SOCIAL DEVELOPMENT DEPARTMENTThe World Bank

Department of Economic and Social Affairs:

Development Forum on Productive Employment and Decent Work:Panel 6: Generating Employment

Dr. Anis A. DaniMay 8-9, 2006New York

Outline

Background Issues Role of Governments Policy Framework

Background

An anthropologist’s perspective Don’t mess with people and cultures Sustainable livelihoods approach

Traditional development practitioner’s perspective Development is inevitable; globalizing trends are

ubiquitous how can we protect the poor against adverse impacts?

Social protection perspective; safeguards; risk management

How do we go forward?

Issues

Most countries have liberalized trade and financial markets controlled runaway inflation privatized many public assets moved in varying degrees toward democratization seen the growth of civil society organisations permit more diversified forms of civic engagement

Issues - 2

Economies have diversified Except for Africa, less dependence on agriculture

both for employment and contribution to GDP Emergence of other sectors varies by country context:

industrialization, services, knowledge economy Many formerly low income countries are growing rapidly

East Asian tigers overtaken by China South Asian countries also posting impressive growth rates 6-8% Transition economies in Eastern Europe emerging from poverty,

largely fueled by EU Integration The resilience of countries and people against crises and shocks

varies BUT

Economies have been relatively stagnant in sub-Saharan Africa (with a few notable exceptions)

Jobless growth in Latin America has led to rising inequality Inequality is also rising in many other regions that are growing

fast, including China and South Asia

Issues - 3

We know that The impact of growth on poverty reduction is considerably greater

when the benefits of growth are more widely shared (eg WB and DESA flagships on inequality)

Some interpret this as a call for more public intervention to ensure redistribution and social protection

The real issue is that traditional livelihoods are not sustainable. In-country market penetration and globalization are eroding traditional livelihoods, or the returns on those livelihoods

With few exceptions, perhaps indigenous peoples, who wish to retain their customary lifestyles most people seek alternative livelihoods (e.g. through migration), expecting to improve their welfare

What public policies can help people adapt to alternate modes of livelihoods?

Issues - 4

Limits to what governments alone can do Countries with weak infrastructure and institutions

are unable to attract investment Barometer surveys reveal that personal insecurity

is arguably the single biggest constraint for the poor

Even in countries with relatively better infrastructure, the poor have less access to infrastructure and services, either due to spatial inequality, or informal status, or unaffordability

Basic education alone is no longer sufficient to create jobs; skill demands increasing in job market

Role of Government

What is the record of governments? Monopoly over use of force is not always used for the benefit

of people. In South Asia, as in much of Latin America and Africa, trust in public institutions is lowest for the police

Latin America and Eastern Europe show even lower trust in political institutions than South Asia

Weaker governments tend to be more amenable to elite capture and rent-seeking

Governments are better at creating state-owned enterprises than at running them

Public actions seen as the primary source of wealth creation, hence asset stripping

Re-classification of public assets, licensing/concessions easy source of wealth accumulation by those who have access to power

Every policy change is an opportunity for those exercising power or controlling information to capture more resources, in the absence of transparency and accountability to citizens

Trust in Public Institutions (De Souza 2005)

Main sources of insecurity: First, theft/robbery, Second, physical attack/harassment (except Pakistan who fear insurgency), Third, India - Insurgency, Pakistan- attack by another country, and Sri Lanka - kidnapping/extortion.

Overall trust in political institutions: India 64 , Pakistan 43, Sri Lanka 55 (in South Asia overall score 60 on 100 point scale). Higher except for Pakistan.

Global picture of political trust, region-wise: Afrobarometer 47%, New Europe Barometer 26%, East Asia 50%, Latino Barometro 21%.

Trilateral countries: decline in public confidence.

Low trust and high trust countries in South Asia.

Disaggregating political trust – Four clusters, 10 institutions

Institutions: Natl govt, Provincial govt, Local govt, Civil service, Police, Army, Courts, Parliament, Political parties, Govt controlled media) (in percentages)

India: (Total 5390) trusting 47, not trusting 26 (except army), partly trusting 8 (highest tr

local govt). partly no trust 19.(highest no tr Police) Army highest among 3 clusters, Police lowest among 2 clusters.

Pakistan (Total 2681) trusting 20, not trusting 35, partly trusting 24, (highest no trust of

police), partly no trust 21 (no tr in army and police) Sri Lanka (Total 4616)

trusting 36, not trusting 17, partly trusting 27 (highest tr Army and courts), partly no trust 20 (no tr in all)

Role of Government - 2

Direct role in creation of public jobs has mixed record Affirmative action has created jobs for SC/ST in India but these are low-

paying, low-status jobs that have not led to social change, leading some to argue that AA has outlived its utility

Governments are better at creating jobs through SOEs than sustaining them

Governments can create enabling environment for employment, e.g Household responsibility system, municipal enterprises, industrial parks, etc.

Record on public works programs also very mixed Governments are best-placed to create public goods

Mobilize resources for public infrastructure Create environment and provide facilities for economic activities Create policy environment for enterprise development (Doing Business

2006) Invest in human capital formation, but need to move beyond schooling to

skills development and higher/technical education Different tiers and arms of government have diverse interests which

can generate effective checks and balances among them The government can also promote a system of checks and balances

between government, private sector and civil society

Policy Framework: subjects and beneficiaries or citizens

1. Personal security, rule of law, access to justice – Legal Empowerment of the Poor

2. Create and increase access to physical infrastructure and utility services – “Reaching the poor” – Lessons from 20 years of infrastructure

3. Improve the business environment to facilitate enterprise formation, give space to informality, facilitate access to information and services

4. Strengthen the asset-base for evolution of livelihoods – invest in skills beyond primary education, invest in long-term knowledge economy and higher education

5. Focus on the rural space – with greater flexibility, tax breaks (e.g. Romania), venture capital, easier access to credit – to create growth poles

6. Target urban slums and informal sector with integrated approach that goes beyond housing to partnerships between government and civil society

7. Provide incentives to investors for job creating growth8. Strengthen regulatory capacity and citizen voice for privatized or

monopolistic public services and utilities9. Develop migration policies and strategies to provide security to migrant

families and reclaim benefits from the diaspora 10.Focus on revenue generation, rather than aid dependency to sustain

growth and achieve redistribution, within an acceptable social compact.

SOCIAL DEVELOPMENT DEPARTMENTThe World Bank

Reflections