The Convergence Agenda Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs OUSMANE BADIANE Director for Africa International Food Policy Research Institute

1 REDIFINING THE CHALLENGE 3 REFINING POVERTY REDUCTION STRATEGIES AMONG LDCs 2 TRACKING OF POVERTY IMPACT OF GROWTH 4 CONCLUSIONS The Convergence Agenda: Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs

1 REDIFINING THE CHALLENGE 3 REFINING POVERTY REDUCTION STRATEGIES AMONG LDCs 2 TRACKING OF POVERTY IMPACT OF GROWTH 4 CONCLUSIONS The Convergence Agenda: Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs

HOW TO ACCELERATE PROGRESS TOWARDS MDG1 UNDER 1 LIMITED RESOURCES AND TIGHT BUDGET CONSTRAINTS 3 LOW GROWTH WITH SIGNIFICANT POTENTIAL 2 SIGNIFICANT SOCIAL NEEDS 4 LARGE POCKETS OF LOW PRODUCTIVITY POOR AND VULNERABLE THE GROWTH-POVERTY CONVERGENCE AGENDA

A DOUBLE CHALLENGE RAISING GROWTH AND ITS IMPACT ON POVERTY Source: Badiane and Ulimwengu (2009)

Swaziland South Africa A DOUBLE CHALLENGE RAISING GROWTH AND ITS IMPACT ON POVERTY Source: Badiane and Ulimwengu (2009)

AP GDP Growth Inverse of headcount ratio1/P0 AP0 Growth Poverty Path 2 Growth Poverty Path1 0 Path 1: Growth without poverty reduction; Path 2: Poverty reduction without growth Path 3 and 4 are similar but starting, respectively, from high level of growth and a low level of poverty, and are thus less problematic. GROWTH POVERTY PATHWAYS Search for optimal policy options U R HERE 2015 Source: Badiane /IFPRI

1 REDIFINING THE CHALLENGE 3 REFINING POVERTY REDUCTION STRATEGIES AMONG LDCs 2 BETTER TRACKING OF POVERTY IMPACT OF GROWTH 4 CONCLUSIONS The Convergence Agenda: Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs

R GDP Growth Inverse of headcount ratio p R0R0 Convergence Path 1 Growth Poverty Path 2 Growth Poverty Path1 0 REINFORCING THE LINKS BETWEEN GROWTH AND POVERTY REDUCTION The Search for optimal policy options Convergence Path 2 Source: Badiane and Ulimwengu (2009)

TWO SIMPLE INDICATORS POVERTY OVERHANG: The Extent to Which Current Growth has Failed to Reduce Poverty to the Maximum Possible GROWTH-POVERTY EFFICIENCY GAP GROWTH DEFICIT: The Extent to Which Future Growth May Fail to Sustain the Current Pace of Poverty Reduction GROWTH-POVERTY EFFICIENCY GAP

POVERTY OVERHANG ESTIMATES ( ) ALTERNATIVE POVERTY OUTCOMES UNDER CONVERGENCE ( ) Source: Badiane and Ulimwengu (2010)

GROWTH DEFICIT ESTIMATES ( ) ALTERNATIVE GROWTH OUTCOMES UNDER CONVERGENCE ( ) Source: Badiane and Ulimwengu (2010)

POVERTY OVERHANG: ADDITIONAL POVERTY REDUCTION THAT COULD HAVE BEEN ACHIEVED GIVEN ACTUAL GROWTH PERFORMANCE ( ) Source: Badiane /IFPRI

1 REDIFINING THE CHALLENGE 3 REFINING POVERTY REDUCTION STRATEGIES AMONG LDCs 2 BETTER TRACKING OF POVERTY IMPACT OF GROWTH 4 CONCLUSIONS The Convergence Agenda: Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs

PUBLIC EXPENDITURE OPTIMIZATION QUESTION ! 1 TARGET PRODUCTIVITY OF POOR AND VULNERABLE 3 RAISE SOCIAL INVESTMENTS TO MEET SHORT TERM NEEDS 2 RAISE INVESTMENT IN SECTORS EMPLOYMENT POOR AND VULNERABLE 4 ALIGN SOCIAL INVESTMENTS TO MAXIMIZE GROWTH IMPACT STRATEGIC QUESTION: HOW TO RAISE GROWTH-POVERTY EFFECTIVENESS AND SUSTAINABILITY? CONVERGENCE AGENDA

Actual Poverty Rate in 1990 STRATEGIC GOAL NO. 1 BRIDGING THE GROWTH GAP TO MEET THE POVERTY MDG TARGET Source: Badiane and Ulimwengu (2009)

STRATEGIC GOAL NO. 2 BRIDGING THE EXPENDITURE GAP TO MEET THE POVERTY MDG TARGET Actual Poverty Rate in 1990 Source: Badiane and Ulimwengu (2009)

STRATEGIC GOAL NO. 3 OPTIMIZE PUBLIC EXPENDITURE S TO RAISE PRODUCTIVITY OF RURAL POOR Source: Badiane and Ulimwengu (2009)

HEALTH SERVICESEDUCATION SERVICES EFFECT OF 10% INCREASE IN SERVICES EXPENDITURE ON SOCIAL OUTCOMES, AGRICULTURAL EFFICIENCY, AND POVERTY Source: Badiane and Ulimwengu (2010)

1 REDIFINING THE CHALLENGE 3 REFINING POVERTY REDUCTION STRATEGIES AMONG LDCs 2 BETTER TRACKING OF POVERTY IMPACT OF GROWTH 4 CONCLUSIONS The Convergence Agenda: Meeting the Challenge of Accelerating Progress toward the Poverty Reduction MDG among LDCs

BASIC STRATEGIC QUESTIONS 1 HOW TO MAXIMIZE LONG TERM GROWTH WHILE MEETING SHORT TERM SOCIAL NEEDS 2 HOW TO MAXIMIZE SYNERGY BETWEEN SOCIAL SERVICES AND PRODUCTIVITY ENHANCING INVESTMENTS CONVERGENCE BETWEEN SOCIAL AND PRODUCTIVITY INVESTMENTS 3 HOW TO EXPLOIT GROWTH EXTERNALITIES OF SOCIAL SERVICES 4 HOW TO IMPROVE CONSIDERATION OF GROWTH SYNERGIES IN BUDGET PLANNING AND NEGOTIATIONS

NEGOTIATION OF EXPENDITURE COMPOSITION vs LEVELS BUDGET ADDITIONALITY vs ZERO SUM GAME –BROADER BUY-IN INTO AGRICULTURAL AGENDA –ACCESS TO LARGER RESOURCES FOR AGRICULTURAL SECTOR –HIGHER RETURNS TO AGRICULTURAL SECTOR INVESTMENTS –HIGHER RETURNS TO PUBLIC SECTOR INVESTMENTS –LONG TERM SUSTAINABILITY OF SOCIAL SERVICES FROM BUDGET COMPETION TO COOPERATION CONVERGENCE BETWEEN SOCIAL AND PRODUCTIVITY INVESTMENTS

COUNTRIES WITH LITTLE MONEY AND LITTLE TIME –VERY TIGHT MEDIUM TO LONG TERM BUDGET CONSTRAINTS –LARGE SHARE OF POPULATION LIVING IN POVERTY –LARGE SHARE OF LOW-SKILL UNDEREMPLOYED RURAL POOR –LOW DEGREE OF DECENTRALIZATION OF SERVICES –URBAN-CENTERED SERVICES DELIVERY (SITE AND CONTENT) WHICH COUNTRIES NEED CONVERGENCE? CONVERGENCE RELEVANCE