Interview with Farrukh Iqbal, Lead Economist and Author Why focus on poverty and human development in MENA? In recent years we have published several studies covering the economic performance of the MENA region, focusing on such aspects as growth, employment, and trade among others. It was thought useful and timely to complement this work with a quick review of the poverty and human development performance as well. Some may not think that poverty is a serious issue in the MENA region, given its association in the public mind with oil wealth. But this is a misleading image. Although the region has a low poverty rate compared with other developing regions, the fact is that one of every five persons there may be considered poor (at the $2 PPP line) and that little progress has been made in reducing this ratio since the mid-1980s. What are the main observations of the book? Slow growth has a social cost. In the region, average per capita income grew by only 1 percent per annum between 1985 and 2000. Over roughly the same period, the number of poor grew by 11.5 million to reach 52 million. This shows what happens when populations continue to grow while economies don't. This also justifies the Bank's concern with promoting growth in the region as the most effective way of fighting poverty.
Surprisingly, the lack of income growth did not constrain human development in MENA. While per capita incomes stagnated, health and education indicators improved tremendously. For example, between 1985 and 2000, literacy spread from 47 to 69 percent of the population, child mortality rates plunged from 108 per thousand to 46 per thousand, and average years of schooling rose from 3.2 to 5.4. Indeed, the region did better than its middle-income comparators over this period. There is reason to believe that the gains in human indicators were due to a combination of factors including enhanced private spending and improvements in the delivery of public health and education services. This is an encouraging finding. It suggests that, even in the absence of income growth, it is possible to improve health and education attainments through attention to public service delivery. It provides a strong empirical justification for the Bank's operational focus on such issues What are the main recommendations of the book? The book calls for a three-pronged strategy, namely, accelerating economic growth, further improving health and education attainments, and strengthening social safety nets: 1) On accelerating growth and poverty reduction Accelerating growth is the most powerful way to accelerate the pace of poverty reduction in the region. Growth policies in the region must be consistent with such objectives as: macroeconomic stability, an enlargement of the role of the private sector, greater outward-orientation, diversification away from hydrocarbons, improved governance and higher female labor force participation. Such policies are likely to increase the annual average output per capita by 3 percent, enough to cut the poverty rate to around 7 percent by 2015. 2) On further improving education and health attainments Sustaining gains in education in the future requires shifting the focus from quantity to quality as the region will have to compete globally for markets and resources. Sustaining gains in health requires continued attention to the needs of the poor and to the consequences of the ongoing demographic and epidemiologic transition. 3) On strengthening social safety nets Social safety nets can be made more effective instruments of poverty reduction through a focus on efficiency and insurance objectives.
Subsidy-based safety nets in the region can be made more efficient through better targeting. Energy subsidies are particularly regressive. Redesigning energy subsidies can release substantial resources with which to help the poor. Safety nets can also be strengthened through measures that help insure against the risks of job and income loss. Any concluding comments? There are grounds for both concern and optimism. The concern arises from the region's weak growth performance in the past decade or so. This needs to be reversed through a sustained focus on macroeconomic and structural reform policies. Will the region be up to this task? Optimism arises from the solid performance of the region on the human development front that was due in part to improvements in the delivery of health and education services. Continued attention to service delivery issues should enable the region to achieve many of the Millenium Development Goals on schedule. |
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