José Luis Machinea EXECUTIVE SECRETARY Economic Commission for Latin America and the Caribbean (ECLAC) Geneva, 6 July 2007 REGIONAL DIMENSION OF STRENTHENING EFFORTS TO ERADICATE POVERTY AND HUNGER, INCLUDING THROUGH THE GLOBAL PARTNHERSHIP FOR DEVELOPMENT REGIONAL DIMENSION OF STRENTHENING EFFORTS TO ERADICATE POVERTY AND HUNGER, INCLUDING THROUGH THE GLOBAL PARTNHERSHIP FOR DEVELOPMENT Dialogue of the Executive Secretaries with the Economic and Social Council

After stagnating in , poverty and indigence rates have fallen sharply in recent years, yet the percentage of people living in poverty is still close to the 1980 figure. LATIN AMERICA : TRENDS IN POVERTY AND INDIGENCE, (Percentages)

Most of the countries of the region saw reductions in their poverty and indigence rates TRENDS IN POVERTY AND INDIGENCE, 2002–2005 and 1998–2005 a/ 2000/ / / /2005 Poverty Indigence Source: ECLAC, on the basis of special tabulations of data from national household surveys. a/ Guatemala and Nicaragua are not included because poverty estimates later than 2002 are not available. b/ Urban areas.

Between 2002 and 2005, the number of poor and indigent population declined by 12 and 16 million persons. This might show a change in trend, but now there are still more poor people than in LATIN AMERICA: POVERTY AND INDIGENCE, (Millions of people)

Projections of the extreme poverty rate up to 2006 indicate that the region is back on track towards the first target of the Millennium Development Goals (actual progress is greater than the time elapsed) LATIN AMERICA (17 COUNTRIES): LEVELS AND PERCENTAGES OF PROGRESS IN REDUCING EXTREME POVERTY BETWEEN 1990 AND 2006 a/ Source: ECLAC, on the basis of special tabulations of data from national household surveys and projections on the basis of official information from the countries. a/ The percentage of progress is calculated by dividing the reduction (or increase) in the rate of extreme poverty in percentage points observed during the period by half of the 1990 extreme poverty rate. The red line represents the percentage of progress expected in 2006 (64%). b/ Urban areas.

Reasons for the progress made towards the target: higher growth, increasing employment and rising per capita social expenditure LATIN AMERICA AND THE CARIBBEAN (21 COUNTRIES): SOCIAL EXPENDITURE AS A PERCENTAGE OF GDP IN , AND (Percentages)

Progress in reducing undernourishment, but there are considerable disparities among countries Source: Food and Agriculture Organization of the United Nations (FAO); The State of Food Insecurity in the World 2004, Rome, b/ Urban sector Latin America and the Caribbean (32 countries): progress toward undernourishment target (in percentages, by ) Target for 2015 (100%) Progress needed by 2002 (48%)

However, progress in poverty reduction since 2002 points to a larger reduction in undernourishment LATIN AMERICA (21 COUNTRIES): RELATIONSHIP BETWEEN EXTREME POVERTY AND UNDERNOURISHMENT, Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of data from the Food and Agriculture Organization of the United Nations (FAO), and ECLAC, Social Panorama of Latin America, 2004.

Unequal income distribution is an important factor to explain high poverty rates LATIN AMERICA AND THE CARIBBEAN (23 COUNTRIES a/): INCOME DISTRIBUTION INDICATORS, 2003/2005 a/ The Caribbean countries (right-hand side of the figure) have different income categories (20% above the poorest, 40% and 30% below the richest 10%). For these countries, the average income ratio cannot be calculated. Source: World Development Indicators, World Bank.

The Global partnership for development  Latin American must continue its efforts to improve growth performance, income distribution and increase the efficiency and financing of social policies to achieve the MDG targets.

The tax burden is too small, but differs sharply across countries TAX REVENUES (% GDP, 2005) Tax rev. + SS: 17.9% Total: 21.9% Caribbean w/o SS (5 countries): 25.5% The tax burden in the Caribbean is higher, however

In the Caribbean the tax burden is higher THE CARIBBEAN: TAX REVENUE WITHOUT SOCIAL SECURITY CONTRIBUTIONS (Percentages of GDP) N.B.: Central government except Barbados, which includes the non-financial public sector.

Even when the figures are corrected for GDP, there is still room to increase the region’s tax burden PER CAPITA GDP AND TAX REVENUES (Percentages of 2003 GDP and constant dollars at 2000 prices)

The Global partnership for development  Latin American must continue its efforts to improve growth performance, income distribution and increase the efficiency and financing of social policies to achieve the MDG targets.  On the other hand, the developed world must be ready to assist all developing countries, not only the least developed ones, in achieving the Internationally Agreed Development Goals.

ODA AND THE CHALLENGES FOR LATIN AMERICA AND THE CARIBBEAN

Recent developments  ODA flows have increased but still fall far short of the Monterrey targets.

Since Monterrey, ODA flows have increased … US$ billions Years Monterrey Consensus

ODA as a percentage of donor GNI …but are still far below the target Projected Source: OECD data base (2007) Monterrey target (0.7% of GNI)

Recent developments  ODA flows have increased but still fall far short of the Monterrey targets.  Channelling ODA towards low-income countries and focusing on social spending.

Channeling ODA to low-income countries and ….. N.B: Does not include Iraq, which accounted for 33% of total ODA in ODA, (Averages)

…focusing on social spending Source: ECLAC, on the basis of OECD (2007). Government institutions include budget support, emergency assistance and external debt operations. ODA TO PRODUCTIVE SECTORS, (Percentages)

Recent developments  ODA flows have increased but still fall far short of the Monterrey targets.  Channelling official assistance towards lower-income countries and focusing on social spending.  Latin America and the Caribbean have lost ground in terms of their relative share (from 12.5% in 1990 to 9% in 2005).

Channelling ODA on the basis of income leads to a regional concentration Source: ECLAC on the basis OECD (2007). REGIONAL CONCENTRATION OF ODA, (Averages as percentages)

The Latin America’s share of ODA has diminished and has fallen more sharply in upper-middle-income countries Percentage of total ODA N.B.: Excludes Iraq.

And the same pattern is observed in the Caribbean countries Percentages

Donations play a significant part in some Caribbean countries and territories THE CARIBBEAN: GRANTS (Percentage of GDP)

Recent developments  ODA flows have increased but still fall far short of the Monterrey targets.  Channelling official assistance towards lower-income countries and focusing on social spending.  Latin America and the Caribbean have lost ground in terms of their relative share.  Lack of clearly defined objectives, strategies and instruments to support middle-income countries.

The effectiveness of ODA depends crucially on:  National policies Institutional capacity-building for the design and implementation of economic and social policy Absorption capacity Development and improvement of domestic resource mobilization. Improved competitiveness through changing production patterns and technological innovation. Improved effectiveness and efficiency in social policy  ODA management Harmonization of donor policies Coordination with recipient countries’ development strategies Mutual accountability between donors and recipients Stability of flows

There are a number of reasons why the importance of ODA for middle-income countries, particularly those in the region, should not be underestimated:  From a national perspective: Slow and volatile growth makes it necessary to guard against economic and social setbacks. Most countries’ financial and trade linkages with the global economy are vulnerable. Countries do not exhibit an equal capacity to access the international financial system. Institutional weaknesses hinder the implementation of economic and social policies and are an obstacle to social cohesion. Difficulties in building up technological capacities and productive development. Poverty is widespread (60% of the poor and 50% of indigents live in upper-middle-income countries).

There are a number of reasons why the importance of ODA for middle-income countries, particularly those in the region, should not be underestimated:  The nature of the various components of ODA are also important: Grants to support fiscal stability. Long-term concessional loans not affected by international financial fluctuations to support capital investment. Technical assistance: knowledge transfer.

 From a more global viewpoint: Stability and growth in those countries produce significant externalities for the other economies of the region or subregion. Countries can support the provision of global or regional public goods: diffusion of knowledge, trade integration, environmental sustainability. These countries are part of the international aid and cooperation system, and their role as recipients and donors should be strengthened. There are a number of reasons why the importance of ODA for middle-income countries, particularly those in the region, should not be underestimated:

In addition to benefiting from ODA, middle-income countries should also contribute to the cooperation system  Direct ODA donors: Brazil has forgiven debts totalling about US$ 1.15 billion.  New financing mechanisms such as global taxes (Brazil and Chile).  South-South cooperation: Macroeconomic coordination. Mechanisms to support liquidity in times of crisis. Development financing through regional and subregional development banks. Technical cooperation.

The ways in which middle-income countries are integrated into the global economy are important in terms of leveraging ODA  Improved access and regulatory frameworks in the international economic system Trade Finance Technology  Strengthened representation in global economic institutions.

The Global partnership for development  For Latin America and the Caribbean, a region made up primarily of Middle Income Countries, prospects for economic growth ride largely on lowering trade barriers in the industrialized countries and fostering a fair global trading system.

Agricultural subsidies are very high INEQUITIES IN THE WORLD TRADING SYSTEM HINDER DEVELOPING-COUNTRY EXPORT GROWTH Estimated producer supports, by country Percentage of producer income corresponding to subsidies, 2004 (Percentages of total exports) Annual averages, Source: Economic Commission for Latin America and the Caribbean (ECLAC), on the basis of figures from OECD.

What the Commission achieved in 2006  Stronger relations with governments  Better coordinatoin with the UN system in the region  Notwithstanding intensive agendas on economic and sustainable development matters, 2006 was the year of the social agenda: Thirty-first session and the document “Shaping the Future of Social Protection: Access, Financing and Solidarity” Emphasis on social cohesion and sense of belonging in Latin America and the Caribbean  Figures to highlight: 430 publications Over 80 meetings organized 8 million visits to and over 20 million files downloadedwww.eclac.cl 683 technical cooperation missions conducted

José Luis Machinea EXECUTIVE SECRETARY Economic Commission for Latin America and the Caribbean (ECLAC) Palacio do Itamaratay Brasilia, May 2007 OFFICIAL DEVELOPMENT ASSISTANCE AND THE FIGHT AGAINST POVERTY AND HUNGER IN LATIN AMERICA AND THE CARIBBEAN OFFICIAL DEVELOPMENT ASSISTANCE AND THE FIGHT AGAINST POVERTY AND HUNGER IN LATIN AMERICA AND THE CARIBBEAN Regional Consultations on the Economic and Social Council Annual Ministerial Review Ministry of Foreign Affairs of Brazil