How to align social and productive investments to accelerate growth

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Ousmane Badiane, Lead Specialist,Food and Agricultural Policy, Africa Region, World Bank
14th May 2008, Royal museum for Central Africa in Tervuren, Belgium

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How to align social and productive investments to accelerate growth

  1. 1. HOW TO ALIGN SOCIAL AND PRODUCTIVE INVESTMENTS TO ACCELERATE GROWTH Ousmane Badiane Lead Specialist Food and Agricultural Policy Africa Region g World Bank
  2. 2. ALIGNING SOCIAL AND PRODUCTIVITY INVESTMENTS STRATEGIC ISSUES 1. POST STRUCTURAL ADJUSTMENT REFORMS • SEARCH FOR NEW INSTRUMENTS BY GOVERNMENTS 2. EMERGING GLOBAL SOCIAL AGENDA • CALLS FOR NEW ROLE FOR GOVERNMENTS 3. LINGERING POVERTY • PRESSURE TO ACT ON SOCIAL NEEDS • RENEWED EMPHASIS ON AGRICULTURAL GROWTH • TIGHT BUDGET CONSTRAINTS 4. MOVE TOWARD BUDGET SUPPORT • RISK OF BIAS TOWARDS SOCIAL SECTORS ?
  3. 3. ALIGNING SOCIAL AND PRODUCTIVITY INVESTMENTS STRATEGIC QUESTIONS AND OUTCOMES • HOW TO MAXIMIZE SYNERGY BETWEEN SOCIAL SERVICES AND PRODUCTIVITY ENHANCING INVESTMENTS: • BETTER UNDERSTAND SYNERGIES AND TRADE OFFS • FULLY EXPLOIT GROWTH EXTERNALITIES OF SOCIAL SERVICES • MAXIMIZE LONG TERM GROWTH • WHILE MEETING SHORT TERM SOCIAL NEEDS • MORE EFFECTIVE BUDGET PLANNING AND EXECUTION
  4. 4. MEETING GROWTH AND SOCIAL NEEDS A DOUBLE CHALLENGE The African Dilemma: Growth or Poverty? Sea rch for op tima l po licy con verge nce Chad Burkina Faso (1990) (2001) .1 Botswana (2001 ) Benin (1990) Burkina Faso (20 01) Benin (2001) Botswana (1990) 5% growth rate .05 wth Cameroon (2001) Economic grow . Congo (2001) Angola Burundi (1 990) (2001) Cent. Afr. Republic (2001 ) B urundi (2001) 20% poverty rate Congo (19 90) Angola (1 99 0) ire (2001) Côte d'Ivo 0 y Côte d'Ivoire (1990) Cent. Afr. Republic (1990) Cha d (1990) -.05 5 2 Cameroon (1990 ) 0 .02 .04 .06 .08 .1 Inverse of poverty rate (% of pop below $1) Source: Country PRSP and 2007 WDI.
  5. 5. DECLINING PUBLIC EXPENDITURE IN AGRICULTURE 900 Social Services 0) Index (1980=100 800 700 Health 600 500 Education 400 Agriculture 300 200 Infrastructure 100 00 0 Defense 1980 1982 1984 1986 1988 1990 1992 1994 1996 1998 2000 2002 1 1 1 1 1 1 1 1 1 1 2 2
  6. 6. FROM TRADE-OFF TO CONVERGENCE • MOST EFFECTIVE WAY TO REDUCE POVERTY – RAISE PRODUCTIVITY OF POORS’ RESOURCES (LAND, LABOR) • GOVERNMENTS BUDGET TRADE-OFF MAY FAVOR SOC SOCIAL S C O S SECTORS • LOW ACCESS TO SOCIAL SERVICES IS OUTCOME OF – LOW HOUSEHOLD PRODUCTIVITY – LIMITED FISCAL RESOURCES – POOR SERVICE DELIVERY – OBSTACLES TO ACCESS • SOCIAL SERVICES ARE COMPOSITES NOT HOMOGENEOUS • SERVICES COMPOSITION IS NOT GROWTH NEUTRAL • ADJUST SERVICES MIX TO RAISE GROWTH IMPACT
  7. 7. MAXIMIZING GROWTH IMPACT THROUGH CONVERGENCE ECON. GROWTH POVERTY REDCUTION
  8. 8. MAXIMIZING GROWTH IMPACT THROUGH CONVERGENCE ECON. GROWTH SCENARIO 1: • NON AG. FOCUSED SERVICES, e.g • EDUCATION FOR ALL • URBAN BASED HEALTH SERVICES S1 POVERTY REDCUTION
  9. 9. MAXIMIZING GROWTH IMPACT THROUGH CONVERGENCE ECON. GROWTH SCENARIO 1: • NON AG. FOCUSED SERVICES, e.g S2 • EDUCATION FOR ALL • URBAN BASED HEALTH SERVICES S1 SCENARIO 2: • AG. FOCUSED SERVICES, e.g • STRONG VOCATIONAL TRAINING • LABOR FORCE DEVELOPMENT • EFFECTIVE CONTROL OF SEASONAL DISEASES IN RURAL AREAS POVERTY REDCUTION
  10. 10. MAXIMIZING GROWTH IMPACT THROUGH CONVERGENCE ECON. GROWTH SCENARIO 1: • NON AG. FOCUSED SERVICES, e.g S2 • EDUCATION FOR ALL • URBAN BASED HEALTH SERVICES S1 SCENARIO 2: • AG. FOCUSED SERVICES, e.g • STRONG VOCATIONAL TRAINING • LABOR FORCE DEVELOPMENT • EFFECTIVE CONTROL OF SEASONAL DISEASES IN RURAL AREAS POVERTY REDCUTION OPTIMIZING GROWTH IMPACT OF BUDGET • MAXIMUM INCREASE IN LABOR PRODUCTIVITY • MAXIMIUM INCREASE IN LABOR USE • CONSTANT SOCIAL SERVICES BUDGETS • CONSTANT LABOR SUPPLY
  11. 11. DEFINING CONVERGENCE CONVERGENCE COMPLEMENTARITY MAINSTREAMING
  12. 12. DEFINING CONVERGENCE CONVERGENCE COMPLEMENTARITY MAINSTREAMING DEGREE OF EXTERNALITIES SEPARABILITY OF OBJECTIVES SEARCH FOR OPTIMIZATION RESOURCE TRADE OFF
  13. 13. DEFINING CONVERGENCE CONVERGENCE COMPLEMENTARITY MAINSTREAMING DEGREE OF EXTERNALITIES SEPARABILITY OF OBJECTIVE SEARCH FOR OPTIMIZATION RESOURCE TRADE OFF
  14. 14. CONVERGENCE BETWEEN SOCIAL AND PRODUCTIVITY INVESTMENTS FROM BUDGET COMPETION TO COOPERATION • NEGOTIATION OF EXPENDITURE COMPOSITION NOT LEVELS • BUDGET ADDITIONALITY NOT ZERO SUM GAME – BROADER BUY IN INTO AGRICULTURAL AGENDA – ACCESS TO LARGER RESOURCES FOR AGRICULTURAL SECTOR – HIGHER RETURNS TO AGRICULTURAL SECTOR INVESTMENTS – HIGHER RETURNS TO PUBLIC SECTOR INVESTMENTS – LONG TERM SUSTAINABILITY OF SOCIAL SERVICES
  15. 15. CONVERGENCE BETWEEN SOCIAL AND PRODUCTIVITY INVESTMENTS BASIC STRATEGIC QUESTIONS HOW TO MAXIMIZE LONG TERM GROWTH WHILE MEETING SHORT TERM SOCIAL NEEDS HOW TO MAXIMIZE SYNERGY BETWEEN SOCIAL SERVICES AND PRODUCTIVITY ENHANCING INVESTMENTS HOW TO EXPLOIT GROWTH EXTERNALITIES OF SOCIAL SERVICES HOW TO IMPROVE CONSIDERATION OF GROWTH SYNERGIES IN BUDGET PLANNING AND NEGOTIATIONS

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