1. SOCIAL DEVELOPMENT DEPARTMENT The World Bank Department of Economic and Social Affairs: Development Forum on Productive Employment and Decent Work: Panel 6: Generating Employment Dr. Anis A. Dani May 8-9, 2006 New York

2. Outline Background Issues Role of Governments Policy Framework

3. Background An anthropologist’s perspective Don’t mess with people and cultures Sustainable livelihoods approach Traditional development practitioner’s perspective Development is inevitable; globalizing trends are ubiquitous how can we protect the poor against adverse impacts? Social protection perspective; safeguards; risk management How do we go forward?

4. Issues Most countries have liberalized trade and financial markets controlled runaway inflation privatized many public assets moved in varying degrees toward democratization seen the growth of civil society organisations permit more diversified forms of civic engagement

5. Issues - 2 Economies have diversified Except for Africa, less dependence on agriculture both for employment and contribution to GDP Emergence of other sectors varies by country context: industrialization, services, knowledge economy Many formerly low income countries are growing rapidly East Asian tigers overtaken by China South Asian countries also posting impressive growth rates 6-8% Transition economies in Eastern Europe emerging from poverty, largely fueled by EU Integration The resilience of countries and people against crises and shocks varies BUT Economies have been relatively stagnant in sub-Saharan Africa (with a few notable exceptions) Jobless growth in Latin America has led to rising inequality Inequality is also rising in many other regions that are growing fast, including China and South Asia

6. Issues - 3 We know that The impact of growth on poverty reduction is considerably greater when the benefits of growth are more widely shared (eg WB and DESA flagships on inequality) Some interpret this as a call for more public intervention to ensure redistribution and social protection The real issue is that traditional livelihoods are not sustainable. In-country market penetration and globalization are eroding traditional livelihoods, or the returns on those livelihoods With few exceptions, perhaps indigenous peoples, who wish to retain their customary lifestyles most people seek alternative livelihoods (e.g. through migration), expecting to improve their welfare What public policies can help people adapt to alternate modes of livelihoods?

7. Issues - 4 Limits to what governments alone can do Countries with weak infrastructure and institutions are unable to attract investment Barometer surveys reveal that personal insecurity is arguably the single biggest constraint for the poor Even in countries with relatively better infrastructure, the poor have less access to infrastructure and services, either due to spatial inequality, or informal status, or unaffordability Basic education alone is no longer sufficient to create jobs; skill demands increasing in job market

8. Issues - 5 Transaction costs are often a bigger barrier than financial costs in access to services Political inequities inhibit access to services (WDR), which tend to be captured by rural and urban elites Complex and non-transparent procedures force intermediation and raise costs for the poor, who are often forced to rely on community-based services (Wood & Newton) Process simplification, e-governance, functional literacy, decentralization and outsourcing service provisioning can facilitate access

9. Role of Government What is the record of governments? Monopoly over use of force is not always used for the benefit of people. In South Asia, as in much of Latin America and Africa, trust in public institutions is lowest for the police Latin America and Eastern Europe show even lower trust in political institutions than South Asia Weaker governments tend to be more amenable to elite capture and rent-seeking Governments are better at creating state-owned enterprises than at running them Public actions seen as the primary source of wealth creation, hence asset stripping Re-classification of public assets, licensing/concessions easy source of wealth accumulation by those who have access to power Every policy change is an opportunity for those exercising power or controlling information to capture more resources, in the absence of transparency and accountability to citizens

10. Trust in Public Institutions (De Souza 2005) Main sources of insecurity: First, theft/robbery, Second, physical attack/harassment (except Pakistan who fear insurgency), Third, India - Insurgency, Pakistan- attack by another country, and Sri Lanka - kidnapping/extortion. Overall trust in political institutions: India 64, Pakistan 43, Sri Lanka 55 (in South Asia overall score 60 on 100 point scale). Higher except for Pakistan. Global picture of political trust, region-wise: Afrobarometer 47%, New Europe Barometer 26%, East Asia 50%, Latino Barometro 21%. Trilateral countries: decline in public confidence. Low trust and high trust countries in South Asia.

11. Disaggregating political trust – Four clusters, 10 institutions Institutions: Natl govt, Provincial govt, Local govt, Civil service, Police, Army, Courts, Parliament, Political parties, Govt controlled media) (in percentages) India: (Total 5390) trusting 47, not trusting 26 (except army), partly trusting 8 (highest tr local govt). partly no trust 19.(highest no tr Police) Army highest among 3 clusters, Police lowest among 2 clusters. Pakistan (Total 2681) trusting 20, not trusting 35, partly trusting 24, (highest no trust of police), partly no trust 21 (no tr in army and police) Sri Lanka (Total 4616) trusting 36, not trusting 17, partly trusting 27 (highest tr Army and courts), partly no trust 20 (no tr in all)

12. Role of Government - 2 Direct role in creation of public jobs has mixed record Affirmative action has created jobs for SC/ST in India but these are low-paying, low-status jobs that have not led to social change, leading some to argue that AA has outlived its utility Governments are better at creating jobs through SOEs than sustaining them Governments can create enabling environment for employment, e.g Household responsibility system, municipal enterprises, industrial parks, etc. Record on public works programs also very mixed Governments are best-placed to create public goods Mobilize resources for public infrastructure Create environment and provide facilities for economic activities Create policy environment for enterprise development (Doing Business 2006) Invest in human capital formation, but need to move beyond schooling to skills development and higher/technical education Different tiers and arms of government have diverse interests which can generate effective checks and balances among them The government can also promote a system of checks and balances between government, private sector and civil society

13. Role of government - 3 Strengthen state capacity to provide public goods to citizens (e.g. in M.E. (Anderson) Extend concept of public goods beyond social service delivery to equitable access to basic infrastructure and utility provisioning (Kessler) and macroeconomic policy (Harris & Kende-Robb) Public institutions have to manage the public interest, even with privatized services (Sclar, Delmon, Dubash) Voice and accountability can lead to improved social policy (Dubash, Kessler, Wood, Bonner et al) Rule of law and access to justice are key but can take multiple forms (Sage & Woolcock, Gloppen)

14. Policy Framework: subjects and beneficiaries or citizens 1.Personal security, rule of law, access to justice – Legal Empowerment of the Poor 2.Create and increase access to physical infrastructure and utility services – “Reaching the poor” – Lessons from 20 years of infrastructure 3.Improve the business environment to facilitate enterprise formation, give space to informality, facilitate access to information and services 4.Strengthen the asset-base for evolution of livelihoods – invest in skills beyond primary education, invest in long-term knowledge economy and higher education 5.Focus on the rural space – with greater flexibility, tax breaks (e.g. Romania), venture capital, easier access to credit – to create growth poles 6.Target urban slums and informal sector with integrated approach that goes beyond housing to partnerships between government and civil society 7.Provide incentives to investors for job creating growth 8.Strengthen regulatory capacity and citizen voice for privatized or monopolistic public services and utilities 9.Develop migration policies and strategies to provide security to migrant families and reclaim benefits from the diaspora 10.Focus on revenue generation, rather than aid dependency to sustain growth and achieve redistribution, within an acceptable social compact.

15. SOCIAL DEVELOPMENT DEPARTMENT The World Bank Reflections

16. New Frontiers highlighted by Arusha process The transformation of subjects and beneficiaries into citizens Fostering an enabling, accessible, responsive and accountable state—universal application of rule of law, and equal rights under the law Strengthening the capacity of states to mobilize revenue from their citizens, and diminishing reliance on external aid

17. Transformation of subjects and beneficiaries into citizens Participants of the Arusha Conference concluded that “The first new frontier of social policy is the transformation of subjects and beneficiaries into citizens. This implies policies that recognize and promote the universal rights and responsibilities of citizens, and strengthen the capacity of citizens to claim their rights. Some of the most effective examples of progress on citizens’s rights have come from alliances between the poor and other segments of society, suggesting that targeting public resources at the poor alone is not always the most effective way of empowering and building their capabilities.” RIGHTS & RESPONSIBILITIES

18. Fostering an enabling, responsive and accountable state “The second new frontier of social policy consists of fostering an enabling, accessible, responsive and accountable state. This entails universal application of rule of law, and equal rights under the law for all citizens. Universal rights, however, need to be accompanied by legitimate, effective, and accountable institutions for policy formulation and implementation, with rigorous monitoring of outcomes. This implies recognizing and celebrating multiculturalism as a source of strength for societies, and supporting policies that accommodate diversity in the achievement of universal rights. And this also involves recognizing the role of power relations and creating institutional mechanisms that offer redress against power inequities.” EQUITY & SOCIAL COHESION

19. Strengthening domestic resource mobilization capacity These two imply the third new frontier: strengthening the capacity of states to mobilize revenue from their citizens, and diminishing reliance on external aid. Domestic resource mobilization is the most effective means of enhancing citizen ownership and state accountability, and of ensuring sustainability. This presupposes a stronger enabling environment and resources for accelerated development. The international community—donors, governments, international organizations, and the private sector—will have to play their part to enable these processes. SUSTAINABILITY & ACCOUNTABILITY

20. Operational implications In existing social policy domains, focus on equity outcomes in terms of access and quality Expand to new arenas of social policy DEMAND SIDE OF GOVERNANCE Social policy dimensions of infrastructure and utilities Local governance and social accountability Rural institutions Fiscal policy LEGAL EMPOWERMENT OF THE POOR Security of tenure, land rights, property rights Supporting and integrating the informal sector Access to justice/rule of law FROM “SUSTAINABLE LIVELIHOODS” TO EQUITY OF OPPORTUNITY Access to assets/Asset accumulation Access to markets Human settlements, especially urban slums Social policy dimensions of Migration