards inclusive development. Several social-sector initiatives are being promoted. The National Rural Employment Guarantee Act – the most popular out of the 3 plans - provides employment to the rural poor and aims at dealing with the causes of chronic poverty, for example drought, deforestation, soil erosion. In more than 43 million households were provided employment under the scheme with 50% of person days in favor of women. Bharat Nirman – building infrastructure and basic amenities in rural areas, namely housing, irrigation, drinking water, roads, electricity and telephones. Sanitation: in the 2001 census 22% households had sanitation facilities, which has risen to 61% now. Education: India has very low secondary education enrollment rates: This aims to improve quality of secondary education with the objective to achieve a 75% enrol. rate within 5 years and universal access to secondary ed. by 2017 Health: seek to reduce infant mortality rate and maternal mortality rate.

27 Current efforts for the promotion of Inclusive Growth: BRAZIL
Bolsa Familia: Brazilian’s main conditional cash transfer program Structural initiatives prior to the crisis: Income transfers Minimum Wage Industrial policy Investment expenditure New structural initiatives during the crisis Change in the personal income tax system New housing program: Minha Casa, Minha Vida ELLIE While Brazil has not been as vocal as India in terms of inclusive growth, it has also followed important human development strategies to enhance access to opportunities. Bolsa Família: This conditional cash-transfer program offers financial aid to families below the poverty line provided that the children aged 6-15 attend school, the children aged 0-6 take vaccines and the mothers receive pre and post-natal checkups. Evidence shows that this program has decreased poverty rates and inequality and that it has increased school attendance by 3 percent. b) Brazil did not decrease funding of the structural initiatives that they implemented before the crisis that explains its macroeconomic resilience during the crisis. Income Transfers: more resources have been devoted to income transfers to families through social security benefits, unemployment insurance and Bolsa Familia Minimum wage: there was a rise of a minimum wage which increase transfers to families and set a floor on the market wage in the economy – particularly the informal sector. Industrial policy: There were tax cuts and incentives that created special credit facilities for sectors experiencing difficulties. Investment Expenditure: Investment expenditure increased, particularly for infrastructure. c) The crisis also gave an opportunity for the Lula administration to introduce some new initiatives namely a change in the personal tax system – the gvt introduced two new income brackets that did not increase the effective tax rate. This introduced a more progressive system mostly benefitting the middle class. Also a new housing program was introduced for poor and low-income families aimed at building one million new residences over the period of 3 years.

28 Current efforts for the promotion of Inclusive Growth: SOUTH AFRICA
Second Economy Initiative Expanded Public Work Program (EPWP): to deal with high rates of unemployment Education and Skills Development Joint Initiative on Priority Skills Acquisition: addresses the shortage of skills in the economy Infrastructure Investment Access to basic services such as potable water, sanitation, electricity, housing. Industrial Policies Increases productivity by adressing counstraints to growth in specific sectors ELLIE In 2006, the Accelerated and Share Growth Iniative for South Africa (ASGISA) was launched to deal with the great inequalities within the population and ensure equal access to opportunities for all. The main goals are a sustained annual growth rate of 6% until 2014 and reducing unemployment to below 15% and halving the poverty rate by 2014, though the goal seems unattainable given the economic crisis. Second-Economy Initiative: The focus is on reducing unemployment – an important initiative is the Expanded Public Work Program, similar to Indias NREGA which aims at dealing with the high rates of structural unemployment – in the first phase EPWP created at least 1 million work opportunities, while in the second phase it seeks to create 2 million full time jobs for poor and unemployed people through the delivery of public and community services. The reported decrease in unemployment from 31 in 2003 to 22% in 2008 demonstrates the success of this program. b)Education and Skills Development: This initiative, called the Joint Initiative on Priority Skills Acquisition (Jipsa), seeks to address the shortage of skills in the economy by training professionals in a variety of areas to a higher standard. c) Infrastructure Investment: the initiative involves projects to eradicate backlogs in basic service delivery, including access to sanitation facilities, potable water, and electricity by 2013. d) Industrial Policies: The initiative aims at increasing efficiency in the economy by addressing constraints to growth in sectors that can diversify the economy and provide sustainable employment on a large scale. In the top three priority sectors – tourism, biofuels and BPO – progress was made in developing policy frameworks as well as providing limited and targeted subsidies.

29 IBSA and Inclusive Growth: Conclusions
IBSA countries are strongly committed to implement Inclusive Growth Policies But evidence shows us that there is still a long way to go Hopefully, current efforts on social policies taken by IBSA governments will bring growth processes which are inclusive in the near future ELLIE To sum up, although IBSA members have stated in different occasions their strong commitment towards inclusive growth, evidence shows us that there is still a long way to go. Brazil has favorable indicators already in place, showing a clear decline in income inequalities in the last decade at the same time that the country has experienced notable growth. Thus, Brazil has been somewhat inclusive and its indicators have been generally improving, yet care should be taken in inequality, as it still remains very high. India is a different story: while the indicators already in place are poor, all the indicators have been improving over time. This is probably due to positive results achieved from all the social policies being implemented to equalize access to opportunities. Hence, while India is not inclusive, it is making progress towards the attainment of inclusive growth. In the case of South Africa, indicators clearly indicate that the growth hasn’t been inclusive with the economy becoming more and more unequal over the years. However, there is some hope that these will start reversing in time, given that the government is making huge efforts to improve access to opportunities. In addition, the formulation and adoption of the Accelerated and Shared Growth Initiative demonstrates that the South African authorities are aware of these trends and are attempting to reverse them.

30 Food for Thought: How Inclusive is Inclusive Growth?
A growth whic increases opportunities for everybody but more for the rich is still an inclusive growth process? How do we measure equality of opportunities? Many papers measure equality of outcomes to assess whether growth has been inclusive (e.g. poverty rates, inequality) but to which extend does equality of outcomes reflect equality of opportunities? Greater consensus is needed for the definition and measurement of inclusive growth What do we prefer – inclusive growth or pro-poor growth? ELLIE and LAIA To finish our presentation, we will formulate some questions which still don’t have a clear answer and which are opened to discussion. First of all, we know that inclusive growth is about ensuring access to opportunities for the whole of the population. However, a process that increases opportunities for everybody, but more for the rich is still an inclusive growth process? If so, Inclusive growth doesn’t care about inequalities? There is a need to distinguish between equality of outcomes and equality of opportunities. The problem is that economists have tended to measure equality of outcomes in order to find out whether growth is inclusive, because outcomes can usually be measured with a great degree of precision, while opportunities cannot. However, is this appropriate? To which extent does equality of outcomes reflect equality of opportunities? We have talked about inclusive growth and relative pro-poor growth, saying that while inclusive growth is concerned with the growth of the society as a whole, including the poor, relative pro-poor growth just cares about the relative progress of the poor compared with the rest of the population. Which one is more rellevant? It depends on what is more important for us: whether poverty reduction or inequality reduction. To show this better, we will put an example:

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