Despite hundreds of millions spent on more and better household surveys across Africa in recent decades, we only have a very rough idea about the levels and trends in income poverty and inequality in sub-Saharan Africa. Many reasons contribute to this unfortunate state of affairs.
Last Friday, July 18, was Nelson Mandela Day, a day to recognize and remember his legacy to the cause of social justice – including the fight against extreme poverty. Mandela has inspired countless people with his ideas and actions.
The moment of personal inspiration came when I read a friend’s blog post several years ago in which he described a visit to Mandela’s prison cell, where he spent more than 20 years – a small cramped space that couldn’t constrain his larger vision. In Long Walk to Freedom, an autobiography he began writing in prison, Mandela said, “It is what we make out of what we have, not what we are given, that separates one person from another.” I found these words compelling, as they challenge each of us to examine our own life and direction.
In a very visceral way, Mandela understood the concept of inequality. He established the “Train of Hope,” which made its first journey to deliver health care to underserved rural populations in 1994, the same year that he was elected as South Africa’s president. He also believed in the promise of education. In 2001, at the opening ceremony of a secondary school, he stated, “Education is the great engine of personal development. It is through education that the daughter of a peasant can become a doctor, that a son of a mineworker can become the head of a mine…”
Mandela is for my generation what Gandhi was for my parents: A legend in his own time.
Jason Furman, appointed by President Barack Obama as the Chairman of the Council of Economic Affairs, spoke yesterday at the World Bank about inclusive growth in the US. Furman said that average income for the bottom 90% grew strongly across all OECD countries starting in the 1950s, but has flattened in the US since the ‘70s. Furthermore, Furman added that capital income contributes more to overall inequality towards the upper end of the American income distribution.
Furman also pointed out that starting in 2000, labor share in US income started falling, largely because of globalization.
Next up in this series of case studies in Active Citizenship is some inspiring work on women’s empowerment in Nepal. I would welcome comments on the full study: Raising Her Voice Nepal final draft 4 July
‘I was just a baby making machine’; ‘Before the project, I only ever spoke to animals and children’
‘This is the first time I have been called by my own name.’ [Quotes from women interviewed by study tour, March 2011]
While gender inequality remains extreme in Nepal, Oxfam’s Raising Her Voice (RHV) programme on women’s empowerment is contributing to and reinforcing an ongoing long-term shift in gender norms, driven by a combination of urbanization, migration, rising literacy and access to media, all of which have combined to erode women’s traditional isolation.
During the past 20 years, Nepal has also undergone major political changes. It has moved from being an absolute monarchy to a republic, from having an authoritarian regime to a more participatory governance system, from a religious state to a secular one, and from a centralized system to a more decentralized one.
A new World Bank policy research working paper by Bill Battaile, Richard Chisik, and Harun Onder shows how Dutch disease effects may arise solely from a shift in demand following a natural resource discovery. The natural resource wealth increases the demand for non-tradable luxury services due to non-homothetic preferences. Labor that could be used to develop other non-resource tradable sectors is pulled into these service sectors. As a result, manufactures and other tradable goods are more likely to be imported, and learning and productivity improvements accrue to the foreign exporters.
CORRUPTION: The Unrecognized Threat to International Security
Working Group on Corruption and Security, Carnegie Endowment for International Peace
Systemic corruption has an unrecognized bearing on international security. Policymakers and private companies often pay insufficient attention to corruption when deciding what foreign and defense policies to pursue or where to invest. Greater understanding of the nature of acute corruption and its impact on global security would contribute to a better assessment of costs and benefits and therefore to improved policy and practice.
The role of Africa's fourth generation
Post-colonial Africa is in its fourth generation. Over the past few decades, each generation has had a specific role to play: the first generation fought for, and gained, independence from their colonisers. The second generation, marked by greed and corruption, largely destroyed all that the first had fought for. The third was tasked with cleaning up the mess made by the second. So where does that leave us – Africa's fourth post-independence generation? It is up to us to build large-scale prosperity for Africa for the first time in its post-colonial history. Although much remains to be done, the second generation's mess has largely been cleaned up and Africa is the most stable it has been in decades. Inter- and intra-state conflict is declining and trade is booming. Africa's 5 % annual GDP growth is four times that of the EU, and between 2011 and 2015, African countries will account for seven of the ten fastest-growing economies in the world.
Regular FP2P readers will be (heartily sick of) used to me banging on about the importance of ‘killer facts‘ in NGO advocacy and general communications. Recently, I was asked to work with some of our finest policy wonks to put together some crib sheets for Oxfam’s big cheeses, who are more than happy for me to spread the love to you lot. So here are some highlights from 8 pages of KFs, with sources (full document here: Killer fact collection, June 2014).
I’m definitely not a stats geek, but every now and then, I get caught up in some of the nerdy excitement generated by measuring the state of the world. Take today’s launch (in London, but webstreamed) of a new ‘Global Multidimensional Poverty Index 2014’ for example – it’s fascinating.
This is the fourth MPI (the first came out in 2010), and is again produced by the Oxford Poverty and Human Development Initiative (OPHI), led by Sabina Alkire, a definite uber-geek on all things poverty related. The MPI brings together 10 indicators, with equal weighting for education, health and living standards (see table). If you tick a third or more of the boxes, you are counted as poor.
In April 2013, the World Bank Group endorsed two ambitious goals: (1) to end extreme poverty by 2030, and; (2) to promote “shared prosperity” by boosting the incomes of the poorest 40 percent of the population in every country. The introduction of the second goal marked a shift in the World Bank Group’s poverty reduction mission. Some might consider the goal #2 to constitute a refinement of a longer-standing -- albeit implicit -- emphasis on growth, widely considered a necessary condition for poverty reduction.
Is goal #1, ending extreme poverty by 2030, paramount and is goal #2 subsidiary to that first objective? On the other hand, if these two goals are prioritized equally, what might this mean for the extreme poor? What are the trade-offs between boosting the incomes of the bottom 40 percent in every developing country and ending extreme poverty globally?
The economics book that has launched a thousand blog posts, Thomas Piketty’s Capital in the Twenty-First Country, tells a grand story of inequality past and present. One would expect that a book on global inequality would have much to say about development. However, the book has limited relevance for the developing world, and the empirical data he marshals for developing countries is weak.
Piketty’s central story is that convergence in the developed world and slower population growth will leave us with a permanently modest economic growth rate (g). Coupled with a constant return to wealth (r), concentration of capital ownership, and high rates of savings among the wealthy, the low g leads to rising wealth inequality over a longish run—something like the second half of the 20th century.
A low-g future for the developed world is a mostly uncontroversial assumption. (He assumes future GDP per capita growth of 1.2 percent for the U.S.) But Piketty draws conclusions for the world as a whole, and we are a long way from global convergence. As Branko Milanovic noted in his review, catch-up growth could fend off Piketty’s inequality dystopia for some time.