1. Perspectives on Global Development 2012 Social Cohesion in a Shifting World Mario Pezzini Director, OECD Development CentreJoint Policy Dialogue with Global Development NetworkNew Delhi, India, 15 October 2012
2. A success story?• A lower-middle income country• Average 5% annual growth rate since 1990• Nearly 100% primary enrolment in 2008• 80% health care coverage• ‘Prudent public debt management’ (42.8% of GDP in 2009)• 3% fiscal deficit• Inflation at approx. 3% in the 2000s
4. Main messages1. As economic uncertainty deepens, now is the time for developing countries to channel their recent prosperity into a more ambitious social cohesion agenda.2. The process of rapid growth in many developing countries presents both a chance and risks for social cohesion.3. It’s not only about what you do but also about how you do it. A social cohesion policy agenda calls for different priorities in policy making.
5. Outline1 Shifting Wealth: an unprecedented opportunity?2 Challenges for social cohesion in fast growing countries3 What policies for social cohesion?4 Looking Forward – Social Cohesion Policy Reviews
6. The four-speed world in the 1990s Source: OECD Development Centre, Perspectives on Global Development 2010 - Shifting Wealth
7. The four-speed world in the 2000s Source: OECD Development Centre, Perspectives on Global Development 2010 - Shifting Wealth
8. Shifting Wealth:New resources for development Greater fiscal space in the 2000s vis-à-vis the 1990s Fiscal revenue to GDP ratio (%) Source: Authors’ calculations based on World Bank (2011).
9. Outline1 Shifting Wealth: an unprecedented opportunity?2 Challenges for social cohesion in fast growing countries3 What policies for social cohesion?4 Looking Forward – Social Cohesion Policy Reviews
10. Growth in life satisfaction andincome do not necessarily coincide Annualised growth rates (%), 2006-2010 Sources: Authors‘ calculation based on Gallup World Poll (2010) and World Development Indicators.
11. The aspirations of the emerging middle class Source: Author’s calculation based on Kharas (2010).
12. Capturing social cohesion dimensions - a dashboard of indicators Social inclusion Social capital Social mobility• Absolute and relative poverty • Interpersonal trust • Perceived ability to advance• Inequalities – distributional • Civic participation • Intergenerational mobility discontents
13. Outline1 Shifting Wealth: an unprecedented opportunity?2 Challenges for social cohesion in fast growing countries3 What policies for social cohesion?4 Looking Forward – Social Cohesion Policy Reviews
14. Policies can make a difference for inequality Gini coefficients before and after taxes and transfers in Latin American countries Source: OCDE (2008a) for OECD countries excluding LAC, OECD (2008b) for Argentina, Brazil Colombia and Peru.
15. Social and economic policyacross the distribution in Brazil Growth incidence curve (2001-06) Real minimum wage (in end 1994 R$) Source: OECD Development Centre, Perspectives on Global Source: IBGE and Central Bank of Brazil Development 2012.
16. Key policy areas for social cohesion- Example 1: Fiscal policy - With higher trust, tax evasion is less acceptable… Source: Authors calculations based on World Value Surveys and Indices of Social Development.
17. Key policy areas for social cohesion- Example 1: Fiscal policy - …which in turns leads to higher revenues… Source: Authors calculations based on World Value Surveys, OECD.stat, OECD/ECLAC/CIAT
18. Key policy areas for social cohesion- Example 2: Social protection - The ‘missing middle’ in Brazil, 2006 Share of the working population by income quintile and labour status Source: da Costa et al. (2011).
19. Key policy areas for social cohesion- Example 3: Employment and labour institutions - Increase in labour disputes in China Number of cases (thousand) Source: Cai and Wang (2011).
20. Labour markets: Reforming labour institutions (China)Reponses: increase in minimum wages… …and wider use of collective bargaining Source: Authors’ calculations based on Du and Pan (2009) and CASS. Source: Cai and Wang (2011).
21. Outline1 Shifting Wealth: an unprecedented opportunity?2 Challenges for social cohesion in fast growing countries3 What policies for social cohesion?4 Looking Forward – Social Cohesion Policy Reviews
22. Summary and Looking forward Shifting wealth brings opportunities and risks Social cohesion as a means and an end More resources and unprecedented possibilities New opportunities not equally shared within countries Looking forward Remaining questions: evolution of worldwide economic environment, sustainability and social cohesion, global governance. How to make social cohesion a part of national development strategies? Implementing Social Cohesion Policy Reviews.
23. Objectives of theSocial Cohesion Policy Reviews (SCPRs) 1. Assess the status of social cohesion in a society and monitor progress over time. 2. Improve the contribution of public policies to fostering social cohesion. • Within selected policy areas • By improving policy co-ordination 3. Gather comparable analysis to foster policy dialogue (In the mid-to-long term)
24. What’s new? – Analyse the impact of policies on social cohesion • rather than growth, poverty reduction or line ministry objectives – A multi-sectoral approach – Diagnostic rather than prescriptive
25. Contents of the review i. Measuring social cohesion i. Social inclusion ii. Social capital iii. Social mobility ii. Assessing the need for policy changes i. Fiscal Policy ii. Labour market policy iii. Social protection, health and other social policies iv. Education iii. Improving the governance of social cohesion i. Civic participation ii. Mechanisms for horizontal and vertical policy coordination iii. Local governance
26. Thank you for your attention!OECD Development CentreMore information:www.oecd.org/dev/pgdwebnet.oecd.org/pgdexplorerwww.oecd.org
28. The Centre’s Membership OECD members: Non-OECD members: 24 countries 17 countries Poland Brazil Morocco Austria Ireland Belgium Israel Portugal Colombia Peru Costa Rica Romania Chile Italy Slovakia Dominican South Africa Czech republic Korea Spain Republic Egypt Thailand Finland Luxembourg Sweden India Viet Nam France Mexico Switzerland Indonesia Senegal Germany Netherlands Turkey Mauritius Cape Verde Iceland Norway United Kingdom ArgentinaThe World Bank, the African Development Bank and the International Monetary Fundare all observers. The European Union also takes part in the work of the GoverningBoard.
29. Producing analysis on key development issues Regional outlooks Thematic outlook Africa Latin America Southeast Asia Global African Economic Outlook Latin American Economic Outlook Southeast Asian Economic Outlook Perspectives on Global Development- 2010: Public Resource Mobilisation - 2010: Fiscal Policies - 2010: Transport Infrastructure- 2011: Emerging Partners - 2011: Middle Classes - 2011/2012: Green Growth - 2010: Shifting Wealth- 2012: Youth employment - 2012: State Reform - 2013: Narrowing development gaps - 2012: Social Cohesion - 2013: Industrial Policies
30. Perspectives on Global Development Trilogy through the lens of Shifting Wealth: 1. Shifting Wealth 2. Social Cohesion in a Shifting World 3. Industrial policies Consultation process: • Expert meeting co-organized with GIZ (April 2010) • International Conference in Paris (January 2011) • Regional consultations (Rabat, April 2011 and Bangkok, July 2011) Partners: • FIIAPP, GIZ, Haut Commissariat au Plan (Morocco), Ministry of Foreign Affairs (Thailand)
31. What policies for social cohesion?• Policies can make a difference• Key areas: Fiscal, employment, social and educational policies• A social cohesion agenda is a more ambitious social agenda: Poverty reduction + increased attention to vulnerable middle class + inclusive policies• Exploiting linkages between different policies is crucial: Policy coherence and co-ordination
32. Distinct policies and growth models:Impact on inequality Changes in the Gini index in the BRICS, 1990-2007 Source: World Bank (2010) for Brazil, Russia, Indias 2005 data, and South Africa; OECD (2010) for China. World Bank (2004) for Indias 2000 data.
33. Example 1:Fiscal policy through the social cohesion lens • Ensuring equal opportunities through more and better redistribution • The virtuous cycle of fiscal legitimacy and social cohesion With higher trust, tax evasion is less acceptable… … which in turn leads to higher revenues …and greater state capacity. • Managing fiscal resources to create fiscal space • Where to begin? • Stronger, transparent and accountable tax administration • Improving quality of public services
34. Example 2:Social protection through the social cohesion lens Social protection can do a lot for poverty reduction: • Income support for the poor (e.g. Conditional Cash Transfers, workfare programmes) • Extending social services such as health to the poor A social cohesion agenda is a more ambitious social agenda • Equality of opportunity (especially between groups) • Avoid segmentation and dual systems Dealing with the `missing middle’ to foster social cohesion • Unbundling • Universality
35. The how also matters • Stop treating social cohesion as a by-product • Long term view is needed • Participation, capacity and accountability to make the policy making process more inclusive.
36. Group inequalities combined with vertical inequality Log adult-equivalent household income Per capita real public social expenditure South Africa (ZAR) quintile (in ZAR, year 2000) 5000 0.6 4000 0.4 3000 0.2 2000 1000 0 2 4 6 8 10 12 0 Quintile 1 Quintile 2 Quintile 3 Quintile 4 Quintile 5 White Asian/Indian 1995 2000 2006 Coloured African Source: Calculations based on SALDRU (2009).
37. Burundi Guinea-Bissau Congo Dem. Rep. Sierra Leone Ethiopia Niger Central Afr. Rep. Malawi* Liberia Madagascar Rwanda Mozambique Uganda Guinea Tanzania Burkina Faso Togo Gambia Mali Comoros** Ghana** ODA per capita Benin AFRICAN MEDIAN São Tomé & Principe Côte dIvoire Mauritania Tax revenue per capita Kenya CameroonSource: OECD/AfDB/UNECA (2010), African Economic Outlook Senegal Zambia Djibouti Chad Sudan Lesotho Egypt Nigeria AFRICAN AVERAGE Morocco Resources for development in Africa Cape Verde Tunisia Swaziland Namibia Mauritius Congo South Africa Botswana Angola Algeria Gabon Seychelles Equatorial Guinea Libya 0 400 800 1200 1600 2000 USD
38. …even accounting for differences in per capita income Partial correlation between tax morale and tax effort in 2008 0.8 GHA MDA 0.6 BGR BIH UKR FRA NOR MKD IRN CYP MAR Tax effort index 2008 0.4 MLI FIN NDL SVN GBRITA 0.2 SWE POL ZAF EGY URY BOL PRY ROU 0.0 ZMB VEN DEU ESP HND BFA ARM TTO CHL GEO -0.2 THA KOR PER UGA USA PAK SLV PHL CAN DOM CHEIND -0.4 SGP GTM CHN -0.6 -0.8 -0.6 -0.4 -0.2 0.0 0.2 0.4 0.6 Tax evasion is never justifiable (fraction of respondents) Source: PGD 2012