GROWTH WITH EQUITY: RESPONSIVENESS OF POVERTY REDUCTION TO ECONOMIC GROWTH IN SUB-SAHARAN AFRICA

KEY QUESTIONS: IS GROWTH SUFFICIENT FOR POVERTY REDUCTION IS GROWTH NECESSARY FOR POVERTY REDUCTION WHAT KINDS OF POLICIES YIELD GROWTH WHICH INCREASES POVERTY WHAT KINDS OF POLICIES YIELD GROWTH WHICH DECREASES POVERTY (PRO-POOR GROWTH)

IS GROWTH NECESSARY FOR POVERTY REDUCTION? IN GENERAL YES: POVERTY REDUCTION REQUIRES RESOURCES OCCASIONALLY RESOURCES CAN BE REDEPLOYED SO POOR GET LARGER SHARE OF SMALLER PIE AND THERE IS POVERTY REDUCTION

IS GROWTH NECESSARY FOR POVERTY REDUCTION? BUT TYPICALLY PIE IS SO SMALL THAT ONLY BY GROWING PIE CAN THERE BE POVERTY REDUCTION

IS GROWTH SUFFICIENT FOR POVERTY REDUCTION? STANDARD VIEW: TRICKLE DOWN ECONOMICS RISING TIDE LIFTS ALL BOATS ALL BENEFIT FROM GROWTH

DO ALL GAIN FROM GROWTH? NOT NECESSARILY U.S. EXPERIENCE WESTERN EUROPEAN EXPERIENCE LATIN AMERICAN EXPERIENCE BUT IN EAST ASIA, ALL (OR AT LEAST MOST) DID BENEFIT

KEY ISSUE IS NOT GROWTH, BUT SPECIFIC POLICIES KEY QUESTION: WHY IS GROWTH SOMETIMES GOOD FOR POVERTY REDUCTION, SOMETIMES NOT?

CONTRASTING EXPERIENCES IN LATIN AMERICA, GROWTH WAS BASED ON FALSE PREMISES, SHORT TERM CAPITAL FLOWS WAS NOT SUSTAINED INSTABILITY HURTS POOR UNEMPLOYMENT INCREASED, EVEN WITH INCREASED LABOR MARKET FLEXIBILITY JOB PROTECTIONS WEAKENED

CONTRASTING EXPERIENCES IN ASIA, EMPHASIS HAS BEEN ON “PEOPLE” JOBS HEALTH EDUCATION SECURITY

GENERAL LESSONS NEED TO RETURN TO BROADER DEFINITION OF POVERTY (INCLUDING SECURITY, EMPOWERMENT) POLICIES WHICH ENHANCE STABILITY ARE LIKELY TO INCREASE POVERTY, EVEN IF THEY INCREASE GROWTH

GENERAL LESSONS POLICIES WHICH PROMOTE EMPLOYMENT AND IMPROVE EDUCATION AND HEALTH AND ACCESS OF RESOURCES BY THE POOR ARE LIKELY TO IMPROVE GROWTH AND REDUCE POVERTY –Win-win policies

PROBLEM IN AFRICA: HOW DO YOU GET GROWTH, IN ANY FORM? WASHINGTON CONSENSUS POLICIES NOT PANACEA AND IN SOME CASES MAY EVEN BE BAD FOR GROWTH MACRO STABILITY, PRIVATIZATION, AND LIBERALIZATION, EVEN PROVIDING INFRASTUCTURE DO NOT NECESSARILY LEAD TO PRIVATE INVESTMENT

LESSONS FROM OTHER COUNTRIES MUST LEARN TO LIVE WITHIN RESOURCES DEPENDENCE ON FOREIGN FUNDS LEAVES ON AT MERCY OF VAGARIES OF INTERNATIONAL MARKET, CHANGING SENTIMENTS SUCCESSFUL COUNTRIES SAVED, EVEN WHEN INCOMES WERE LOW

LESSONS FROM OTHER COUNTRIES GOVERNMENT NEEDS TO TAKE A LEADING ROLE BE WARY OF MISTAKES OF THE PAST – CORRUPTION – BIG PROJECTS WHICH DO NOT CREATE JOBS PARTERNERSHIPS WITH PRIVATE SECTOR –NEPAD IS POTENTIALLY MAJOR POSITIVE STEP FORWARD –BUT BE AWARE OF DIFFERING INCENTIVES OF PRIVATE SECTOR

LESSONS FROM OTHER COUNTRIES RURAL DEVELOPMENT STATEGIES NEED TO BE PART OF THE PROGRAM – ENORMOUS POTENTIAL TO INCREASE PRODUCTIVITY – BASIS FOR SUCCESS IN MANY COUNTRIES

CONCLUDING REMARKS GROWTH WITH EQUITY IS POSSIBLE BUT IT WILL NOT BE EASY ONE WILL HAVE TO GO WELL BEYOND WASHINGTON CONSENSUS POLICIES