neil mcculloch globalisation team leader some random thoughts on growth
TRANSCRIPT
Neil McCullochGlobalisation Team Leader
Some Random Thoughts on Growth
y = 1.17x - 0.00
R 2 = 0.52
-20%
-10%
10%
20%
-20% -10% 10% 20%
Growth in per
capita income
Growth in per capitaincome of the poor
Growth Incidence Curves
KALIMANTAN
JAVA
SUMATRA
SULAWESI
MALUKU
PAPUA
NUSA TENGGARA
BALI
KALIMANTAN
JAVA
SUMATRA
SULAWESI
MALUKU
PAPUA
NUSA TENGGARA
BALI
Reflecting big differences in real GDP Growth rates
CAD vs CAFCADCAD: firms in prioritised areas cannot survive
in open competitive markets because they are in conflict with the comparative advantages determined by their endowments They need subsidies, but these can’t
be afforded, so governments use administrative measures (e.g. Monopolies, suppressed interest rates, overvalued currencies, price controls on inputs
These controls then lead to shortages in funds, forex and raw materials
CAF• Follow the comparative advantage of the
country at every stage of development As countries develop, their
endowments change, as to relative factor prices and so the strategy can also change
Processes for effective growth policy• Ensuring that all voices are heard, including those of the poor
and marginalised • Accountability mechanisms• Dialogue – between public and private sectors• Do good technical analysis• Monitor, evaluate and kill things that aren’t working• Build effective systems for domestic resource mobilisation
Gross domestic product or ‘grossly deceptive product’?
• Non-market transactions– The ‘care’ economy (underestimation of housewives/husbands work)– Subsistence agriculture
• Distribution, nature and quality of goods produced
• Leisure time
• The hidden economy– Illegal activities– Informal sector
• Economic ‘bads’ – No distinction between green and polluting industries
Complements to GDPName Year Producer/Developer
Index of Sustainable Economic Welfare/
Genuine Progress Indicator
1989 Herman Daly, John B. Cobb
Green GDP 1993 Bureau of Economic Analysis, USA
Genuine Savings 1995 The World Bank
Ecological Footprint 1990 William Rees, Mathis Wackernagel
Subjective Well-being 1967 Warner Wilson
Gross National Happiness 1972 King Jigme Singye Wangchuck - King of Bhutan
Human Development Index 1990 Mahbub ul Haq, Amartya Sen (UNDP)
Happy Planet Index 2006 New Economics Foundation
Living Planet Index 1998 World Wide Fund for Nature
Conclusions
• We all know that growth is important • We also know that we don’t really know how to create it (far
less pro-poor, inclusive, sustainable growth)=> focus on building effective processes for deciding growth policy
• Growth is not the ultimate objective• There are several well developed measures which provide
more rounded assessments of progress=> standardise their use in the UK, EU and G20
Thank you