Volatility and growth: How can fiscal policy boost equitable growth in Argentina?

Volatility hurts growth, especially in low-income and emerging countries that are even more vulnerable to external shocks, which implies more risk and lower stability. The role of fiscal policies thus is not only to boost growth, but to cater for sustainable and equitable growth; especially for the poor who are the most vulnerable to market volatility.

“What can fiscal policy do to boost equitable growth in Argentina?”

Jimena Zúñiga, Marcelo Capello, Inés Butler and Néstor Grión from the IERAL of the Mediterranean Foundation attempt to provide an answer to this question in their research “A cycle-adjusted fiscal rule for sustainable and more equitable growth in Argentina”, which Jimena presented at the GDN 14th Annual Conference. In order to do this, they first define the main binding constraints to growth in Argentina, then they investigate which fiscal reform strategy is the most suitable to specifically tackle these constraints. They argue that for a reform strategy to be effective in Argentina, it must be inclusive; involving all levels of governmental sectors, and designed to stabilize key macroeconomic variables.

The proposed model is a cycle-adjusted fiscal rule, which is found to be effective in reducing Argentina’s macroeconomic volatility. In turn, this will result in long-term growth and an increase in welfare of the poor families. In the video below, Jimena Zúñiga explains the main pillars of this research and also briefly highlights the main findings and their potential impact on promoting sustainable and equitable growth in Argentina.

Jimena Zúñiga, IERAL of the Mediterranean Foundation

Read this Paper: A cycle-adjusted fiscal rule for sustainable and more equitable growth in Argentina

Understanding inclusive growth: Effective policies for more inclusive societies

By definition, inclusive growth entails the equitable allocation of resources in order to generate benefits that can be incurred by all sectors of the society, thus alleviating poverty and inequality. However, is inclusive growth necessarily pro-poor? And does it ensure reducing the troubles of the most disadvantaged while benefiting everyone? There is yet no clear coherent measure to combine all the dimensions of inclusive growth that involves how the elements of inclusiveness relate to each other and ultimately how they can collectively induce growth.

Rafael Ranieri from the Ministry of Planning, Budget and Management, Brazil presented a paper titled “Inclusive growth: Building up a concept” at the GDN 14th Annual Conference. He tackled the state of the debate on the concepts of inclusive growth and pro-poor growth; highlighting distinctive features of the concept of inclusive growth and contributing to the design of more effective policies through addressing the main issues that can take it further. He argues that, unlike pro-poor growth concepts, inclusive growth is not limited to income outcomes but is rather concerned with the process of growth. In other words, people must actively participate in the growth process for it to be inclusive.

Greater clarity about the meaning of inclusive growth is important to determining clearer policy objectives and thus to designing more effective policies to create more inclusive societies. In their paper, Ranieri and Raquel A. Ramos from the Centre d’Economie de Paris Nord, France emphasize that actual manifestation of inclusion in public policy make a country more resilient to change in the long term, taking into consideration the distinct nature of national concerns and social forces in each country.

                Rafael Ranieri, Ministry of Planning, Budget and Management, Brazil

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Awarding innovative development research and ideas

Winners of the Global Development Awards and Medals Competition 2012

Launched in 2000 with the support of the Government of Japan, the Global Development Awards and Medals Competition aims to recognize innovative ideas and to encourage talented young researchers. This year, 12 finalists had the opportunity to present their papers, research proposals and projects on inequality, social protection and inclusive growth at GDN 14th Annual Conference. Interesting discussions emerged throughout the conference’s plenaries and parallel sessions where researchers presented their innovative work.

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Philippines: Making social protection more inclusive

By Felipe F. Salvosa II, Publications Division Chief, Philippine Institute for Development Studies

Josef T. Yap, Philippine Institute for Development Studies (PIDS)

Josef T. Yap attending session during the GDN 14th Annual Development Conference in MAnila, Philippines

How does 7.8% GDP growth feel?
For big players in the Philippines, there is a lot of reason to celebrate, the domestic economy being the fastest-growing in Asia in the first quarter of 2013. Josef T. Yap, President of the think-tank Philippine Institute for Development Studies (PIDS), explains that the Philippines has leap-frogged into a service economy without going through extensive industrialisation  He argues that positive developments, are only at the macro level, and “relatively high poverty incidence and persistent inequality remain important concerns.”

To address this concern, the Aquino administration has prioritized the conditional cash transfer program- known locally as Pantawid Pamilyang Pilipino Program or 4Ps (“Bridge for Filipino Families”)- and PIDS researchers led by Senior Research Fellow Celia M. Reyes are providing research support to make it more effective and remove “leakages” to non-poor beneficiaries.

At the Joint Parallel Session co-sponsored by the East Asian Development Network, PIDS, and GDN Japan during the GDN 14th Annual Development Conference , Reyes called for a “deepening” of the 4Ps scheme, already the biggest social protection program ever conceived by the Philippines with a budget of 39.5 billion pesos and three million beneficiary-families in 2012.  The objective is two-fold: social assistance through cash assistance and social development through investments in human capital, particularly in health and education.

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Changing mindsets and policy priorities: Can growth and inequality reduction go hand in hand?

“This is a cross post based on GDN’s President Pierre Jacquet’s Op-Ed on the GDN 14th annual Conference, taking place in Manila, Philippines. The conference theme is “Inequality, Social Protection and Inclusive Growth”, with a focus on promoting research capacity building to inspire better policies.”

Pierre Jacquet

Pierre Jacquet, GDN President during the GDN 13th Annual Conference.

As concerns of the spread of poverty and social inequality across the world, and in developing countries in particular; research to impact policy decision must thus be driven by those who live among it, rather than international experts and aid agencies. GDN’s vision to bridge social science research and policy takes up an approach that ensures maximum effective as well as efficient communication. This year’s annual conference aims not only to raise the voice of developing country researchers, but also to provide them with a unique chance to debate their views and their research against comments, insights and advice of the experts. Also on the debate whether a policy focus on inequality reduction weakens or strengthens the growth objectives of a country, GDN advocates, through this conference, that the frustration with insufficient results does justify more research and more debate, which also entails value-for-money in learning about how to better meet challenges and influence effective policies and priorities.

Both the rise of poverty and inequalities in industrial countries, and their persistence in developing countries amidst a diversity of experiences, suggest that the empirical design of social protection schemes and of “inclusive growth” policies is still a mostly unchartered agenda. In a context in which policy priorities are largely the results of local political economy considerations rather than general discussions on what “should be” done, it is crucial to expose facts and document policy results, because this is what can powerfully change domestic agendas. This is what GDN’s research experience confirms, for instance through the recently completed research program “Supporting Policy Research to Inform Agricultural Policy in Sub-Saharan Africa and South Asia“. This is also what all participants in the GDN Conference in Manila will help do.

Promoting the importance of social policies and social protection systems

Inequality, Social Protection and Inclusive Growth”

GDN 14th Annual Conference – "Inequality, Social Protection and Inclusive Growth"

GDN 14th Annual Conference –
“Inequality, Social Protection and Inclusive Growth”

The GDN 14th Annual Global Development Conference on Inequality, Social Protection and Inclusive Growth will be held on June 19-21, 2013 at the Asian Development Bank Headquarters in Manila, Philippines. In partnership with Asian Development Bank (ADB), East Asian Development Network (EADN) and Philippine Institute for Development Studies (PIDS), the conference is expected to host 400 participants from all over the world including the East Asia region and the Philippines.

In the aftermath of the global financial crisis, there is now a growing consciousness of the benefits of social protection in fighting poverty and inequality, and empowering people to adjust and seize opportunities to deal with unemployment and increase productivity. The main focus of the conference is thus to promote the importance of social policies and social protection systems that address and reduce inequality and social exclusion for long-term sustainable and inclusive growth.

Topics to be covered at the conference include (but are not limited to):

  • Global perspectives on inequality
  • Gender, inequality and social protection
  • Regional perspectives on inequality and inclusive growth
  • Mechanisms to promote social protection for inclusive growth
  • Key challenges for social protection policies
  • Inequality, social protection and inclusive growth in the context of the post-2015 development agenda

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