ECOSOC/6215
12 July 2006
ECOSOC Holds Panel Discussion on Policy Approaches to Achieve Economic Growth, Poverty Reduction, Development
(Reissued as received)
GENEVA, 7 July (UN Information Service) -- The Economic and Social Council this morning held a panel discussion on policy approaches to achieve economic growth, poverty reduction and development: lessons learned, challenges and opportunities, under the theme of ECOSOC's on-going coordination segment, sustained economic growth for social development, including the eradication of poverty and hunger.
Hjalmar W. Hannesson, Vice-President of the Economic and Social Council, introduced the panel discussion, saying that policy coherence at all levels and across all sectors needed to be ensured for the successful achievement of development goals.
The panellists would focus on successes and challenges of current approaches as they emerged from country experiences and would address alternative solutions. Today, poverty was a multidimensional problem for which no single sector could provide a complete eradication strategy.
Semakula Kiwanuka, Minister of State for Finance of Uganda, said Uganda's mechanism for achieving the Millennium Development Goals was the Poverty Eradication Plan, which was introduced in 1997 with the aim of reducing poverty to 10 per cent. He noted that experience pointed to the fact that the Millennium Development Goals could not and would not be attained if investment were made only in the social sectors. Increased funding in all sectors was essential.
Jim Harvey, Head of Profession of the Department for International Development's (DFID) Livelihoods Group, said that economic growth was the single most important way of pulling people out of poverty; and poor people in developing countries wanted the same things as people did in the developed societies - a decent job that would meet their basic needs; to lead a fulfilled life, take good care of their children and have a role in their community and society.
Nora Lustig, Director of the Poverty Group at the Bureau for Development Policy of UNDP, said the Millennium Development Goals were based on the theory that investing in human capital caused increased growth. The empirical evidence showed that addressing poverty traps had a positive effect on the lives of the people, and increased growth. Ideology was subsiding in the debates, and the discussion was moving more towards the practical implementation.
Yash Tandon, Executive Director of South Centre, an Intergovernmental Organization of Developing Countries, said development was a self-description by the people who seek development; it was not something imposed on them from the outside; and every nation had a right to determine its own destiny. The question of policy space was not an ideological or academic matter; and it was a mater of principle and a practical issue.
In the interactive debate, speakers raised various issues and made comments on a wide range of topics on the elimination of poverty; the results of conflict and civil war in Africa on poverty; the issue of universal primary education and the move towards universal secondary education and how that was to be funded; and the place ECOSOC could play in the area of development, among other things.
Speaking in the interactive debate were the representatives of Guinea, Nigeria, Mauritania, Venezuela, Finland, Benin, and the United States.
When the Council reconvenes at 3 p.m., it will hold a panel discussion with the Chairpersons of the functional commissions of the Council.
Statements
HJALMAR W. HANNESSON (Iceland), Vice-President of the Economic and Social Council, introduced the panel discussion on "policy approaches to achieve economic growth, poverty reduction and development: lessons learned, challenges and opportunities". He said that during the introduction of the Secretary-General's report on the theme of the segment and in the ensuing general discussion, the complexity of the relationship between social development and economic growth was highlighted. The importance of dealing comprehensively with social and economic issues in view of their reciprocal impacts on poverty and hunger, which were often context-specific and could not be dealt with in a "one-size-fits-for-all" manner, was also stressed. The report further highlighted the impact of global policies on the achievement of national development goals. Policy coherence at all levels and across all sectors needed to be ensured for the successful achievement of development goals.
This morning's panellists would focus on successes and challenges of current approaches as they emerged from country experiences and would address alternative solutions. Today, poverty was a multidimensional problem for which no single sector could provide a complete eradication strategy. The panel discussion would provide an excellent opportunity for delegations to reflect on different views and perspectives, as well as to broaden their understanding of the problems embedded in the socio-economic policy formulations, such as trade-offs and complementarities between economic growth and social development.
SEMAKULA KIWANUKA, Minister of State for Finance of Uganda, said Uganda's mechanism for achieving the Millennium Development Goals was the Poverty Eradication Plan, which was introduced in 1997 with the aim of reducing poverty to 10 per cent, and this was in response to people's demands that the Government should invest more in the social sector, especially health, water and sanitation, education, adult literacy, HIV/AIDS, malaria, and gender mainstreaming. The launching of the United Nations Millennium Development Goals in 2000 found Uganda with a working mechanism under the Poverty Eradication Plan, and hence it was able to address them under that programme, and measured the Millennium Development Goals achievements with reference to the performance of the Plan.
Experience pointed to the fact that the Millennium Development Goals could not and would not be attained if investment were made only in the social sectors. Increased funding in all sectors was therefore essential for attaining the Millennium Development Goals, overall economic growth and sustainable development. Today, Uganda faced an acute energy crisis with serious impact on the economy. Hence, it appealed to the international community, especially the G8, to fulfil the pledges made at Gleneagles in 2005. Uganda gratefully acknowledged recent debt cancellations by the IMF and the World Bank. But debt forgiveness, although necessary, was not sufficient. There should be greater emphasis on Aid for Trade. Uganda would continue to invest and build durable and functional institutions, which were a pre-requisite for attaining the Millennium Development Goals. Good governance, peace and security were essential for economic growth and sustainable development, not only for Uganda, but for all of Africa.
JIM HARVEY, Head of Profession of the Department for International Development's (DFID) Livelihoods Group, said that economic growth was the single most important way of pulling people out of poverty. Poor people in developing countries wanted the same things as people did in the developed societies - a decent job that would meet their basic needs; to lead a fulfilled life, take good care of their children and have a role in their community and society. A job created income, people could save and invest and protect themselves in times of trouble. They could get their children into school. And as economies grow, governments could raise the money they needed for public services. Tackling inequality would help poor people participate in growth and would enhance its future impact. Countries with greater inequality would grow more slowly. Inequality would limit the benefits of growth. It would be a vicious circle.
Pro-poor growth and broader growth were inextricably linked. It would be nice, neater for a development organization, to achieve pro-poor growth in isolation but one could not do it. Economies, whether national or global, were increasingly interdependent. Some commentators were concerned about the proportion of overall growth that was pro-poor. A recent study by the New Economics Foundation in the United Kingdom had estimated that "Every $1 of growth for poor people requires $166 of global production and consumption". They claimed that the ration had worsened over the last decade or so. That did not necessarily matter if one could go on increasing the size of the economic cake. Many would argue - with history on their side - that predictions about "limits to growth" had always been proved wrong. That it would not matter if there were an immutable equation.
NORA LUSTIG, Director of the Poverty Group, Bureau for Development Policy of the United Nations Development Programme (UNDP), said four basic principles should guide the Millennium Development Goals-based National Development Principles: the inclusion of specific pro-MDG policies which did not rely solely or primarily on trickle-down economic growth; to ensure broad consistency between macro and growth policies, and pro-MDG policies; a selection of pro-MDG policies that were pro-growth in the long run; and the setting of minimum standards for all population groups and regions which did not rely solely on the performance of national averages. There were two views of the development process; the first, that growth led to human development and poverty reduction; the second, that human development and poverty reduction led to growth. The Millennium Development Goals were an end in themselves but could also be a means to achieving higher growth in the long run.
The Millennium Development Goals were based on the theory that investing in human capital caused increased growth. The empirical evidence showed that addressing poverty traps had a positive effect on the lives of the people, and increased growth. Ideology was subsiding in the debates, and the discussion was moving more towards the practical implementation. In moving from research to practical strategies, it became clear that it was necessary to define national priorities, identify binding constraints, choose the policy interventions, estimate the costs of interventions, and allocate the financing requirements subject to macro trade-offs. There was the poverty elasticities approach, a maquette for MDG simulation, the needs assessment approach, and the evidence-based interventions approach.
YASH TANDON, Executive Director of South Centre (an Intergovernmental Organization of Developing Countries), said development was a self-description by the people who seek development. It was not something imposed on them from the outside. Development was not confined to economic well-being. It was a complex phenomenon with deep roots into the history, geography, institutions of governance, culture and value-systems of the society, values that could not be reduced to the callous logic of economics or trade. Every nation had a right to determine its own destiny. The question of policy space was not an ideological or academic matter. It was a mater of principle and a practical issue. The countries of the South, which were erstwhile colonies of the North, had now won their political independence but their economies were still embedded in a structured asymmetry created from the past.
The General Equilibrium Model had a circular logic based on certain assumptions, such as perfect movement of factors of production and the assumption of full employment, and the theory of comparative advantage. The logic could not be falsified in its own terms because of its circularity. The model had become a tool for legitimising policy strategies by global institutions such as the IMF, the World Bank and certain regional organizations. Countries in the South should do what the early industrializers did in their own time. Contrary to the prescriptions of the free trade liberalists, the state in the developing countries had a definite role to play in encouraging the industrialization of their countries. The " right to development" was enshrined within the corpus of rights recognized by the United Nations. Aid and debt relief, or technical assistance should not be accepted by the developing countries if those were used by the industrialized countries to influence them to accept agreements reached by the World Trade Organization or by the Cotonou Agreement.
Interactive Dialogue
In the interactive debate, speakers raised various issues and made comments on a wide range of topics, including that the elimination of poverty was a factor of and a requirement for any sustained economic development; the results of conflict and civil war in Africa on poverty and its increase in both the country where the event was taking place and in neighbouring countries; the issue of universal primary education and the move towards universal secondary education and how this was to be funded; the place ECOSOC could play in the area of development; the difference in perspectives wherein one approach was for macro-economics to drive development, and the other which was for human development to drive development; that economic growth was only one tool to eliminate hunger and that development strategies should always incorporate a social dimension, with the development model focused on human beings and their dignity; that to reduce poverty sustainably, economic growth today should never come with the cost of environmental failure tomorrow; the bottom-up approach to making growth pro-poor and the need to make sure that all men and women at the grass roots level including enterprises and cooperatives should cooperate and benefit from that economic development; whether the fight against corruption was essential for poverty reduction and whether it was a long-term objective; and that democracy was the tried and true best way to ensure consensus on the methods and forms for implementing growth; and the need to test and retest ideas and programmes on a continuing basis and adjust them as needed.
Speaking in the interactive debate were the representatives of Guinea, Nigeria, Mauritania, Venezuela, Finland, Benin, and the United States.
SEMAKULA KIWANUKA, Minister of State for Finance of Uganda, reacting to the comments and questions raised by delegates, said that the free and compulsory primary education programmes in Uganda had prompted parents to send their children to school. Development should be based on a multisectoral approach in the fight against poverty. With its restructured economic management, Uganda was hoping to perform better in its development programme. If a government did not have a policy on what to do with its economic achievements, growth alone might not necessarily eradicate poverty. Much energy was spent on subsidies while neglecting the use of the available market for the goods produced.
JIM HARVEY, Head of Profession of the Department for International Development's (DFID) Livelihoods Group, said DFID was interested in pro-poor growth, not useless growth. This really came down to the poverty elasticity of growth. The discussion around diagnostics had been very interesting, as every country was different, and any tool that could get under the skin of why something worked in one area and not in another would be very useful. DFID supported human development very strongly, but also believed growth was important. If countries were to develop, then growth was important for them, and if this development was based on aid, then that did not change the final objective, which was better growth and better lives, and a situation where the country could support its own growth.
The supply side was terribly important, and support for Aid to Trade was a very important part of the agenda. Growth today could not be achieved at the expense of environmental failure in the future, and many countries had gone through a period of environmental degradation. Looking after the environment should be seen as a positive contribution to GDP, and not as a continual drain on the exchequer. Empowering people to take charge of their own development and thus growing it from the ground-up was something that was fully supported. Fighting corruption was not a pre-requisite for development, but it was a necessary element. Data was very important, and empirical evidence of what was happening in the field was vital, as was improved interpretation of the agenda. Countries should decide their own approaches to human development and growth.
NORA LUSTIG, Leader Poverty Group, Bureau for Development Policy of the United Nations Development Programme (UNDP), said 40 counties had been empirically examined with regard to the distribution and use of cash to families. In Brazil and Mexico, for example, cash distribution to families had tremendously helped families to send their children to school and reduce their poverty levels. Because of the cash they received, their nutritional regime had also been improved. It was not only the economic growth that would bring improvement to living conditions, but States should implement policies on social and economic developments. The investment on kids should be encouraged in order to draw the benefits when they become employable in 25 years time.
In addition, there should be a multi-faceted approach by the government through its intervention in tackling HIV/AIDS, which was a problem affecting States' economies. Another problem that should be dealt with was corruption, which was a concern in many countries. The United Nations Development Programme was helping developing countries in identifying market opportunities.
YASH TANDON, Executive Director, South Centre, said it was important to work out areas of agreement and disagreement. The panel agreed on five areas: that development should be a bottom-up approach; the objective was human development; that data was important; anti-corruption; and that there was no intent to enter into an ideological debate, that the issues were practical. The differences began when the move was from the abstract to the concrete, and how to operationalize the abstract ideas. Different perspectives caused the differences as to what was important, but it was agreed that it was important to obtain the empirical data first, however, there were differences in studies, as the basic assumptions could be different. The assumption of the general equilibrium model was not always valid, and thus it was clear that once certain assumptions were made to come to a conclusion, then the assumptions themselves needed to be examined.
The most important question that had been raised was by Nigeria, on the topic of protectionism. Mr. Tandon said he had no ideological position on this, as it depended on location, geography, level of development, and many other issues. If the level of development required protectionism, then it should be implemented, if not, it need not be used. The issue was to be pragmatic, as there were the differences.
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