November 2008

The December issue of Poverty in Focus, the magazine published by UNDP's International Poverty Centre, is out. This issue is fully devoted to the linkages between employment, economic growth and poverty reduction.

"What is the role of employment in the nexus of economic growth, poverty reduction and progress towards achievement of the UN Millennium Development Goals? Although employment is not an explicit component of the MDGs, it has a key role in economic and social development.

As labour is the main resource that most poor people are endowed with, labour intensive growth is the most effective way to reduce poverty. Employment is the key source of income, consumption and other material aspects of improved livelihoods. Moreover, it enhances also other dimensions of wellbeing including skills, physical abilities and self-respect."

Access the full issue on-line: Jobs, Jobs, Jobs - The Policy Challenge

The Commission on Growth and Development has published the paper International Finance and Growth in Developing Countries: What Have We Learned?, by Maurice Obstfeld.

"Despite an abundance of cross?section, panel, and event studies, there is strikingly little convincing documentation of direct positive impacts of financial opening on the economic welfare levels or growth rates of developing countries. The econometric difficulties are similar to those that bedevil the literature on trade openness and growth, though if anything, they are more severe in the context of international finance. There is also little systematic evidence that financial opening raises welfare indirectly by promoting collateral reforms of economic institutions or policies. At the same time, opening the financial account does appear to raise the frequency and severity of economic crises. Nonetheless, developing countries continue to move in the direction of further financial openness. A plausible explanation is that financial development is a concomitant of successful economic growth, and a growing financial sector in an economy open to trade cannot long be insulated from cross?border financial flows. This survey discusses the policy framework in which financial globalization is most likely to prove beneficial for developing countries. The reforms developing countries need to carry out to make their economies safe for international asset trade are the same reforms they need to carry out to curtail the power of entrenched economic interests and liberate the economy’s productive potential."

This Friday we close the chapter on Gender Budgeting. Next week we will start looking at "Gender and Monetary Policy". As usual, from Raj Nallari and Breda Griffith's lecture notes.

Conclusion

Paul Shaffer, from the University of Toronto, writes in the Real-World Economics Review about the new thinking on poverty.

"Three main changes in thinking about poverty have gained increasing currency over the past decade. First, the concept of poverty has been broadened. This is reflected in the move from a physiological model of deprivation to a social one, and subsequently, in the increasing attention afforded issues of vulnerability, inequality and human rights. Second, the causal structure has been broadened to include a range of causal variables which previously received little attention. These have been phrased as 'forms of capital' and include social, political, cultural, coercive and environmental capital. Third, the causal structure has been deepened to focus on flows of individuals into and out of poverty, rather than on changes in the stock of poverty, and on strategies of social protection vs. poverty reduction. The paper reviews these changes as well as their implications for globalisation and policy."

 

(via From Poverty to Power)