ECOSOC HOLDS SPECIAL PANEL DISCUSSION ON PROMOTING GROWTH FOR ACCELERATING POVERTY ERADICATION AND ACHIEVING THE MDGS
Also Hears the National Voluntary Presentation by Pakistan
6 July 2011
The United Nations Economic and Social Council this morning heard the National Voluntary Presentation by Pakistan, followed by a special panel discussion on promoting sustained, inclusive and equitable growth for accelerating poverty eradication and achievement of the Millennium Development Goals.
Nafisa Shah, Member of the National Assembly of Pakistan, delivering the presentation, said that the report conveyed an honest account and despite certain shortcomings Pakistan remained committed and hopeful. Educational goals included ensuring primary education for all, achieving upper level educational goals; eliminating urban-rural and gender disparities and increasing literacy rates to 85 per cent. Acting as friends of Pakistan, the delegations of Bangladesh, China and Turkey made statements. Subsequently, Carol Bellamy, Chair of the Board of Directors of the Education For All Fast Track Initiative, moderated an interactive discussion in which the delegations of India and Germany participated.
Introducing the special panel discussion on promoting sustained, inclusive and equitable growth for accelerating poverty eradication and achievement of the Millennium Development Goals, Lazarous Kapambwe, President of the United Nations Economic and Social Council, stressed the importance of education for economic growth and development and indicated that establishing growth that was inclusive and equitable underscored a significant social challenge but, on the other hand, uneven distribution of the benefits of growth that did not deliver gains to all social groups would lead to social tensions. Mr. Kapambwe urged delegations to gain insights from previous experiences and to achieve equitable economic growth and accelerate poverty eradication.
Juan Somavía, Director-General of the International Labour Organization, acting as moderator, said that the issue of promoting sustained, inclusive and equitable growth for accelerating poverty eradication and the achievement of the Millennium Development Goals was at the heart of many of the issues currently faced. Data showed that inequality was also growing in the developed world and that it was no longer an issue of developing countries catching up, but suggested problems within those countries that had previously established strong income distribution mechanisms.
In the panel discussion, Zhu Min, Special Advisor to the Managing Director of the International Monetary Fund, indicated that in the context of financial markets that were larger than the real economy, the emphasis on tradable goods was disproportionate. There should be a stronger link between finance and the real economy, in order to make the financial sector work for the real economy. Noeleen Heyzer, Executive Secretary of the Economic and Social Commission for Asia and the Pacific, said Asia was the pole for the global economy and was currently investing in itself; in this context, the creation of a regional market would boost lagging parts of the region and economic governance was critical. Cho Tae-yul, Ambassador for Development Cooperation of the Republic of Korea, suggested that export-led growth might be necessary to acquire the resources and promote distribution properly, thus the question was not whether trade liberalization always had a positive impact on income distribution, but how effectively developing economies could be integrated into the global economy, increasing their competitiveness in the global market.
Frances Stewart, Director of the Centre for Research on Inequality, Human Security and Ethnicity at the University of Oxford, argued that once people had attained a certain income, they were not willing to give it up and this made redistribution difficult; the post-2015 environment should addressed inequality as well as inclusive growth through policies such as higher tax rates, promoting quality of education and a minimum wages. Finally, Esther Duflo, Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics at the Massachusetts Institute of Technology, warned against overly focusing on arbitrary poverty lines as indicators, and suggested that attention should be paid not only on the number of people under such a poverty line, but rather their quality of life. Concerning the question of whether there could be an opportunity for nutrition policy to make education systems more effective and efficient at reducing inequality, she argued that many schools had failed to cater to early learners and to level the field, thus reproducing existing inequalities.
Following the presentations, Mr. Somavía opened the floor for delegations to participate in the discussion. India, Greece, Indonesia on behalf of a group of 13 southeast Asian countries, Guatemala, United States, Zambia, Senegal and the United Nations Food and Agriculture Organization made statements.
ECOSOC will reconvene at 3 p.m. this afternoon to resume its High-Level Segment and continue with the general debate based on the report of the Secretary-General on implementing internationally agreed goals and commitments in regard to education, which was the theme of the segment, and the report on current global and national trends and challenges and their impact on education.
National Voluntary Presentation: Pakistan
CAROL BELLAMY, Chair of the Board of Directors of the Education For All Fast Track Initiative, acting as moderator, said her role as moderator was limited to giving the floor to those wishing to make interventions in the interactive dialogue with Pakistan which would be presenting its national voluntary report in the framework of the annual ministerial review of the Economic and Social Council.
NAFISA SHAH, Member of the National Assembly of Pakistan, said she was presented with the difficult job of presenting the National Voluntary Presentation of Pakistan on the theme of the Annual Ministerial Review. The report was not easy to prepare but it was an honest report. There were certain shortcomings, but Pakistan was committed and hopeful. Ms. Shah presented the key education indicators of Pakistan: adult literacy was 57.7 per cent and net enrollment rate was fifty-seven per cent. Educational infrastructure was large – there were primary, secondary and higher-level institutions. Although a recent constitutional amendment confirmed the Pakistani people’s right to education, about 7.2 million children were not attending school, 60 per cent of schools had no electricity, 34 per cent had no drinking water and most primary schools in rural areas had only two teachers. Ms. Shah highlighted the damages resulting from the 2005 earthquake, the 2010 floods, regional war as well as internal displacement. These disasters had caused student causalities, destroyed school buildings and displaced children and adults. The Taliban had destroyed or damaged 700 girls’ schools. Pakistan was facing an emergency of everyday life, including growing pressure on the economy, growing poverty and rising economic and educational costs.
Pakistan’s education goals were to ensure all completed a full course of primary schooling, achieve upper level educational goals, eliminate gender disparities and increase literacy to 85 per cent. The 2009 Education Policy emphasized increased enrollment in public sector schools, higher budgetary allocations to education, the removal of urban-rural and gender imbalances and improving the quality of education at all levels. The Government recognized the need to employ public-private partnerships in the educational sector. Subsidies had been provided for children to attend school. Support had been allocated to improve adult literacy. Pakistan would most likely achieve its goal of achieving gender equity in education.
There was a growing demand for education but thousands of villages had no schools. Poverty was a main barrier to education. Free education and incentives could bring girls into school. Universal primary education could only be achieved through focused intervention by the public sector. Improving the efficiency of existing schools was much more crucial than establishing new ones. Donors had provided support for education in disaster areas and for education sector reforms. Pakistan was not likely to achieve all its education goals. Although a strong policy commitment existed, there was comparatively weak policy implementation. Future success would largely depend on the role of provincial governments, since education was devolved, to take the education agenda forward. Pakistan needed additional financial resources to achieve its educational goals.
NOJIBUR RAHMAN (Bangladesh) said the presentation portrayed in clear terms the progress that Pakistan had made towards the internationally agreed goals of Education for All and the Millennium Development Goals within the framework of its national development strategies and current challenges. The presentation highlighted the difficult development context in which the developing countries had to pursue their developing goals, particularly in the South Asia region, which housed the bulk of the world’s human population. The report also drew attention to the kind of gaps between the need for resources and their availability; and thus provided a roadmap for the involvement of the international community towards improving the situation. Bangladesh asked what policies had made particularly impressive progress and, in the context of the need for aligning education systems with the requirements of the market, what mechanisms might Pakistan have established to meet this challenge.
BO QIAN (China) said the presentation gave a comprehensive and objective perspective of efforts and the policy experience of Pakistan in implementing internationally agreed goals and contributed with insightful views and proposals. In recent years Pakistan had overcome considerable difficulties, such as the impact of recent flooding on its domestic product, and it had made significant achievements towards these goals. Pakistan had made important efforts, bilaterally and multilaterally to meet its responsibilities and promote educational improvement. At present Pakistan faced among other challenges high drop-out and adult illiteracy rates and the lack of infrastructure and resources. China would seek to strengthen cooperation and it called upon the international community to provide assistance to Pakistan. In so far as Pakistan continued to follow the right policy direction positive results would be achieved. China asked, with regards to improving opportunities for ethnic minorities and people with disabilities, what mechanisms were being implemented. In the context of constitutional amendments increasing decentralization of education responsibilities, how did the Government ensure policy coordination?
EMRIYE ORMANCI (Turkey) thanked Dr. Nafisa Shah for her very comprehensive presentation and for presenting an honest account of the education sector. Turkey noted with pleasure that Pakistan had recently introduced policy reforms and launched key initiatives to achieve internationally agreed goals in the education sector. Turkey was confident that Pakistan would mainstream gender equality into its national education policy. Turkey commended the Pakistani authorities for their impressive efforts to overcome the numerous development challenges arising from many factors. It was imperative that international development partners continued to support Pakistan’s education efforts. Turkey asked Pakistan to share its view on providing quality education and shed light on the policy steps taken by Pakistan in this regard. Turkey also inquired how, given growing debt burdens, international development partners could further contribute to education in developing countries.
NAFISA SHAH, Member of the National Assembly of Pakistan, thanked speakers for their support and important questions. Regarding higher education for women, gender balance had been reversed in some areas, for example in medicine. Girls outnumbered boys in studying medicine. Once they had made it to this level, girls were very successful, but the problem was to get them to this level. Monetary and food support programmes were in place for this purpose. Higher literacy rates for women were contributing to gender equity and boosting school attendance. Pakistan needed a market-oriented education system and numerous technical initiatives were present and successful. However, this area required further work, including the development of a regulatory framework. Under the constitution, the fundamental rights of minorities were assured and special programmes and scholarship schemes were in place to ensure that their education needs were met. Special institutes were run to address problems encountered by people with disabilities. Direct income support was being provided to women in order to alleviate poverty. Provinces were spending large proportions of their budgets on education. This devolved system was coordinated by an inter-ministerial body. Quality education was always a problem, but comprehensive teacher training and resource centres had been established. Regarding the issue of debt, donors had initiated debt-for-education swaps.
VIKRAM SAHAY (India) said that Pakistan had taken significant steps to fulfill its goals and acknowledged the commitment of Pakistan’s Parliament, educational commission and its programmes. How was the Government’s commitment effectively being fulfilled in regard to article 25 a) of the constitution? Furthermore, India asked whether Pakistan had implemented any innovative steps, proposals or initiatives for ensuring sufficient financing or providing additional resources for education in Pakistan, such as those implemented in India.
HENRIETTE KOTTER (Germany) said Pakistan was one of its partner countries in which education was a priority. Pakistan had recently faced considerable challenges in the form of floods and national disasters; what lessons had been learnt about ways for providing education in the context of these situations, including the challenge of bringing educational services to children in shelters.
NAFISA SHAH, Member of the National Assembly of Pakistan, said that over the years there was a lot of duplication and waste in education in Pakistan. The devolved system placed more responsibility on the provinces. Devolution was an impetus for all and increased public pressure. The central government was tasked with developing policies in the areas it administered and the hope was that policies would be replicated and adapted by provinces. It was an important time in Pakistan for considering and implementing reforms. Under two per cent gross domestic product was allocated to education, so Pakistan was far from reaching the target of seven per cent. However, the public and private sectors were providing an increasing amount of resources. In the aftermath of the floods, some of those displaced were the poorest and most marginalized. Many children had never attended school and adults could not read and write. The floods provided an opportunity to establish transitional schools in camps, which allowed for literacy training and first-time school attendance. The concern was what would happen once those displaced returned home.
Special Panel Discussion on “Promoting sustained, inclusive and equitable growth for accelerating poverty eradication and achievement of the Millennium Development Goals”
LAZAROUS KAPAMBWE, President of the United Nations Economic and Social Council, stressed the importance of education for economic growth and development. The target date of 2015 for achieving the Millennium Development Goals was fast approaching yet substantial drops in economic growth triggered by recent global crises indicated the link between economic growth and human well-being. Appropriate policies should ideally create an environment for high levels of investment and job creation, as well as social protection, inclusiveness and equity; and an enabling international environment, particularly through fair and open trade, development cooperation and transfer of technology and know-now, were some essential elements. In addition to establishing sustained growth, establishing growth that was inclusive and equitable underscored a significant social challenge; on the other hand, uneven distribution of the benefits of growth that did not deliver gains to all social groups would lead to social tensions. Several countries had made progress in reducing inequalities and it was important to examine the policies they had enacted to manage this issue. This discussion would present policies that could be implemented to overcome the challenges of achieving equitable economic growth and insights on how to accelerate poverty eradication and achieve the Millennium Development Goals through sustained, inclusive and equitable economic growth.
JUAN SOMAVIA, Director-General of the International Labour Organization, serving as moderator for the panel discussion, said the issue of promoting sustained, inclusive and equitable growth for accelerating poverty eradication and the achievement of the Millennium Development Goals was at the heart of many of the issues currently faced. Some of the political impacts of economic growth were an issue as well. The growth pattern of the last 30 years had increased inequality. Currently, 3.5 billion people had the same income as 61 million people. Respect for the environment had not been up to par. Respect for labour standards had not been up to par. The level of investment in the real economy had been rather stable in the last 30 years. It was a question of addressing basic structural issues. From the perspective of the International Labour Organization, job creation had not been sufficient. The highest level of unemployment, youth unemployment, and insecure work ever recorded presently existed. Mr. Somavia said that he believed that growth patterns since the 1980s had become inefficient, environmentally degrading and unsustainable. The concept of social justice needed to return to the discussion. Mr. Somavia looked forward to hearing from the panellists about how different models of growth could address the many issues of poverty, inequality, environmental degradation and social justice. Because the financial economy appeared to be in the driver seat of the global economy, Mr. Somavia asked how the financial economy could contribute to increased equality.
Statements by Panellists and Discussion
ZHU MIN, Special Advisor to the Managing Director, International Monetary Fund, said that in the past 20 years the global GDP per capita had doubled, yet despite growth in lower income countries, the income gap had increased. While budget deficits remained the same, the major change was increase in unemployment and inequality rates. Growth was strong at the macro level but it had not benefited everyone in the system and it had slowed growth and reduced the generation of wealth. Fiscal policy was very important; there must be a balance between austerity policies and the promotion of growth. As financial markets became volatile, investment in human capital, health, education, and job training constituted a priority. The international community should work on capacity building. Inclusive growth required not purely economic of financial growth, but a better distribution. Therefore “smart” policies at the macro level were needed; restrictive financial and economic measures were important for macro stability, but did not necessarily improve the situation on the ground. The International Monetary Fund worked to open the dialogue among different stake holders and promote inclusive growth.
JUAN SOMAVIA, Director-General of the International Labour Organization, said data showed that inequality was also growing in the developed world and that it was no longer an issue of developing countries catching up, but suggested problems within those countries that had previously established strong income distribution mechanisms. For example, 0,1 per cent of people in the United States commanded a disproportionate income, how was it possible to deal with such levels of inequality.
ZHU MIN, Special Advisor to the Managing Director, International Monetary Fund, said that inequality was a global phenomenon; wealth and income were overly concentrated. As seen in advanced economies and emerging markets, globalization implied that tradable goods got more distribution than non tradable ones, a property also associated with the financial market. For this reason, the value of the financial market was several times larger than that of the real economy. Trade was important and a fair trade environment was important, but policies must also pay attention to the non tradable sector. More importantly, there must be a strong link between the financial sector and the real economy, they must be equalized and made to walk together. Taxing financial transactions would be one way, although unpopular, to make the financial sector work for the real economy.
FRANCES STEWART, Director of the Centre for Research on Inequality, Human Security and Ethnicity, University of Oxford, said the salaries paid in the financial sector were gross and unnecessary. These kind of salaries affected the entire economy. This needed to be confronted. It was argued that workers in this sector were efficient, but given the financial crisis, this idea had been debunked. Society had to address these inequalities.
CHO TAE-YUL, Ambassador for Development Cooperation of the Republic of Korea, said the Republic of Korea was able to overcome the current crisis because of the crisis it faced in Asia in the 1990s. This had allowed the Republic of Korea to strengthen the economy. Because of drastic reform measures, the Republic of Korea had been able to recover. However, inequality rose during this time because the country was not prepared for the structural problems that had emerged over many years. This had created serious socio-economic issues.
JUAN SOMAVIA, Director-General of the International Labour Organization, said that many spoke of moving into the Asia century but it was necessary to focus on today. The economies of India and China would constitute the future and the rate of change was extremely rapid. Mr. Somavia said that in 1997, India had decided to manage policies the way it wanted. It had paid back the International Monetary Fund to retain autonomy over its policies and thus managed its recovery. Because countries had faced this previous crisis and had different policies in place, that could explain why emerging countries recovered better than developed countries. Mr. Somavia asked how Asia could reconcile its leadership in economic growth with autonomy in policy making.
NOELEEN HEYZER, Executive Secretary of the Economic and Social Commission for Asia and the Pacific, said Asia was the pole for the global economy and was currently investing in itself. Asia had traded itself out of the previous crisis, but this time it had financed itself out. However, it was hard to say how it would assure its dynamism and growth in the medium term. Growing inequalities were prevalent. This time it was not possible to trade itself out of crisis because developed countries had to reduce fiscal and other spending. Asia was considering how to create alternative sources of demand. Asia had taken on the challenge of reducing inequality and alleviating poverty. By focusing on these issues, the challenge could be turned into an opportunity. Achieving the Millennium Development Goals and alleviating poverty could be seen as critical for sustaining the region’s dynamism in the coming years. Job-led growth was needed. A much greater focus on agricultural growth and rural development would benefit the bulk of poor people, as they derived most of their income from agriculture. Financing for development was critical, including the role of the State. The financial inclusion of the poor and vulnerable had to be increased. Governments needed to ensure an institutional and regulatory environment that fostered an inclusive, fair and more efficient banking system and expanded the safeguard options of the poor. Infrastructure gaps needed to be closed. Finally, the creation of a regional market would boost lagging parts of the region. Economic governance and Asia’s role in that was critical. The need for social protection was seen not as a cost, but an investment. This connectivity agenda involved hardware and software. Software needed to take into account changing population patterns, including the issue of youth populations and poor and marginalized populations.
JUAN SOMAVIA, Director-General of the International Labour Organization, underlined the link between trade liberalization and income inequality. Previously the growth pattern had been export led. Currently, countries were concentrating on the domestic market to come out of the crisis, yet a domestic market could not be developed in the context of endemic unequal distribution. How was it possible to continue to sustain global markets in a context in a world in which domestic markets acquired a greater importance?
CHO TAE-YUL, Ambassador for Development Cooperation of the Republic of Korea, referring to the experience of development of the Republic of Korea during the 1960s and 1970s, said that given the lack of domestic resources, the pie had to be expanded by export-led economic growth. Now the Korean economy was much bigger and domestic consumption had a greater importance. In the past, because of the limited size and resources of domestic markets a policy of growth-now, distribution-later was necessary to acquire the resources and promote distribution properly. However, in the context of globalization and the wake of the Asian crisis, the expansion of the knowledge-based economy further widened income inequality, leaving low-skilled workers at a greater disadvantage. The question was not whether trade liberalization always had a positive impact on income distribution, but how effectively developing economies could be integrated into the global economy, increasing their competitiveness in the global market. Subsequently, an important question was how to ensure inclusiveness and equity while continuing to promote economic growth. This was where social policies came into play. A greater access to education and a more inclusive labour market, boosting the employment of youth, women and the elderly and a more advance social welfare system and better health services were all necessary in steps in parallel or following closely quantitative economic growth.
ZHU MIN, Special Advisor to the Managing Director, International Monetary Fund, said the world economy was changing so fast and over such a scale that job loss multipliers and other effects were concentrated. It had become very clear that globalization brought about a lot of change. It was important to build domestic systems and invest in education to ensure that non-trade sectors could increase productivity, so income in both trade and non-trade sectors was equalized. This had to be done as early as possible. Growing developing countries that did not have internal demand needed to move into a consumption-driven economy, requiring the use of tax policy to ensure people could consume. People needed to have jobs. In order to find jobs, people needed the skills that qualified them for these jobs. This allowed them to consume and participate in the consumption-driven economy.
JUAN SOMAVIA, Director-General of the International Labour Organization, asked how gains from growth could be shared in an inclusive way and inquired what key policies could be employed to ensure this. The gains of productivity needed to be expressed in wages. Mr. Somavia asked how this could be achieved.
FRANCES STEWART, Director of the Centre for Research on Inequality, Human Security and Ethnicity, University of Oxford, said that once people had attained a certain income, they were not willing to give it up and so redistribution was difficult. Ms. Stewart said inclusive growth was talked about often, but it was not often defined. The lack of a definition allowed people to say it had occurred. One definition of inclusive growth was growth in which the bottom twenty and forty percent of the population received proportionate gains from growth. Another way to think about inclusive growth was in terms of groups, such as those marginalized and poor, and thus consider their proportionate share in growth. It was possible to go further and say that these groups needed to participate as producers as well as consumers. Inequality between groups increased the propensity for conflict and criminality, which would destroy growth. This was an important issue for developing as well as developed countries. The Millennium Development Goals had no inequality consideration. Ms. Stewart felt that the post-2015 environment should address inequality as well as inclusive growth. Important policies included the establishment of a high tax rate. Access to education but also quality of education were important. Generous tax-transfers had a huge role to play, as could the use of a minimum wage. In the 1980s the minimum wage was dismantled in many countries and thus inequality rose. Anti-discrimination legislation could play a role, ensuring the right of groups to jobs and good education. The global economy was a growing tide that often played a role in inequality. Policies were ineffective because the tide of the global economy swept away the impacts of policies.
ZHU MIN, Special Advisor to the Managing Director, International Monetary Fund, indicated that rather then focusing on the top-twenty and bottom-forty income groups, it should be recognized that while the bottom-twenty people had not changed very much, it was the top-twenty’s income share that had radically increased, thus reducing that and squashing the middle-income sectors.
CHO TAE-YUL, Ambassador for Development Cooperation of the Republic of Korea, reiterated that the environment where the Republic of Korea found itself during the 1960s, made “growth-now, development-later” the only possible policy. Distributional aspects of economic growth should be gradually stepped up, one step behind quantitative economic growth.
LAZAROUS KAPAMBWE, President of the United Nations Economic and Social Council, recalling a question posed by the United States, said that while there had been growth in many developing countries, poverty levels were increasing and inquired why this was the case and what could be done in order to correct it.
JUAN SOMAVIA, Director-General of the International Labour Organization, in response to Ms. Stewart, said there was an underlying question of values. When such levels of inequality were reached, these must reflect the values behind the policies promoting such levels of inequality. In this context, the bonus culture and the enormous salaries earned by business leaders reflected a particular set of values reflecting notions of success, and the prevalent notion that the economy produced winners and losers. While the world needed increasing networking and cooperation, a culture that privileged individualism and competition remained. Globalization processes seemed to have lost their ethical component. Concerning the question posed by the United States, Mr. Somavia said that it was now evident that high levels of growth did not solve the problem of inequality.
ESTHER DUFLO, Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics, Massachusetts Institute of Technology, said over a long period of time a poverty line could be established as an arbitrarily point of reference, for instance 1 dollar poverty line, yet higher targets had also been established, making it look like poverty had increased. Shifting definitions might hide actual progress made. Given that poverty was not about accessing consumer goods that could be monetarily quantified, the same indicators might be slightly misguiding. The focus must be not only on the number of people under such a poverty line, but rather their quality of life. Concerning the question of whether there could be an opportunity for nutrition policy to make education systems more effective and efficient at reducing inequality, she argued that the ideology and mission in current school systems should change. Policies had usually equated learning with school enrollment, and the notion that one led to the other. There had been considerable progress in enrollment world-wide at a great cost and significant efforts by Governments and the international community. However, the quality of education and the lack of basic skills in in-school children remained a problem. This was not because children were unable to learn, but because neither teachers nor parents seemed to believe that the schools were supposed to promote learning and teach skills to everyone; rather the emphasis was on preparing the best students for competitive university exams. Schools had failed to cater to early learners and to level the field, thus reproducing existing inequalities. There was a risk of reproducing the same problem in higher education, making it harder for many graduates to find employment.
JUAN SOMAVIA, Director-General of the International Labour Organization, stated that many people received an education which permitted them to move forward in the world but realized that outside factors prevented them from doing so. This was a structural, not personal issue, but it was important to address the emotional impacts.
VIKRAM SAHAY (India) said in India there was a tax on financial transactions. This meant that more resources were collected and that transactions were recorded and could be analyzed by the Government. In regards to inclusive growth, India stated that the rural employment guarantee programme, which ensured a minimum 100 days of employment every year, improved rural areas and provided for work opportunities. This work improved rural villages’ infrastructure and other elements. This had also arrested rural-urban migration, which had implications for energy consumption, arresting its growth. Besides improving livelihoods, this programme allowed for rural investment. Looking past 2015, regarding goal six of the Millennium Development Goals, it was difficult to define quality in education. From the perspective of sustainable development and education in sustainable development it was important to re-define goal six to have monitor-able targets. Linking education to employment was a major issue for skill development programmes and educational courses attuned to the market.
GEORGE PAPADATOS (Greece) said Greece would touch on issues concerning debt and unemployment. Angry young people were claiming policies had failed them and economic theories had not provided good answers. Greece asked whether the limits of these economic theories had been breached and whether there were any new ideas on the subject.
HASAN KLEIB (Indonesia), speaking on behalf of a group of 13 Southeast Asian countries, said that growth should not be an end in itself but a way to achieve social and development goals. Sustained and inclusive growth and the achievement of the Millennium Development Goals were mutually reinforcing. It was important to pursue pro-growth, pro-job and pro-poor policies. At the regional level, it was important to create regional connectivity and intra- and inter- regional trade to narrow development gaps. At the international level, an open and fair international trade regime could serve as an engine of growth and thus Indonesia encouraged the conclusion of the Doha round of trade negotiations. Jobs were more than a livelihood, they involved self-worth. Also important were regulatory frameworks and polices for small and medium enterprises to encourage the poor to participate and benefit from economic activities. In relation to pro-poor growth policy, benefits needed to be distributed to all. Protecting and empowering vulnerable groups were key for inclusive growth. Investment in health and education and targeted policies to increase the livelihoods of the poor were vital. Cooperation in Asia had contributed to the achievement of the Millennium Development Goals. Indonesia asked how to best reconcile trade and equality, in terms of pro-growth and pro-poor policies. Indonesia inquired how the poor could benefit from trade.
GERT ROSENTHAL (Guatemala) asked, following up on the question posed by Greece, about the role of ideology in achieving equitable growth today. Previous debates during the past 20 or 30 years on the role of the state and market liberalization emphasized the importance of the market at the expense of regulation. These policies benefited actors organized to function in the market and had undermined others. Before the crisis nobody had thought that the question of States and market regulation would be revisited. In the United States and Europe, many discussions continued to emphasize the importance of the market and the need for little regulation. Finally Guatemala asked the panelists and Ms. Stewart, agreeing on the importance of increasing taxations, their opinion on the current political context that privileged the market.
ABDESSALAM OULD AHMED, of the Food and Agriculture Organization, said that studies showed that poverty and food insecurity were disproportionately prevalent in rural areas, where the impact of the agricultural sector on poverty reduction was at least twice as powerful. There had been important progress in fighting food insecurity along with poverty reduction, however, given the hike in food prices, this had changed. The crisis should not overshadow the fundamental problem of food insecurity and poverty, and the underlying fragility of the current food system. It was necessary to address this question in the context of the challenges of the millennium. Achievement made on the basis of a green revolution overly depended on the use of agrochemicals at great cost. A better solution would require a shift of paradigm towards the intensification of sustainable crop production, putting an emphasis on sustainability, depending on education.
RICK BARTON (United States) asked where youth were employed when they were being absorbed by the economy at a higher rate than currently. The United States asked whether there were losses in key sectors not previously noted, such as in the agricultural sector. The United States asked how the collection of data on the world’s economic growth was proceeding. The collection of data was difficult and reliance on data, particularly on data collected in least developed countries, was unwise. Regarding the quality of school, the expansion of the number of schools attendees could reduce the quality of education, as had been the experience in the United States; was that the experience in other countries and what kind of policies had been used to address the issue? Instead of addressing simply ideological issues regarding tax rates, the universally poor tax collection and enforcement rates could be addressed.
DARLINGTON MWAPE (Zambia) stated that Zambia wanted to follow up regarding the transition from export-led to consumption-led growth. It was his view that it was not a question of choice between the two. The reality was that many countries were too small to grow through domestic consumption. Zambia asked how small countries, such as many of those on the African continent, could grow by consumption. Regarding the question about why high growth rates were not translated into poverty reduction, Zamiba believed this was a question of inclusiveness and income distribution. It was an issue of which sectors were driving economic growth. On the African continent, most growth was driven by extractive industries. There were fewer and fewer people employed in these sectors, and therefore incomes were not being well distributed. The sector prominent in graduating least development countries was tourism, which involved a lot of labour and thus achieved better distribution of income.
NDIAGA MBOUD (Senegal) stated that high growth rates in Africa had not contributed to development. High growth rates often did not lead to poverty reduction, development or job creation. When high levels of growth existed in Africa, it was noticed this did not have development gains. Development partners had said these rates were not sufficient to reduce poverty and ensure development. Double digit growth was required. This explanation was striking, particularly because many developed countries would be delighted with three per cent growth. The explanation was that high growth rates were due to the export of agricultural and mined products. This had no impact on manufacturing and service sectors, and thus these high levels of growth did not reduce poverty. This led Senegal to look into export policy to see how it could seek to reduce poverty with the help of exports. This also led Senegal to look into trade and development aid. This part of aid was part of the growth model applied to Africa, which encouraged Africa to export basic commodities. In order to eliminate poverty, this pattern of export needed to be abandoned. Africa needed to be incorporated in the value-added chain.
ZHU MIN, Special Advisor to the Managing Director, International Monetary Fund, said that India had passed a law to promote jobs and the informal sector, providing social security and securing jobs was very important for developing countries. With globalization the job demand was globalised, but given the local character of education, job supply remained localized, there was a structural mismatch given the difference between the tradable and the non-tradable sectors. Many jobs had been created, but particularly in the service sectors, this was an important challenge and structural issue that they were facing today. Zambia and Senegal should look at the service sector and income, classical Keynesian theory was not enough today, looking at aggregated macroeconomic factors was not enough; policy should aim to promote a balance at the sector level between tradable and non-tradables.
NOELEEN HEYZER, Executive Secretary of the Economic and Social Commission for Asia and the Pacific, said that growth could be converted into poverty reduction efforts through the job sector and through the promotion of minimum wage and decent work. Policy alignment was crucial. The values underpinning states and markets were also important; increasingly citizens were making governments and markets accountable. The wealth that was being generated must be shared. Corporate responsibility and inequality were not acceptable. Many of the lessons of the crises of 2008 had not been learned. How did they ensure that citizens’ voices were represented. Labour flows were not allowed as much as capital flows, graduates working as domestic workers, doctors working as nurses, reflected this problem. It was not the domestic market vs. the global market, but also regional markets, economic corridors across national borders further linking the global economy could be beneficial.
CHO TAE-YUL, Ambassador for Development Cooperation of the Republic of Korea, indicated that high growth rates were not being translated into poverty reduction due to the lack of institutional frameworks to translate them into education, welfare, and services that were needed to achieve a more equitable growth. In order to achieve this, human factors came into place. The Republic of Korea was successful because of the strong leadership, skill-technocrats behind policy design, effort of its people. Education played a key role in promoting social mobility, more than simply reducing income gaps. Concerning the roles of states and markets, the Republic of Korea noted that, while generally trying to avoid intervention as much as possible, it recognised that a positive balance must be achieved.
FRANCES STEWART, Director of the Centre for Research on inequality, human security and ethnicity, University of Oxford said that it was right that absolute poverty had improved and a wide of range of indicators would attest to that. However, unemployment and inequality had emerged as the key problems. The Kuznets’s curve predicted that equality would eventually improve with growth. With globalization, this did not appear to be true because the global economy was much more productive, thereby utilizing less employment. The mobility of people at the top pulled up the wages at the top of the income scale. In the high productivity sectors, job creation was not keeping pace. The trick was to get resources out of high productivity sources into the sectors that created jobs. The best way to do this was taxation, but this was not popular politically. Polanyi had emphasized that economic systems acted like a pendulum, arguing that a market system would become so extreme that people would begin to challenge it. This was now being seen. There would be a political reaction. Inequality and unemployment were not technical, but political problems.
ESTHER DUFLO, Abdul Latif Jameel Professor of Poverty Alleviation and Development Economics, Massachusetts Institute of Technology, stated that there was a window to increase taxes by keeping tax brackets unchanged. China had succeeded at this and had been successful at tax collection. It was politically acceptable to let the bracket creep. Looking at gross domestic product, but also other less comprehensive indicators could be useful. Assets could be measured reliably and cheaply. Regarding the quality of education, it was not the case that the absorption of learners had reduced quality. There was no evidence that increasing access to inputs improved education. Millennium Development Goal number six, on the quality of education, needed to be defined. This needed to be taken seriously. Quality had to be defined in terms of the goals of systems and pupils development. There was a tendency to use input to define quality.
JUAN SOMAVIA, Director-General of the International Labour Organization, said the discussion had been very rich. Inequality was a global problem, but used to be seen as a developing country problem. There was need to concentrate on the quality of growth. There had been a tendency to say high growth was desirable, but the content of the growth was a central aspect in moving into the future. Regarding the ideologies and values underpinning the economic system, the reason developing countries did better than developed ones was that they were intellectually free to find that balance between the state and the market. The ideology that deregulation was always better had failed. It was a tool. The policy choices used in Europe in responding to the economic crisis were surprising. Mr. Somavia stated the importance of balancing the financial economy vis-à-vis the real economy and the state. There was no dearth of ideas for addressing these issues, but collective thinking and out-of-the box thinking were required. The United Nations needed to put this together with intellectual freedom.
For use of the information media; not an official record