Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Breaking the Poverty trap


Published on

Ronald U. Mendoza, Ph.D.,Asian Institute of Managment: Policy Center slides during the GDN 14th Annual development Conference.

Published in: News & Politics, Travel, Business
  • Be the first to comment

  • Be the first to like this

Breaking the Poverty trap

  1. 1. Breaking the Poverty TrapRonald U. Mendoza, Ph.D.Associate Professor of Economics
  2. 2. Social Protection•An investment rather than mere redistribution…•Strengthens citizenship and social cohesion…•Only temporary: the issue of “graduation”…•Fiscal sustainability…•Mainly addresses the human capital investments for thenext generation; but what about the present generation?•Risk of elite capture…
  3. 3. Source: Figure adapted from Balisacan (2011). Scenarios based onauthor’s calculations.How growth trickles down?-5-4.5-4-3.5-3-2.5-2-1.5-1-0.50Ravallion(2001),41DevelopingCountriesWorldBank(2009),EastAsia1990-2006WorldBank(2009),Thailand1990-2006WorldBank(2009),Indonesia1990-2006WorldBank(2009),Vietnam1990-2006WorldBank(2009),Philippines1990-2006BalisacanandFuwa(2004),Philippines1988-1997Balisacan(2007),Philippines1988-2003Percent change in poverty incidence arising from 1% change in mean incomeAt 3% growth, and at 1.5% poverty elasticity ofgrowth, it will take the Philippines 360 years toeliminate poverty.At 8% growth, and at 1.5% poverty elasticity ofgrowth, it will still take the Philippines 130 years toeliminate poverty.At 10% growth (approximating China’s) and 5%poverty elasticity of growth (approximatingThailand’s), it will take 24 years to eliminatepoverty in the Philippines.
  4. 4. Source: The Economist (2013).Can we eradicate extremepoverty worldwide?Inequality matters…World Bank: a 1%increase in incomes cutpoverty by 0.6% in themost unequalcountries but by 4.3%in the most equalones.
  5. 5. 5Schizoprenic economy?
  6. 6. Some elements ofinclusiveness?•Inclusive human capital investments (the startingpoint)…•Building resilience in a crisis-prone world…•Sustainable growth: shifting from (primarily) extractiveand rent-based growth to innovation and productivitybased growth…•Competition and industrial policies: striking the balance(over time) between state and market; and between largeand small enterprises – while preserving equity, efficiencyand stability aspirations of society