Summary of ediscussion (Part III): Institutions and Policies for Greater Equity and Poverty Reduction

Several questions were raised at the beginning of the discussion. Click the links below to read participants' responses as summarized by the moderator.

1. How can market-oriented reforms be made equitable and growth-enhancing?

 

2. Can poor countries afford to care about inequality? If so, what policies should they adopt? What do you feel is the policy/institutional change with the highest priority at the national level? Relate these questions to your country experience.

 

3. To what degree are global inequalities caused by conditions and policies in individual countries versus conditions and policies in the global arena?

 

4. What do you feel is the policy/institutional change with the highest priority at the global level?

 

5. Do you favor free movement of people alongside movement of goods and capital?

 

Additional thoughts: environmental concerns

 

 

1. How can market-oriented reforms be made equitable and growth-enhancing?

Participants resoundingly illustrated the need to increase voice and participation to combat social and economic exclusion.  Suggestions for increasing voice revolved around market legislation, property rights and contract establishment, and increasing human capital through education.  Access to markets, especially financial markets, was seen to be particularly important in ensuring that individuals are not disadvantaged in investing in human capital or productive activities.  Some participants suggested that markets and equity are fundamentally opposed and that markets by nature create gross inequities.  Lastly, participants underscored the need to evaluate the externalities of individual country’s policies, arguing that in the increasingly integrated global marketplace national decisions have transnational effects.

2. Can poor countries afford to care about inequality? If so, what policies should they adopt?  What do you feel is the policy/institutional change with the highest priority at the national level?  Relate these questions to your country experience.
Participants agreed that poor countries ought to care about inequality -- if nothing else, because wide inequalities lead to instability and conflict -- and can afford to do so. Decentralization was encouraged to push decision making to the level where it is most informed by local public debate, though not without recognizing the risks of decreased inter-regional transfers and coordination.   Along the same lines, some suggested that policies which could make use of and enhance social capital and community networks could lead to more pro-poor, efficient, and politically sustainable outcomes.  One instrument cited to devise equity-enhancing policies is "corporatist negotiations", that include representatives of the legislative bodies, national and local governments, relevant parts of the bureaucracy as well as a fair representation of all significant parts of private sector and relevant parts of civil society.  Universal free high-quality basic education, protection of human rights, land reform, labour standards and health protection, and access to finance were also cited.  

Participants provided useful examples of positive actions (Ghana’s district assemblies common fund), counter-productive policies (expropriation and redistribution through imminent domain in Antigua and Barbuda), and the political fallout of not following equity-promoting strategies (recent Indian elections).

 

3. To what degree are global inequalities caused by conditions and policies in individual countries versus conditions and policies in the global arena?

Only a few participants expressed views on this question, and they differed in assigning responsibility to developed countries (that "dictate" global policies") or developing countries ("the main responsibility of reducing poverty and inequality still lies at the domestic level.").  One contributor noted that the end global inequality is determined by the interaction of global and local conditions.  Pernicious effects can be counteracted by strong national institutions.

 

While some went so far as to question the existence of a ‘global policy arena’ and recommended reducing the influence of multilateral lending agencies, others suggested enhancing existing institutions to give greater voice and equitable treatment to developing countries.   Many highlighted the need for collective action on the part of developing countries. 

 

4. What do you feel is the policy/institutional change with the highest priority at the global level?

Participants mentioned forgiving debt; speeding up reforms of the United Nations system (and related bodies) to strengthen its capacity to deal with externalities associated to national policy choices; changing the mindset of developed country leaders so that policy coherence improves, for example with the elimination of agricultural subsidies in OECD countries.  Several suggestions refer to the role of aid agencies; participants think that multilateral funding agencies have too great a say in setting national policies and that sovereignty and ownership need to be respected more.  Others stressed the need to make aid flows more predictable and policy-based.

 

5. Do you favor free movement of people alongside movement of goods and capital?

A largely consistent view was voiced that labor should be allowed to move to where it can be put to its most productive use just like other factors of production.  However, there was not clear consensus on whether free immigration would reduce or increase inequality.  Issues of brain drain, educational arbitrage, and remittances complicate the net effect of immigration, making the outcome context specific.  One participant wrote that free movement of labor did not come without costs, among which was increased tension and long-run unsustainability of continued migration for both origin and destination countries.

 

Additional thoughts: Environmental concerns

Beyond sharing their views on the proposed questions, participants felt strongly that environmental aspects of equity are not sufficiently addressed in the outline.  One view was that more attention needed to be given to the ability of the poor to gain access to and effectively use natural resources, including water and wood, as the current use of natural resources between rich and poor countries and individuals is inequitable and the planet cannot equitably support its inhabitants at current levels of use.

 

A second view is that environmental protection is a global public good and that the national policies of pollutant nations have significant negative and inequitable externalities.  Recommendations included further empowering the UN to take action as well as generating mechanisms whereby OECD and other developed nations become the ones to pay for their concern (and lack of concern) for the environment.