UN DESA United Nations Department of Economic and Social Affairs

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UN DESA United Nations Department of Economic
and Social Affairs

• Distribution Analysis
• Poverty and Social Assessments
• Isabel Ortiz
• Senior Interregional Advisor
• United Nations DESA
• UN Commission for Social Development
• Side Event by Oxfam International and UN DESA
• New York, 8 February 2008

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Distribution of World Income Development for
Whom?
Source Sutcliffe, 2005. Department of Economic
and Social Affairs. WP 2. United Nations
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Bringing Distribution Analysis to Development a
Must Inequality Escalating
Ratio of the Income of the Richest 20 to the
Poorest 20
Year Ratio
1820 31
1870 71
1913 111
1960 301
1991 611
1997 741
2005 1031
Source UNDP Human Development Reports 1999 and
2005, New York
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The Core Problem The Logic of Development
Interventions

• Major development interventions selected by a
  non-social rationale (e.g. GDP growth) but
  these policies unable to generate high employment
  growth
• Complemented with residual, smaller social
  investments (human development, safety nets)
  increased in recent years but often at the cost
  of agriculture!
• Military expenditures further constrain fiscal
  space for poverty reductn

Source WB Annual Reports
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No Trickle-Down Effect The Benefits of Economic
Growth do NOT Automatically Reach All
Source Woodward and Simms, 2006. Department of
Economic and Social Affairs. WP 20. United
Nations.
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1995 World Summit in Copenhagen Development for
All

• Governments of the world agree that eradication
  of poverty and promotion of social inclusion must
  be priorities of development because of
• Social Justice
• Economic Arguments
• Inequality is economically dysfunctional
• World problem of overproduction and global excess
  capacity in the context of weak effective demand
• Consumption concentrated in top income deciles
• Raising the incomes of the poor increases
  domestic demand and, in turn, encourages growth
  by expanding internal markets
• Political Arguments
• Gross inequalities cause tension/conflicts,
  uncontrolled migration
• UNDESA core mission Development for All
• BUT HOW?

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From Targeted Interventions to Mainstreaming
Poverty and Social Issues in Development

• Key issue is not to leave social development in a
  silo, but to mainstream social impacts in all
  interventions
• Tools/Instruments
• 1. Social Safeguards, Corporate Social
  Responsibility
• 2. Distribution/Poverty and Social Assessments
• 3. Strategies/Action Plans for different social
  groups
• Ultimately, what is needed are National
  Development Strategies and International
  Agreements (e.g. trade) with equitable
  distributional impacts, that benefit all

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1990s onwards Social Safeguards and Corporate
Social Responsibility

• World Bank/AfDB Social Dimensions of Adjustment
  Initiative (1987) high human costs of
  structural adjustment
• Safeguard approach in development institutions
  include
• Involuntary Resettlement
• Gender
• Indigenous Peoples
• Impacts on the Poor
• Social Protection and Labour Safeguards
• Corporate Social Responsibility expands in the
  1990s in the private sector. The UN Global
  Compact promotes non-violation of Core Labour
  Standards and UN Declaration of Human Rights by
  business.
• Safeguards ensure compliance to minimum social
  standards as exemplary practice (e.g. no child
  labour used in an investment)
• As well as mitigating unintended negative social
  impacts of development projects (e.g.
  compensation in case of resettlement because of
  an infrastructure investment)
• gt Necessary but insufficient approach -
  safeguards ensure that poverty/exclusion is not
  increased, but they do not address the structural
  reasons of poverty/exclusion

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Late 1990s/2000s Poverty and Social Assessments
in Development

• Poverty and Social Impact Assessments (also known
  by acronym PSIA) are ex-ante analysis that look
  at the distributional impacts (income and
  non-income) of development interventions
• Project level
• Sector reforms
• National Strategies
• International agreements (e.g. Trade)
• Provides alternative policy options to maximize
  positive poverty and social impacts
• Needs to be an independent, non-partisan analysis
  given vested interests at any level
• For policy-makers, it is a good tool to be
  accountable to citizens through a public debate

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Example Impact of Policy Reforms on the Poor
Summary analysis of effects of removing a
fertilizer subsidy on the poor with respect
to (1) employment (2) prices (3) access to
goods/services (4) transfers/taxes Two policy
options
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Slow Progress in Distribution/Poverty and Social
Assessments

• Distribution/Poverty and Social Assessments are a
  necessary tool to reduce poverty and exclusion
  BUT
• Need to expand outreach
• Done in selected interventions by the IFIs,
  piecemeal approach (e.g. IMF only utilities)
• Also need to expand
• Governments/National Development Strategies
• To other international organizations (e.g. WTO)
• Need to expand coverage to all social groups
• The poor always addressed, but not other excluded
  social groups as agreed by UN international
  conventions/agreements (women, older persons,
  persons with disabilities, indigenous peoples,
  etc).
• Despite women are half of worlds population,
  economic and social inequalities and measures to
  redress them are often misreported

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Slow Progress in Distribution/Poverty and Social
Assessments (II)

• Areas Analysis needs to cover all areas and
  discuss policy options e.g. very limited
  progress on
• Macroeconomic policies (examples next slides)
• Trade - most trade agreements are done without
  thinking on distributional impacts on population
• Policy options weak
• EURODAD (Hayes, 2005) only 3 of 18 World Bank
  PSIAs had a meaningful analysis of alternative
  options
• Often minor policy changes or mitigative measures
  instead of a complete alternative set of policies
• Policy space needed to discuss and implement real
  alternatives that maximize impacts on people

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Examples of Standard Macroeconomic Policies and
Alternative Options
Normal inflation target below 5 per annum Alternative Expansive, employment-generating macroeconomic policies, tolerance to limited inflation
Normally fiscal policies Minimal direct taxation Alternative Progressive taxation for development and redistributive purposes
Normally deficit reduction a priority Alternative Public investment for development need to expand governments fiscal space
Country Fiscal Deficit Targets over 3-year IMF Program Reduction GDP What this could buy for one year
Cameroon -0.7 to 0.7 -1.4 Could have doubled health expenditure
Ghana -9.7 to 5.7 -4.0 Could have doubled primary healthcare expenditure each year of the 3-year program
Rwanda -9.9 to 8.0 -1.9 Could double the health and education budget in each of three program years
Source Oxfam International 2003 and Rick Rowden,
Action Aid 2007
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Examples of Policy Options for Equity and Poverty
Reduction
Area Typical interventions with EQUITABLE/PROGRESSIVE outcomes Typical interventions with INEQUITABLE/REGRESSIVE outcomes
Culture Multicultural activities, popular events that foster social cohesion Subsidies to elitist events/ exclusive art
Education Universal free education programmes to ensure access and retention of students (particularly girls) User fees in primary and secondary education commercialization of education
Energy and Mining Rural electrification life-line tariffs (subsidized basic consumption for low income households) Untaxed oil/mineral extraction, poorly negotiated PPPs power plants
Finance Regional rural banks, microfinance managing finance (current accounts, capital flight) Reform/rescue of banking system (transfers to large banks) subsidies to large private enterprises
Health Universal free (or with minimal nominal fees) primary and secondary health services, nutrition programmes User fees, commercialization of health, tertiary highly specialized clinics (e.g. cardiology centres)
Housing Subsidized housing finance, upgrading of substandard housing Public loans for housing finance for upper income groups
Industry Supporting competitive, employment-generating domestic industries Deregulation
Labour Active and passive labour programmes Labour flexibilization
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Examples of Policy Options for Equity and Poverty
Reduction
Area Typical interventions with EQUITABLE/PROGRESSIVE outcomes Typical interventions with INEQUITABLE/REGRESSIVE outcomes
Macroeconomics Employment-sensitive monetary and fiscal policies, countercyclical policies Cyclical policies, indirect taxation (VAT)
Public Expenditures Progressive expenditures Military spending
Rural Development Secure access to land, water, markets, livestock, credit for smallholders Irrigation systems that benefit landowners
Social Protection Non-contributory pensions, cash transfers, social services, etc. almost all SP aimed at redistribution Private funded pension systems
Tourism Small-scale local companies Poorly taxed luxury hotel chains
Trade Linking employment-generating local companies with export markets Most bilateral free trade agreements
Transport and Infrastructure Rural roads, affordable public transport, non-motorized transport for households (bicycles, buffalos, etc) Some large (and costly) infrastructure investments
Urban Development Slum upgrading, accessible universal design Large urban infrastructure projects in wealthy areas
Water Rural water supply and sanitation Poorly negotiated privatizations
Source Ortiz 2007. Social Policy Note. UNDESA
Policy Notes for National Development Strategies,
United Nations.
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Slow Progress in Distribution/Poverty and Social
Assessments (III)

• Lack of independence
• Need independent institutions to carry analysis
• Methodologies
• Not standardized, plurality of approaches is
  correct but problem when lack of rigor
• Sophisticated quantitative models not necessarily
  best care with assumptions and parameters
• It is not only about income poverty Poverty and
  exclusion have many other dimensions including
  discrimination, exploitation, lack of control of
  resources, obstacles to access goods/services,
  vulnerability to shocks, helplessness/fear to
  violence and corruption, lack of voice in
  decision-making.
• Multidisciplinary approaches best, combining
  quantitative and qualitative analysis

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Slow Progress in Distribution/Poverty and Social
Assessments (IV)

• Short-long term impacts
• Generalizations not acceptable (e.g. often the
  poor/excluded groups benefit in the long term but
  upper income groups benefit in the short term
  transparency needed)
• Timing and Civil Society Participation
• If distribution/poverty social assessments done
  too late, cannot influence policy reforms
• Analysis needs to be released ( translated!) to
  civil society/parlamentarians as soon as
  possible, to allow for public debate and to be
  contested if necessary
• See critical Joint NGO Briefing Note by Oxfam
  International, Christian Aid, Bretton Woods
  Project, EURODAD and other NGOs, 2007.
• Why only ex-ante?
• Distribution Analysis/Poverty and Social
  Assessments should accompany the whole policy
  cycle to be accountable

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Concluding

• UN Commission for Social Development,
• UN General Assembly, World Summits
  Governments of the world unanimous that
  fighting poverty and exclusion is a priority

• This priority will not be accomplished by having
  targeted interventions to the poor, but about
  mainstreaming equity and social inclusion in
  development
• Need to expand use of distribution
  analysis/poverty and social assessments
• To all national and international development
  interventions
• To all areas including trade, macroeconomic
  policies
• To all social groups
• Need policy space for alternative equitable
  policy options
• Need public debate and be accountable to
  societies
• Distribution/Poverty Social Assessments are
  not free, their costs need to be absorbed by
  governments and organizations Call to donors to
  fund Southern independent institutions

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Thank you United Nations Department of Economic
and Social Affairs http//www.un.org/esa/ Email
ortizi_at_un.org