Resource Mobilization and Structural Transformation Abdoulie Sireh-Jallow Lead Economist, IsDB 2011 African Economic Conference Green Economy and Structural Transformation
Format of presentation Structural Transformation Resource Mobilization - Fiscal Space Expansion Traditional (the Usual) Non-Traditional sources (Ethiopian Case) Conclusion
Definition Structural Transformation Large scale transfer of resources from some sectors to others in a system, necessitated by fundamental changes in policies or objectives.scaletransferresources sectorssystem fundamentalchangespolicies objectives Why Transfer? How about Creation? Transitioning into a Green economy is a structural transformation How can we fund this?
Resource Mobilization From where???? Traditional Sources (the Usual Workhorses) Tax and Non-Tax Revenue ODA Borrowing (External or internal) Efficient management of what we already have And if these are NOT Enough? Non-Traditional Sources of Development Finance to COMPLEMENT traditional ones WHAT is Non-traditional?? Lets look at the Tax Landscape in SSA
Revenue sources as % of GDP - SSA Source: Raising Domestic Revenue for MDGs, Terry Mckinley, IPC, UNDP using IMF Statistics
Estimated Tax Effort Source: Revenue Mobilization in Developing Countries, IMF (March 2011)
Government Revenue as % of GDP in SSA Source: Regional Economic Outlook: Sub Saharan Africa, IMF (Apr, 2011)
Very country-specific What is N-T to country A may be Traditional in Country B Examples Carbon Sequestration and Trading Diaspora Bonds Trade in Services Centers of Excellence – Trading Services in the Social Sectors Tourism You can only own your development when you FUND it yourself. What are Non-Traditional Sources?
The Case for Ethiopia Source: Min of Finance, Ethiopia, UNDP MP, IMF, Own computations
ODA – Gleneagles Scenario Source: Min of Finance, Ethiopia, OECD, Own computation Food and Fuel Crisis FEC
Carbon Trading Scenario Source: and own computations
Potential Fiscal Space (Select N-T Sources) Source: Prospects of Non-Traditional Sources of Development Finance in Ethiopia, UNDP Ethiopia (2010)(Unpublished)
Solar Energy Potential Source: Millennium AG
Fiscal space expansion helps in relaxing binding constraints induced growth Catch-22 cycle Non-competitive economy Sub-Optimal Exports Limited Fiscal Space Unfavorable debt sustainability situation Binding Constraints (e.g. Infrastructure Deficit)
Conclusion YES WE CAN! YES AFRICA CAN! Analytical Study in only ONE step, the next is a STRATEGIC ACTION PLAN to implement the study recommendations Let us explore and exploit Non-Traditional Sources of Development Finance ( Country-specific ). The more you can fund your development, the more you own your development.
Thank You
Reference documents Revenue Mobilization in Developing Countries, IMF (March 2011) Regional Economic Outlook: Sub Saharan Africa, IMF (Apr, 2011) Raising Domestic Revenue for MDGs. Why wait for 2015? Terry Mckinley, IPC, UNDP (2007) Prospects of Non-Traditional Sources of Development Finance in Ethiopia, UNDP Ethiopia and CDPR, SOAS (2010) Fiscal Space and Carbon Sequestration in Ethiopia: a potential non-traditional source of development finance to meet the MDGs, Abdoulie Sireh-Jallow (2010)