Contact:
In Washington: Dina El Naggar (202) 473-3245
Delnaggar@worldbank.org WASHINGTON, April 19, 2006 — Since the mid-1980s, there has been little progress in poverty reduction in the MENA region although human development indicators have continued to improve. Accelerating poverty reduction and sustaining human development improvement are important challenges for the region in the future says a World Bank report "Sustaining Gains in Poverty Reduction and Human Development in MENA" released today. The report provides an overview of trends in poverty and human development indicators during the last two decades. It shows that the substantial progress in reducing poverty in earlier decades came to a halt in the latter half of the 1980s. Average poverty rates for the region, measured at the $2 per capita per day international poverty line, fell to around 25 percent by 1987, the lowest in the world at that time. But they stagnated thereafter, fluctuating between 20 and 25 percent. "This is the social cost of slow growth," says Mustapha Nabli, Chief Economist at the World Bank for the MENA region noting that "an additional 11 million people were added to the ranks of the poor between 1987 and 2001 because the region's population continued to grow but its economies didn't." Knowledge about the causes and consequences of poverty in MENA is limited by the availability of data. This is a serious issue in MENA countries where, according to Farrukh Iqbal, the principal author of the report, "access to data is typically considered not a matter of public right but of bureaucratic discretion." Often, this results in a lack of accurate information even within government agencies, and hampers its ability to understand and analyze poverty, design effective anti-poverty programs, and learn from experience. Data from this report shows that while poverty incidence rates did not improve during the period from 1985 to 2000, there were strong gains in human development: Literacy spread to 69 percent of the population, average schooling (for those above 15) rose to 5.2 years, child mortality rates plunged to around 46 per thousand births, and life expectancy continued to climb to reach 68 years. Indeed, the region improved its social indicators faster than middle-income comparators over this period. The fact that little poverty reduction occurred during the 1990s despite remarkable gains in human development reflects a failure to translate rising human capital into higher productivity. The slow growth experienced by the region over this period was a consequence in part of deficiencies in macroeconomic and structural policies. Among the structural policies that prevented higher rates of return to education and higher rates of employment were those related to trade. Insufficient openness to trade and investment constrained the returns to human development investments in the region. Progress in human development indicators despite economic stagnation and a decline in levels of social spending suggests gains in the efficiency of service delivery during the 1990s. This can be attributed to better targeting of spending to underserved groups and positive cross-sectoral impacts of earlier investments in female education and the provision of safe water supply. For example, statistical analysis shows a strong link between child mortality improvements during 1980−2000 and the level of female education achieved by 1980. The report also notes that the region's social safety nets need considerable improvement. Parts of the safety net that are effective are not efficient and parts that are relatively efficient are not effective. For example, food and energy subsidies reach a large number of people and are effective in the sense that they also reach the poor. However, both food and energy subsidies are inefficient in that they involve a lot of resource leakage to the non-poor. On the other hand, cash handouts are often better targeted to the poor and the vulnerable but they are funded at such low levels (typically less than 1 percent of GDP) that they are not very effective. While acknowledging some improvements in the design of food subsidies in such countries as Tunisia and Egypt and the switch from a food subsidy system to a cash transfer system in Algeria and Jordan, the report notes that opportunities to make a more substantial difference through reforming fiscally-profligate energy subsidies have largely been missed. The report argues for a three-pronged plan to meet future challenges: (a) accelerate growth while paying special attention to the need to increase labor absorption in the private sector; (b) further improve human capital by focusing on education quality at all levels and expanding the access of the poor to health services; and strengthen social safety nets through an emphasis on efficiency and insurance objectives. A growth strategy built around a bigger role in the regional economy for markets, the private sector and international trade and investment can deliver the needed growth. Such an approach, combined with better governance and higher female labor force participation, can raise the average output per capita by 3 percent per year, or thrice the actual rate experienced since 1985. Such a difference in growth implies a net gain in poverty reduction of around 8 percent within a decade or so. "The region cannot afford to miss this opportunity, "says Mustapha Nabli. "22 million more people would be lifted out of poverty by 2015 with a high growth scenario than without."
The education and health challenges of the future are likely to be different from those in the past and will require different responses. In education, the emphasis must now shift to improving quality and labor market relevance so as to meet the challenge of global competition. On the health front, the emphasis must be on continuing to improve the access of the poor and coping with the fiscal pressures of an emerging disease pattern that is likely to require more technology-intensive and thus more costly remedies. The report further highlights the importance of improving the supply of safe water and sanitation to under-served groups as well as providing nutrition and preventative health education. Safety net reforms are also needed. The prevailing social safety nets can be made more efficient through better targeting but this is presently constrained by political economy considerations as well as by deficiencies in data access, quality and related technical considerations. Safety nets can also be strengthened through measures that help insure against the risks of job and income loss. Such measures include: unemployment insurance, temporary employment in public works, and microfinance. ### For more on the World Bank and MENA, go to:
www.worldbank.org/mna/ |
RSS