The document discusses aligning social and productive investments to accelerate growth. It argues that maximizing synergy between social services and productivity-enhancing investments can lead to better long-term growth outcomes while still meeting short-term social needs. Specifically, adjusting social service compositions to have a greater agricultural focus and exploiting growth externalities of social services can optimize the growth impact of budgets. The document defines convergence as moving from competition over budget levels to cooperation on expenditure composition to jointly maximize social and economic objectives.

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. 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. 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. 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. 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. 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. MAXIMIZING GROWTH IMPACT THROUGH CONVERGENCE
ECON. GROWTH
POVERTY REDCUTION

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. 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. 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. DEFINING CONVERGENCE
CONVERGENCE COMPLEMENTARITY MAINSTREAMING

12. DEFINING CONVERGENCE
CONVERGENCE COMPLEMENTARITY MAINSTREAMING
DEGREE OF
EXTERNALITIES
SEPARABILITY
OF OBJECTIVES
SEARCH FOR
OPTIMIZATION
RESOURCE
TRADE OFF

13. DEFINING CONVERGENCE
CONVERGENCE COMPLEMENTARITY MAINSTREAMING
DEGREE OF
EXTERNALITIES
SEPARABILITY
OF OBJECTIVE
SEARCH FOR
OPTIMIZATION
RESOURCE
TRADE OFF

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. 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