Supported by Christian Aid, UK, UNDP, India and Action Aid, China
International Development Economics Associates (IDEAs) organized a three day workshop followed by a three day international conference at Tsinghua University in Beijing, China. The workshop was held between 3-5th June and the conference followed between the 7-9th of June, 2007. The events were organized to focus discussions on the recent economic growth witnessed in some parts of the developing world, and its impact on economic structures and thereby on income distribution and poverty reduction.
The issue is particularly relevant as the recent decades have thrown up interesting dilemmas for the developing world. While many countries have witnessed some economic growth with a few experiencing spectacular growth, the process of growth has often been accompanied by increases in income inequality and inadequate reduction of poverty. This has been a rather disappointing trend since the policies of structural reforms and globalization have always been associated with promises of poverty eradication, a reduction in the inequality of income distribution, and a general rise in welfare for developing economies.
Therefore, this workshop and conference intended to focus on the extent and nature of growth in developing economies, particularly in Asia where growth has been very rapid. It aimed to explore the extent to which the growth process has been related to shifts in underlying economic structures with adverse impacts on poverty and inequality, or to policy paradigms, both domestic and external, which have created these contradictions within the growing developing world. The impact on livelihood and employment patterns, sectoral shifts in investment, production, and incomes, the impact on human development and gender were all sought to be studied in detail. Within developing Asia, India and China have proved to be very significant cases given the combination of high growth and growing income inequalities. Therefore the events also looked at growth processes in these economies, to find what may be the lessons and implications for other developing economies.
Workshop entitled “Development Experiences and Policy
Options for a Changing World”
3-5th June, 2007
Within the context of the overall theme, the workshop intended to focus on a somewhat broader perspective than the conference and therefore the sub title for the event was decided accordingly. It had about 47 young participants and 8 instructors.
In continuation of IDEAs’ workshops held round the world in partnership with universities and organizations on issues of economic development, the Beijing workshop invited applications to participate in the workshop and attend the conference from young economists from developing countries who have completed or are close to completing their Ph.D. In addition, individuals with a strong economics background involved in advocacy work with civil society organizations or engaged in policy making activities were also encouraged to apply. The selection process laid special emphasis on participants from and based in developing countries, and also ensured a representative regional and gender distribution.
Selected participants were provided full funding for travel, besides boarding and lodging, to attend both the workshop and the conference. Some others also attended at their own cost or by sharing the cost, though they were limited in number so as not to take away opportunities from developing country scholars who are unable to cover their own costs. Researchers from the developing South and Asia were especially encouraged to apply.
Participants represented a wide range of regional and academic or work backgrounds. Within China, participants came from regions, including some very interior regions. Along with members of Tsinghua, Renmin, and Beijing Normal Universities from Beijing, there were participants from the Shanghai Academy of Social Sciences, and the School of Economics, Shanghai University of Finance & Economics. In addition there were participants from the Xiamen University of Fujian, Nankai University in Tianjin, School of Economics, Henan University, Nanjing University of Economics and Finances, and Anhui University, Hefei. There were also a number of representatives of civil society organisations, who have been working on the field in many different parts of China.
Participants from the rest of the world covered a broad spectrum of regions and organizations. Some were from the Indian statistical Institute, Kolkata, University of Delhi and Jawaharlal Nehru University, New Delhi, all from India. From Turkey, Dokuz Eylül University, Izmir, and Atilim University in Ankara were represented along with Universidade Federal do Rio de Janeiro, and Federal University of Minas Gerais (UFMG), both from Brazil. In addition, there were participants from Chulalongkorn University, Bangkok, Thailand, Oxfam-South Asia Regional Centre, The Open University of Sri Lanka, University of Nairobi, Nairobi, Kenya, Pontificia Universidad Católica Madre y Maestra of the Dominican Republic, Centre for Economic and Social Development, Baku, Azerbaijan, African Institute for Agrarian Studies, Harare, Zimbabwe, University of Essex, UK, and Centro de Investigaciones de Economía Internacional Universidad de La Habana Havana, Cuba.
The workshop was organized in four modules of 1.5 to 2 hours on each of the three days. Out of the total of 12 modules, 8 took the form of lecture-cum-discussion sessions of one and a half hours each, delivered by senior academicians and policymakers from around the world. These consisted of a 45 minute to 1 hour lecture followed by an intensive question answer cum discussion session. In the remaining 4 sessions, some of the young participants were invited to make presentations in their current area of research. These presentations were organized to promote alternative research and its active dissemination among younger practitioners. These sessions were also intended to generate free and frank discussions between young participants as well as invite comments from the senior instructors. There were a total of 16 presentations from the workshop participants.
The instructors for the workshop were drawn from noted economists across the world, most of whom belong to the IDEAs network and share similar but still different outlooks on the issues of economic growth, development policies, and human development. Some of them have also worked on the field of poverty in its different dimensions from various micro and macro perspectives. It was the objective of the workshop to acquaint the participants with a diverse range of case studies and policy perspectives, and therefore the instructors’ panel was drawn based on their ability to contribute a well informed and wide variety of specialized lectures.
Prof. C.P. Chandrasekhar, IDEAS executive Committee member, and Professor of Economics, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India took the first lecture on the 3rd of June, 2007, on ”Some Implications of New, High-Growth Development Trajectories: Contrasting China and India”. This was followed by a lecture by Prof. Yukio Ikemoto, Professor of Economics, Tokyo University, Japan, who talked on the “World Income Distribution and Asian Economic Development: 1820-2003”. Prof. Jayati Ghosh, Executive Secretary, IDEAs and also a professor at the Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India gave the post lunch lecture on ”Developing Country Surpluses and Implications for Macroeconomic Policies”.
On the second day, 4th of June, Dr. Andong Zhu from the School of Humanities and Social Sciences, Tsinghua University gave an informative lecture on “The Chinese Economy in the past three decades: Achievements and Problems”. He was followed by another Chinese economist, Prof. Dic Lo, from the School of Economics, Renmin University, Beijing, who is also a visiting professor at the School of Oriental and African Studies (SOAS), London, UK, who spoke on ”Assessing the Role of Foreign Direct Investment in China’s Economic Development: Towards a Broader Vision”(Download the paper). The third l;ecture of the day was given by Dereje Alemayehu, the East Africa Programme Manager of Christian Aid, on the theme of ”Development Economics was Bright and Optimistic: Reflections on Early Years of the Discipline”.
The third and final day of the workshop had two lectures scheduled. The first was taken by Prof. Jan Kregel, Distinguished Research Professor, Centre for Full Employment & Price Stability, University of Missouri, Kansas City, who spoke on ”Development Policy in an Unequal World: Financing for Development and Growth”. The second was taken by Prof. Wang Shaoguang, Professor of Political Science, Chinese University of Hong Kong, Hong Kong, China. His lecture was entitled ”The Great Transformation: The Double Movement in China”.
The 16 presentations by the young scholars, which are listed below, represented a wide variety of themes.
Day 1, 3rd June, 2007: Changing Patterns of Inequality
”Globalization and Inequality in CIS countries”
Day 2, 4th June, 2007: Economic Policies and Alternatives
Day 3, 5th June, 2007: Inequality and Poverty
Day 3, 5th June, 2007: Outcomes for Workers and Peasants
The workshop also promoted a free and passionate exchange of ideas and an interaction among all the participants, which was not limited to only issues of economic development, but spread to the interaction of cultural identities and individual personalities. As intended by the organizers, the workshop taught, along with an alternative perspective to issues of equitable and inclusive economic and social development, a tolerance towards and understanding of each other’s cultures and identities.
The International Conference on
‘Policy Perspectives on Growth, Economic Structures and Poverty Reduction’,
7-9th June, 2007, Tsinghua University, Beijing, China
The conference was organized with a view to promoting interaction between development theorists and practitioners across the world and to build and strengthen a network of committed individuals who are able to express unorthodox perspectives on economic development. Therefore one aim of the event was to present economic issues from a critical perspective at variance with mainstream ideas or results. It also aimed to encourage a clear set of policy guidelines for inclusive and equitable growth in developing economies. The set of policy guidelines also had to be such that civil society organizations working at the micro level could identify with and include in their articulation of grass root needs for development.
The conference included a total of about 80 participants of which about 41 were from outside China, while participants, both young and senior, from Beijing, Shanghai, Tianjin, Nanjing, Fujian, Henan and other parts of China made up the rest. The participants consisted of senior economists, policy makers, members of civil society organizations and other development activists.
The event highlighted latest research output on changes in inequality and poverty in different parts of the world, particularly in developing Asia. It also focused strongly on the relevant policy measures for effective poverty reduction. 18 papers focusing on a variety of issues ranging from the global economy to country experiences were presented by the participants. There were specific focuses on rural and urban poverty and the role of different strategies for their eradication. The role of social security or social assistance measures got special attention in this regard. The conference ended with a panel discussion on the policy lessons for developing economies as well as a review of the papers presented and issues brought forward by the conference.
Some of the main issues which emerged were the question of governance, of development planning and its financing, economic structures and shifts thereof in affecting growth and human development, the interaction between agriculture and industry. The other set of crucial issues which were widely discussed were the role, measurement and nature of poverty and the impact of poverty eradication programmes and their interaction with the macroeconomic policy regimes in developing nations. Employment guarantee schemes as instruments of poverty reduction were also discussed. Finally the importance of promoting human development through health and education facilities for building future human capital came up again and again, and was looked at both as a right of the people as well as an investment for future growth. There was wide scale participation and sharing of experiences by senior researchers, policy makers and other development professionals, along with young scholars.
During the opening session on the 7th of June, a number of eminent academicians and civil society representatives delivered opening speeches while highlighting the importance and relevance of the issues under discussion. Prof C. P. Chandrasekhar, member, Executive committee of IDEAs, welcomed the participants on behalf of IDEAs and emphasized the crucial importance of mutual understanding and collaborations in order to build a world of justifiable development alternatives. The other speakers included Prof. Cheng Enfu, Director, Marxism Academy, Chinese Academy of Social Sciences, Beijing, China, the Dean of the School of Humanities and Social Sciences, Tsinghua University, Prof. Li Qiang, the Dean of the School of Economics, Prof. Yang Ruilong and the Director of Action Aid, China , Ms Zhang Lanying.
Below is a list of the speakers and paper titles arranged thematically which were presented during the conference.
June 7, 2007
Session I: Analytical Issues
Chair: C P Chandrasekhar
Distinguished Research Professor, Centre for Full Employment & Price Stability, University of Missouri, Kansas City “Can identifying the causes of poverty give us insight into eliminating poverty?”
Professor, Department of Economics, University of Buenes Aires, Argentina
“The relationship between the exchange rate and employment: Revisiting the structuralist explanation” (Download the paper)
Discussant: Abhijit Sen
Member, Planning Commission, India and Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India
Session II: Comparative Experiences 1
Chair: Jayati Ghosh
Executive Secretary, IDEAs and Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India
Retired, Department of Globalization and Development, UNCTAD, Geneva, Switzerland
“From export promotion to import substitution; comparative experience of China and Mexico in electronic industry” (Download the paper)
Senior Researcher, Makarere University, Uganda ”The myth of donor-driven “structural” economic transformation: Understanding Taiwan Province of China’s lessons for Uganda”
Professor, Chief of Division of Labor and Human Captial, Institute of Population and Labor Economics, Chinese Academy of Social Sciences, Beijing, China ”Urban poverty and social assistance programme in China” (Download the paper)
Discussant: Dic Lo
Senior Lecturer in Economics, School of Oriental and African Studies, University of London, and Director of the Centre of Research in Comparative Political Economy at the School of Economics, Renmin University of China
Session III: Comparative experiences 2
Chair: Xu Jiankang
Senior Researcher, the Chinese Academy of Social Sciences
Professor of Economics, Tokyo University, Japan “Poverty alleviation policies and ethnic minority people in Vietnam: A capability approach” (Download the paper)
Lecturer, the Open University of Sri Lanka, Colombo, Sri Lanka ”Liberalization policies and economic divide in Sri Lanka: an appraisal of post reform experience”
(Download the paper)
Discussant: Parthapratim Pal
Assistant Professor, Indian Institute of Management, Kolkata, India
June 8, 2007
Session I: Institutional change and income distribution in China
Chair: Jan Kregel
Professor of Economics, Weatherhead East Asian Institute, Columbia University, USA “Explaining China’s changing income distribution: market forces vs. social benefits”. (Download the paper)
Assistant Vice President, Sichuan University, P. R. China ”An analysis of the development of Sino-Japanese economic relations”
Discussant: Andong Zhu
School of Humanities and Social Sciences, Tsinghua University, Beijing, China
Session II: Issues in rural poverty reduction in China
Chair: Long Denggao
Professor, Economics Institute, Tsinghua University, Beijing, China
Professor, Hong Kong Polytechnic University, Hong Kong, China ”A new turn in China’s agricultural policy”
Department of Economics, Hong Kong Baptist University, Hong Kong, China ”Building pro-rural economic institutions in China” (Download the paper)
Discussant: Dic Lo
Session III: Poverty and income distribution in India
Chair: Lei Da
Professor, former vice dean, School of Economics, Renmin University of China, Beijing
Himanshu (with Abhijit Sen)
Fellow (Economics), The Centre de Sciences Humaines (CSH), New Delhi, India ”Trends in poverty and income distribution in India: Evidence from the NSSO”
Dean, School of Social Sciences, and Professor, Centre for Studies in Regional Development, Jawaharlal Nehru University, New Delhi, India “Migration and urbanisation in India in the context of the goal of poverty alleviation” (Download the paper)
Discussant: Ratan Khasnabis
Professor, Department of Economics, and Dean, School of Business and Management Studies, University of Kolkata, India
Session IV: Economic restructuring and income distribution in Latin America
Chair: Saul Keifman
Researcher- Professor, Universidad Nacional de General Sarmiento (UNGS), Buenos Aires, Argentina ”Macroeconomic regime, trade openness, unemployment and inequality: the Argentine Experience” (Download the paper)
Elda Molina Diaz
Researcher, Centro de Investigaciones de Economía Internacional Universidad de La Habana, Havana, Cuba ”Cuba: Economic restructuring, recent trends and main challenges” (Download the paper)
Discussant: Francis Cripps
June 9, 2007.
Session I: Poverty reduction policies
Chair: Mehdi Shafaeddin
East Africa Programme Manager, Christian Aid ”Taming the ‘predatory’ state – the major antipoverty project in Africa”
Fellow, Institute of Human Development. New Delhi, India ”Significance and limitations of India’s National Rural Employment Guarantee Programme in addressing rural poverty”(Download the paper)
Discussant: Darshini Mahadevia
School of Planning, CEPT University, Ahmedabad, India
10.30 to 11 a.m. Coffee
11.00 a.m. to 1.00 p.m.
Panel discussion: Policy implications
Chair and Speaker: Cui Zhiyuan
School of Public Policy and Management, Tsinghua University, Beijing, China
Member, Planning Commission, India and Professor, Centre for Economic Studies and Planning, Jawaharlal Nehru University, New Delhi, India
Distinguished Research Professor, Centre for Full Employment & Price Stability, University of Missouri, Kansas City
Dean, School of Social Sciences, and Professor, Centre for Studies in Regional Development, Jawaharlal Nehru University, New Delhi, India
Yuk Shing Cheng
Department of Economics, Hong Kong Baptist University, Hong Kong, China
Vote of thanks: Jayati Ghosh
Executive Secretary, IDEAs.
Discussion and Policy Implications
As has been pointed out before, a major objective of the conference was to look at policy choices for poverty reduction and ensuring a more egalitarian distribution of income and growth among all segments of the population. In this regard, both urban and rural poverty and income distribution were taken as important. Rural poverty and income distribution has remained a key area in development literature, especially in the current context of low growth rates in output and employment in most developing countries. In the era of open trade and capital flows, the agrarian sector has been clearly adversely affected. But alongside, given the trend of urban centric growth and relative stagnation of agriculture, which has resulted in large-scale migration to urban areas, rapid urbanization and pressures on the urban sector as a whole, urban poverty and income distribution emerge as important issues. In both India and China, the two leading Asian economies, both urban and rural poverty and income distribution variables have shown interesting characteristics.
In China, while both rural and urban poverty showed a decline, urban poverty reduction has been hampered by the increasing number of rural migrants who have been largely outside the social security networks and employment guarantee provisions. It was estimated earlier that the poverty rate among the migrants was as high as 50% even in early 2000 and this substantially underestimated the official poverty statistics. The papers presented at the IDEAs’ conference showed that in the most recent period, poverty and inequality within rural and urban areas showed some decline, the decline more pronounced in the rural areas.
The papers presented at the conference clearly pointed towards some interesting trends in China.
- In rural areas, improvements took place as a result of “a large increase in wage-earning jobs in poorer regions of the country between 1995 and 2002, and partly by a decline in the extreme regressiveness of net taxes” (Carl Riskin, “Explaining China’s changing income distribution: market forces vs. social benefits”). Therefore, both market forces and social policy changes contributed to this reduction. Of course rural poverty had for some time been positively affected by the migration to urban areas which helped ease pressure on rural livelihoods but increased the pressures on the urban system.
- In rural areas of China, building pro poor institutions remained the major challenge to policy (Yuk Shing Cheng, “”Building pro-rural economic institutions in China”). The building, for example, of institutions like rural credit cooperatives could present a solution to the problem of agrarian stagnation and rural poverty. With funds injection into the system and reform of the functioning structure, the institution has improved its performance dramatically after reforms.
- In urban areas of China, the reduction came directly as a result of changes in social policy. In the recent period, “important subsidies that been regressively distributed became better targeted, while the size of social benefits programmes targeted at the unemployed and poor urban residents grew as well” (Carl Riskin, “Explaining China’s changing income distribution: market forces vs. social benefits”). One major reason was that the Hukou system by which migration was banned in China for a long period was abolished. The earlier ban implied that rural migrants were denied job security, at par wages and social benefits in urban areas.
- The paper by Riskin strongly argued that social benefits, as a part of the overall social policy structure, were a key determinant of declining rural and urban inequalities. Social benefits covered by the paper included health, housing, food, and other in-kind transfers. It argued that it was imperative that social benefits are distributed progressively rather than regressively to offset the negative effects, if any, of market reform. Before 2002, urban social benefits, which were progressively distributed helped to counteract the negative effects of market reform, but could not counter it completely. In the rural areas, social benefits were regressively distributed and were unable to mitigate problems of inequality before 2002.
- A paper by Yang Du, Chinese Academy of Social Sciences, Beijing, also corroborated the earlier argument on the positive impact of social benefits in affecting poverty and income distribution in urban China. He argued that earlier, social benefits were related to employment and therefore shocks to the labour market and employment had meant a withdrawal of social benefits for unemployed workers over the nineties. Large retrenchment in the SOE sector was a major contributor to this phenomenon. According to the presentation (Yang Du, ”Urban poverty and social assistance programme in China”), various forms of social benefits were used in urban China recently to counter these effects. The measures included “socializing the pension system, reforming the health care system, and establishing minimum living standard. In addition, various temporary measures were used to alleviate the negative impacts of shocks on the workers’ life, such as laid-off subsidy and lump-sum payments have been used to relive the crisis to those SOE workers who experienced sudden employment shocks”. The paper highlighted the role of the ‘Dibao’ programme in China which support the poor whose income is below poverty line. First introduced in Shanghai, this programme benefited the poor immensely, the paper found, though it has left out the migrant population from its purview. The paper finds that the programme had reasonably good coverage as the analysis on distribution of transfer also shows that the poorest 20% population gets more than 80% of Dibao transfer, which means that the implementation of the program functions quite well.
In India, too, the urban-rural scenarios presented interesting analogies. Stagnating agricultural growth since the mid nineties, and slow industrial growth over the nineties had meant that the employment generation ability of the economy had to come from the service sector. But being skill biased, despite a high growth of output, the service sector has been unable to absorb displaced workers from agriculture. Non farm employment has grown since the late nineties though real wages fell implying an increase for profits and private capital.
- According to Himanshu (“Growth, Employment and Poverty Reduction: The Post Reform Indian Experience”), both urban and rural consumption inequalities increased sharply since the early nineties, urban more than rural inequality. After much debate this has been more or less conclusively established. However, despite inequality increase and agrarian stagnation, the period after 1999 has seen significant poverty reduction, and this is much more in rural areas than in urban. This the paper ascribed to lower inflation especially in food prices and higher worker participation rates. However, wages per worker have grown much less during this period and this has increased profits and allowed more private investment. Gaps between wages and managerial emoluments also increased sharply. Though non farm employment increased after late nineties, employment shares show no growth in private organised employment and a sharp decline in agricultural wage employment. The real expansion was in self-employment
- The paper argued that in terms of achieving sustainable reductions in poverty, a policy shift focusing on the growth of agriculture was a must. The growth potential of non farm employment is limited without driving down wages further and increasing within urban inequalities. In addition, most of the self-employed are in low productivity informal sector activities, and any further increases in these sectors do not appear sustainable.
- Another paper on India (Amitabh Kundu, “Migration and Urbanisation in India in the Context of Poverty Alleviation”) dwelt on the role of migration, urbanization and the implications it had for poverty. The paper argued that it is important to harness the potential of migration in the context of development and poverty alleviation. It would, therefore, make sense to discuss measures to promote orderly migration instead of considering proposals to discourage mobility of population. Under a more proactive vision of inclusive development, the provision of land for the poor can be made within the cities, as envisaged under Eleventh Plan document. Indeed, all concerned international agencies should examine the possibilities of supporting economic opportunities by providing the migrants access to infrastructure and basic services, besides removing discriminatory regulations that deny migrants equal access to employment and basic services. In addition, the pattern of urbanization and infrastructure development must also focus on smaller cities as these contain the highest rate of poverty and greater deprivation in terms of quality of life.
- The third paper on India (Smita Gupta, ‘”Significance and limitations of India’s National Rural Employment Guarantee Programme in addressing rural poverty”) focused specifically on the National Rural Employment Guarantee Act (NREGPA) and examined its role in being able to provide rural employment and alleviate poverty. The paper received enthusiastic response since it described the functioning of a pro-active move on the part of the Indian government to address questions of poverty, livelihood and imbalances. Therefore, it could be used as a role model for other developing economies which were grappling with similar problems.
Papers on other regions like Cuba and Vietnam highlighted the role of social development and emphasized the need for investments in education and health. Others on Africa highlighted the role of strengthening state-society interaction, and using active feedback of the society in shaping poverty alleviation and development policies. The Argentina case showed the need for concentrating on more than just economic growth for attaining poverty reduction, and concentrating on an appropriate macroeconomic framework that could deliver more employment options.
- In Cuba (Elda Molina Diaz, “”Cuba: Economic restructuring, recent trends and main challenges”), despite the economic hardship brought forward by the economic embargo, state expenditure on education, health and social security continued to increase over the second half of nineties and increased sharply thereafter. Health and education were developed not only for citizens but as export products. A major objective of the policy planners was to create the economic and social basis to re-launch a development program once the crisis was over. The current policy thrust included improvement of the free educational system in all levels, refurbishment, expansion and retooling of the free healthcare system and increases of wages, pensions and social assistance. The state has also increased investments in infrastructure.
- Another paper on Vietnam (Yukio Ikemoto, “”Poverty alleviation policies and ethnic minority people in Vietnam: A capability approach”) highlighted the importance of the ‘capability approach’ and the limitations of just going by income indicators in the policy focus on reducing poverty. This required addressing a set of issues that builds the human being’s capability. These can be understood in terms of some basic indicators that an individual must meet. Being adequately nourished, free from avoidable disease, avoiding premature mortality, being adequately educated, having essential non-food consumption goods and being well-sheltered were some of these.
- The paper on Argentina (Roxana Maurizio, “Macroeconomic regime, trade openness, unemployment and inequality: the Argentine Experience”), argued that macroeconomic regime matters in term of distributional and living conditions outcomes Argentina’s poverty and income distribution did suffer in spite of recovering from crises. There are environments that, in spite of producing important GDP growths, do not benefit the employment creation and therefore contribute to the inequality increase. Negative effects that some macroeconomic configurations have on the labour market and income distribution persist even after the country returns to its growth path. Argentina has experienced a pattern where the successive crises worsen the income distribution as long as the recovery cycles find boundaries for the complete reversion of these trends. High real exchange rate alone does not solve all labour and social problems.
- The paper on Africa (Dereje Alemayehu, ”Taming the ‘predatory’ state – the major antipoverty project in Africa”) argued that incomplete nation-building and perennial dysfunctional state-society relationship characterise the major political impediment to eliminate poverty in Africa. The way forward lies in democratising state –society relations. This included an informed and organised participation of citizens in the political and policy processes.
The papers highlighted a range of issues relating to the nature and extent of poverty and income inequalities across developing countries and provided some clear policy guidelines. From the papers and the discussions that followed, a set of policy prescriptions emerge that can be included in part or whole in the policy goals of any economy that is seeking to address basic economic ills of persistent poverty and inequality and meeting the MDG goals. In the current context, these are even more imperative. The prescription policies are also interconnected and represent not isolated but an interdependent network of policy regime.
To summarise, the overall policy indicators would indicate certain pathways:
- To invest in social benefits and strengthening the social security network through the development of not only income subsidies, but the active pursuit of public education and health provisions. Investment in social sectors is a must in this regard. This could ensure the development of human potential in the long run and therefore, long run economic growth. Forms of direct income transfers for populations below the poverty line could also be effective in the short run as in the case of China.
- To build pro-poor rural institutions like credit and agrarian infrastructure that can help mitigate the problem of agrarian stagnation. As the cases of India and China show, countering the problem of agricultural stagnation was a must for attaining sustainable reductions in poverty. Just employment generation in the urban sector is not enough.
- Simultaneously, growth itself is not enough for poverty reduction or for improving income distribution. There must be active policy impulses for broad based employment promotion. Addressing agricultural growth issues is one of these policies. Initiating special programmes for employment generation as done in the case of India is an important tool in this aspect. The broad macroeconomic framework must be pro-employment for this to work.
- In urban areas, in-migration is an increasing trend in developing countries. But this force could be used effectively by improving livelihood options, improved infrastructure and living conditions in urban areas. This must focus not only on big cities but on smaller cities where higher poverty tends to be concentrated.
- Finally, the role of interaction between the state and society and effective governance cannot be undermined. The developmental role of the state must be built in active coordination with the society. Political democracy and effective governance with state-society participation is a crucial ingredient for the success of any anti poverty programme, and this is especially true for regions where the state – society networks are underdeveloped and governmental institution may be less mature.