Presentacin Secretario Ejecutivo

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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
ReviewMinistry of Foreign Affairs of Brazil
José Luis Machinea EXECUTIVE SECRETARY Economic
Commission for Latin America and the Caribbean
(ECLAC) Palacio do Itamaratay Brasilia, 17-18
May 2007
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After stagnating in 1997-2002, 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.
3
Most of the countries of the region saw
reductions in their poverty and indigence rates
TRENDS IN POVERTY AND INDIGENCE, 20022005 and
19982005 a/
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.
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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 1980.
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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.
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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
1990-1991, 1996-1997 AND 2002-2003 (Percentages)
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The number of people suffering from
undernourishment declined from 59 to 52 million
between 1990 and 2001-2003. Even so, projections
indicate that 40 million people will still be
undernourished in 2015.
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However, progress in poverty reduction since 2002
points to a larger reduction in undernourishment
LATIN AMERICA (21 COUNTRIES) RELATIONSHIP
BETWEEN EXTREME POVERTY AND UNDERNOURISHMENT,
2000-2002
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.
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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.
10
The tax burden is too small but differs sharply
across countries
TAX REVENUES ( GDP, 2005)
The tax burden in the Caribbean is higher, however
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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.
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Even when the figures are corrected for GDP,
there is still room to increase Latin Americas
tax burden
PER CAPITA GDP AND TAX REVENUES (Percentages of
2003 GDP and constant dollars at 2000 prices)
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ODA AND THE CHALLENGES FOR LATIN AMERICA AND THE
CARIBBEAN
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Recent developments

• ODA flows have increased but still fall far short
  of the Monterrey targets.

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Since Monterrey, ODA flows have increased
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but are still far below the target
Source OECD data base (2007)
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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.

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Channeling ODA to low-income countries and ..
ODA, 1970-2005(Averages)
N.B Does not include Iraq, which accounted for
33 of total ODA in 2005.
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focusing on social spending
ODA TO PRODUCTIVE SECTORS, 1973-2005
(Percentages)
Source ECLAC, on the basis of OECD (2007).
Government institutions include budget support,
emergency assistance and external debt operations.
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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.

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Channelling ODA on the basis of income leads to a
regional concentration
REGIONAL CONCENTRATION OF ODA, 2001-2005
(Averages as percentages)
Source ECLAC on the basis OECD (2007).
22
The Latin Americas share of ODA has diminished
and has fallen more sharply in upper-middle-income
countries
Percentage of total ODA
N.B. Excludes Iraq.
23
And the same pattern is observed in the Caribbean
countries
Percentages
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Donations play a significant part in some
Caribbean countries and territories
THE CARIBBEAN GRANTS(Percentage of GDP)
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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.

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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

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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).

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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.

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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 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.

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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.
• South-South cooperation
• Macroeconomic coordination.
• Mechanisms to support liquidity in times of
  crisis.
• Development financing through regional and
  subregional development banks.
• Technical cooperation.

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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.

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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
ReviewMinistry of Foreign Affairs of Brazil
José Luis Machinea EXECUTIVE SECRETARY Economic
Commission for Latin America and the Caribbean
(ECLAC) Palacio do Itamaratay Brasilia, 17-18
May 2007
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And in some countries they have helped to
achieve fiscal equilibrium
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Progress in poverty reduction since 2002 points
to a larger reduction in undernourishment
LATIN AMERICA AND THE CARIBBEAN (19 COUNTRIES)
RELATIONSHIP BETWEEN EXTREME POVERTY AND
UNDERNOURISHMENT, AROUND 1999
Source Economic Commission for Latin America and
the Caribbean (ECLAC), Social Panorama of Latin
America, 2002-2003.
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Progress in poverty reduction since 2002 points
to a larger reduction in undernourishment
LATIN AMERICA (18 COUNTRIES) RELATIONSHIP
BETWEEN EXTREME POVERTY AND CHRONIC
UNDERNUTRITION, CIRCA 1999
Source Economic Commission for Latin America and
the Caribbean (ECLAC), Social Panorama of Latin
America, 2002-2003.