MACROECONOMICS AND HUMAN DEVELOPMENT Deepak Nayyar 15 January 2013 AGW, Bangalore

OVERVIEW Diminishing Intersections From Macroeconomics to Human Development From Human Development to Macroeconomics The Political Context Conclusions

I. DIMINISHING INTERSECTIONS Narrower concerns of macroeconomics Wider conception of development Outcome of changing concerns and shifting emphasis Irony in the situation Compared with ideas from the past Juxtaposed with experience from the present

II. FROM MACROECONOMICS TO HUMAN DEVELOPMENT Nature of causation Level of employment Degree of social protection Public entitlements for social consumption Positive consequences Macroeconomic objectives and policies Experience from the past Comparison of developing countries and industrialized countries Negative consequences Orthodox macroeconomics Developing countries Industrialized countries Financial liberalization Contraction in policy space Social costs of volatility and crises Similarities between Developing countries Industrialized countries

III. FROM HUMAN DEVELOPMENT TO MACROECONOMICS Connections, implications and consequences Positive causation Strong in developing countries Resource mobilization Resource creation Weak (almost absent) in industrialized countries Negative causation Capabilities without opportunities Reinforced by economic policies Manifest in ‘jobless growth’ Common to developing countries and industrialized countries Feed-back effects in rich countries Welfare states and unsustainable macroeconomics Ageing of industrial societies

IV. THE POLITICAL CONTEXT Policies and the political process Economic interests Political compulsions Intersection of economics and politics in macro policies Fiscal policy Developing countries Industrialized countries Monetary policy Developing countries Industrialized countries Role of ideology and institutions Interaction of market economy and political democracy Twist in the tale Human development in the political process Developing countries and industrialized countries Rhetoric and reality Checks and balances

V. CONCLUSIONS Relationship not quite recognized State of economies at macro level Well-being of people at micro level Causation runs in both directions Positive Negative Developing countries and industrialized nations Similarities Differences Political economy of policy design Macroeconomics Human development