Eliminating Human Poverty: Macroeconomic and Social Policies for Equitable Growth book cover

Eliminating Human Poverty: Macroeconomic and Social Policies for Equitable Growth

Author(s): Santosh Mehrotra (Author)

Publisher: Zed Books
Publication Date: 29 May 2007
Language: English
Print length: 448 pages
ISBN-10: 1842777734
ISBN-13: 9781842777732

Book Description

This book focuses on the provision of basic social services - in particular, access to education, health and water supplies - as the central building blocks of any human development strategy. The authors concentrate on how these basic social services can be financed and delivered more effectively to achieve the internationally agreed Millennium Development Goals.

Their analysis, which departs from the dominant macro-economic paradigm, deploys the results of broad-ranging research they led at UNICEF and UNDP, investigating the record on basic social services of some 30 developing countries. In seeking to learn from these new data, they develop an analytical argument around two potential synergies: at the macro level, between poverty reduction, human development and economic growth, and at the micro level, between interventions to provide basic social services. Policymakers, they argue, can integrate macro-economic and social policy. Fiscal, monetary, and other macro-economic policies can be compatible with social sector requirements. They make the case that policymakers have more flexibility than is usually presented by orthodox writers and international financial institutions, and that if policymakers engaged in alternative macro-economic and growth-oriented policies, this could lead to the expansion of human capabilities and the fulfillment of human rights. This book explores some of these policy options.

The book also argues that more than just additional aid is needed. Specific strategic shifts in the areas of aid policy, decentralized governance, health and education policy and the private-public mix in service provision are a prerequisite to achieve the goals of human development. The combination of governance reforms and fiscal and macro-economic policies outlined in this book can eliminate human poverty in the span of a generation.

Editorial Reviews

Review

'This book has an ambitious agenda. It offers a framework for conceptualizing macroeconomic policies on the assumption that people matter. The authors demonstrate a sure grasp of the complexities of policy-making to reduce poverty. This book offers an indispensable guide to policy makers and development practitioners.' Professor Ajit Singh, Faculty of Economics, University of Cambridge 'This book gets to the core of what will be needed to revive economic growth after the slowdown in much of the developing world over the last 25-30 years - by reversing the deflationary tendency of much contemporary macroeconomic policy.' Jomo K. S., Assistant Secretary-General for Economic Development, UN Department of Economic and Social Affairs 'A vital reference for donors, NGOs and others wanting to see the MDGs achieved - but uncertain how much it will cost. The analysis and 30 country case-studies provide important evidence and hard analysis to fill the gap between over-simple estimates of costs and over-cautious pessimism on policies.' Sir Richard Jolly, former architect of the Human Development Report 'This book is the blueprint for eradicating world poverty in the 21st century. Forget Stiglitz, move on from Sachs: this book based on over a decade of committed work in UNDP and UNICEF marks the real turning point away from neo-liberalism in the global discourse about economic and social policy.' Bob Deacon, Professor of International Social Policy, Director of Globalism and Social Policy Programme, Sheffield University, UK 'This is an excellent, timely book...Innovative, clearly written, readable and draws on a comprehensive range of research.' Dr David Lewis, Reader in Social Policy, London School of Economics

About the Author

Santosh Mehrotra is a human development economist educated at the New School for Social Research, New York, and the University of Cambridge where he did his doctorate. He was Associate Professor in Jawaharlal Nehru University, New Delhi, before moving to the United Nations in 1991.

Enrique Delamonica is an economist and political scientist educated at the University of Buenos Aires, Columbia University, and the New School for Social Research. For almost 15 years, as a consultant for UNICEF and UNDP and a policy analyst in UNICEF Headquarters, he has worked on the impact of macroeconomic policies on children, poverty reduction strategies, financing of social services and budget allocations, the analysis of trends in socio-economic disparities, child poverty measurement, and social protection policies. Currently he teaches at Saint Peter's College in New Jersey.
Santosh Mehrotra is a human development economist educated at the New School for Social Research, New York, and the University of Cambridge where he did his doctorate. He was Associate Professor in Jawaharlal Nehru University, New Delhi, before moving to the United Nations in 1991. For the past 15 years he has worked on the human impact of macro-economic policy. He led UNICEF's research programme on economic and social policy on developing countries at the Innocenti Research Centre, Florence, 1999-2002. He was a co-author of the Human Development Report (2002-2004) and Regional Economic Adviser for Poverty for the Asia region (2005-6). His books include: India and the Soviet Union: Trade and Technology Transfer (1990); Development with a Human Face: Experiences in Social Achievement and Economic Growth (with Sir Richard Jolly) (1997); Le Developpement a Visage Humain (2001); Universalizing Elementary Education in India: Uncaging the Tiger Economy (2005) (coauthored); The Economics of Elementary Education in India, ed. (2006); and Asian Informal Workers: Global Risks, Local Protection (with M. Biggeri) (2006). He is currently advisor to the Planning Commission, Government of India, and is involved in writing India's 11th Five Year Plan (2007-2011). Website: http://santoshmehrotra.org

Santosh K. Mehrotra is Regional Economics Advisor, Asia, with UNDP.
Enrique Delamonica is a policy analyst in the Division of Policy and Planning, UNICEF

Excerpt. © Reprinted by permission. All rights reserved.

Eliminating Human Poverty

Name: Eliminating Human Poverty: Macroeconomic and Social Policies for Equitable Growth
Author: Santosh Mehrotra (Author)
ISBN: 9781842777732

Macroeconomic & Social Policies for Equitable Growth

By Santosh Mehrotra, Enrique Delamonica

Zed Books Ltd

List of tables and figures, x,
Foreword by Kemal Dervis, xiii,
Preface, xv,
1 Introduction, 1,
PART I Macroeconomic policies,
2 Integrating macroeconomic and social policies to trigger synergies, 13,
3 Macroeconomic policies and institutions for pro-poor growth, 57,
PART II Public expenditure on basic social services,
4 The (in)adequacy of public spending on basic social services, 97,
5 The distribution of benefits of health and education spending, 134,
6 Policies to enhance efficiency and improve delivery in the public provision of basic social services, 154,
7 Governance reforms to address the systemic problems of state provision of basic services, 211,
8 Promoting complementarity between public and private provision, 235,
PART III Mobilizing domestic and external resources,
9 Taxation and mobilization of additional resources for public social services, 277,
10 The consistency between aid and trade policies and the Millennium Goals, 319,
11 Conclusion, 358,
Notes, 369,
References, 395,
Index, 426,

CHAPTER 1

Introduction

Human development is a goal, an objective and an aspiration. The goal gives salience to the well-being of the individual and the individual's full participation in society. It is a goal towards which economic policies should lead.

The notion of human development also provides an alternative framework beyond the traditional approach of economic analysis at the theoretical level. This notion is firmly grounded in the capabilities approach (Sen, 1982, 1985; Nussbaum, 2000). It requires an explicit and constant recognition of the need to integrate economic and social policy, which alone will ensure the goals of human development. This has at least two implications. First, by integrating and linking the human dimension with the analysis of growth and development, it should no longer be sufficient to look at macroeconomic variables, such as investment and trade, to assess or predict a country's performance or growth in the near future or the long run. Elements such as gender equity, and the health, nutrition, and education levels of the population are as significant as the macroeconomic variables.

There are practical policy implications of such a theoretical framework. It could be argued, for instance, that the international financial institutions should be evaluating country performance differently over a loan period (e.g. the period of applicability of the joint IMF-World Bank-Government Poverty Reduction Strategy Papers in low-income countries). This would not be merely in terms of macroeconomic indicators, or governance indicators, but also in terms of human development outcomes. This does happen increasingly at meetings of the Consultative Group of donors, but ultimately the most important indicators remain macroeconomic ones. The weight of 'Policies for Social Inclusion' in the evaluation of country policies is only 25 per cent. The Poverty Reduction Strategy Papers, initiated in 1999, are an attempt to address this problem. Whether this change in name from the erstwhile Policy Framework Papers means a substantive change in direction in the IMF remains to be seen; but the evidence so far does not suggest that there has been much substantive change (IMF, 2003; 2004).

Second, while there has been an increase in literature focused on many of these issues (i.e. the link between social and macroeconomic variables) (World Bank, 1980, 1990, 2000a), studies usually apply standard economic tools to non-economic issues. We believe that this approach gives a distorted picture of what human development is and how it can be achieved. In particular, the analysis of health and education sectors as if they were competitive markets could lead to seriously misguided policy recommendations. As a result, we suggest that Human Development, as a theoretical lens, is more naturally associated with various strands of non-orthodox economics, such as structuralist macroeconomics and evolutionary growth theories.

We do not pretend to cover all aspects of human development in this brief book. Our goal is more modest, as we concentrate on one fundamental piece: the provision of basic social services (BSS) to expand what Sen calls capabilities and functionings. We concentrate on how basic social services can be financed and delivered more effectively than hitherto in order to ensure universal and equitable access to high quality basic social services — so that the Millennium Development Goals (MDGs — some set for 2005, but mostly with a target date of 2015) can in fact be achieved (see Annex 1.1 to this chapter for a brief discussion of the magnitude of human poverty and Annex 1.2 for a list of the goals and targets of the MDGs). This provision of basic services is also related to other dimensions of human development, and we touch upon them along the way, especially when our analysis implies policy recommendations that differ from those of the dominant development paradigm.

Mainstream economic theory is the framework explicitly or implicitly used by most analysts of development. It is based on the assumption that given preferences and technology, production and distribution take place in such a way as to maximize welfare and to distribute income to the owners of the factors of production in proportion to their contribution to output. Thus, efficiency is maximized, and growth is determined by savings — that is, individuals/households prefer to exchange present for future consumption. This is not the place to engage in a critique of such a view, whether applied to industrialized or developing countries. Our approach is different. It can be summarized as follows.

First, production takes time. During the period of production, transactions must be carried out. These transactions include purchases of subsistence goods by workers and purchases of production inputs. These exchanges imply that enough commodities exist to sustain workers and facilitate production. These commodities can only come from previous production, and, at the very least, producers expect that at the end of this period enough commodities will again exist in order to sustain workers and production in the future.

Second, profits and accumulation (and consequently growth) are expected by producers. Otherwise, there would be no incentive to produce. Although individual producers may fail, society as a whole must produce enough commodities for its survival (to sustain workers and production, i.e. social reproduction as described in the previous paragraph). Moreover, at the aggregate level, a surplus (loosely interpreted as production beyond 'social reproduction') is needed as an incentive for production and to allow accumulation (i.e. economic growth).

Third, all commodities (those needed for social reproduction and those representing a surplus) need to be distributed. This distribution may or may not reflect contribution to output. It rarely does, as it is based on relative bargaining power of different groups and sectors. Assuming, in order to simplify, that the commodities used to sustain workers and production are distributed in a way that guarantees social reproduction, the distributional conflict revolves around the surplus.

The distribution of this surplus affects economic...

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Eliminating Human Poverty: Macroeconomic and Social Policies for Equitable Growth