Development Cooperation Seminar Social Protection: Towards Universal Coverage in Thailand 5 November 2010 Michael Samson Economic Policy Research Institute and Williams College CDE msamson@epri.org.za International perspective on affordability, feasibility and developmental impact of social protection The

OECD countries invest significant shares of national income in social protection Source: OECD, cited in Hagemejer (2007) Social protection expenditure as % of GDP

....and social protection accounts for substantial poverty reduction in higher income countries SOURCE: UNDESA, OECD AND ILO

Development country spending on social protection Mean 1.7% of GDP; median 1.4% of GDP (n=72) For 1/2 of countries is about 1-2 % of GDP

Designing social transfers within a broader development planning framework Intra- sectoral linkages Inter- sectoral linkages Inter- sectoral linkages

Social protection promotes human capital development and strengthens pro-poor growth South Africa Social protection Human capital Labour productivity Pro-poor growth Increase wages 60-130% more than the cost of transfers

Higher investment and growth Social protection promotes better risk management and encourages investment Higher investment and growth Risk Manage-ment Social protection

Social protection reinforces social cohesion, facilitating economic reforms that promote pro-poor growth EXAMPLES Mauritius Botswana Nepal Papua New Guinea IMF Working Paper, African Department Who Can Explain The Mauritian Miracle: Meade, Romer, Sachs or Rodrik? Prepared by Arvind Subramanian and Devesh Roy1, August 2001 “In return for guaranteeing the rights of the sugar owners, the political majority did implicitly extract a compromise in terms of transferring some of the rents from sugar to itself. One important aspect of this transfer was a large, relatively well paid, civil service (staffed predominantly by the majority Indian community) and a generous system of social protection,particularly related to pensions, The success of the sugar industry in Mauritius can thus be seen as an example of what can be termed as optimal rent sharing between the political (predominantly Indian) and economic elites (predominantly non-Indian).” MauritiusPensionExplainGrowthMiracleIMF.pdf, page 37 Mauritius

Conclusions Social protection is affordable Increasingly developing countries are integrating social protection into development plans in order to achieve maximum impact The growth and development effects have an important impact on affordability and sustainability Universal approaches contribute the maximum to social cohesion and nation building