Hyun H. Son

Poverty Equivalent Growth Rate

This paper proposes a new type of growth rate, called the “poverty equivalent growth rate” (PEGR), which takes into account both the growth rate in mean income and how the benefits of growth are distributed between the poor and the non‐poor. The proposed measure satisfies a basic requirement that the proportional reduction in poverty is a monotonically increasing function of the PEGR. Thus, maximizing the PEGR implies a maximum reduction in poverty. The paper demonstrates that the magnitude of PEGR determines the pattern of growth: whether growth is pro‐poor in relative or absolute sense or is “poverty reducing” pro‐poor. The pattern of growth has been analyzed for Brazil using the National Household Survey (PNAD) covering the period 1995–2005.

Human Capital Development

This paper has two main objectives. First, it assesses and measures the gaps in the stock of human capital across the world. It presents how effectively different regions are improving their stock of human capital, and how long it will take for developing countries to catch up with the current level of human capital in industrialized countries. Second, it revisits the contribution of human capital to economic growth, proposing a decomposition method to account for employment growth—which is also impacted on by human capital growth—in explaining growth in total output per worker. The proposed methodology introduces employment growth in the growth decomposition through the employment growth elasticity. It is conjectured that as human capital increases, employment growth elasticity will decrease, making the economy less labor-intensive, resulting in higher economic growth. The proposed method points to the importance of the micro linkage between human capital and the labor market.

Measuring the Impact of Price Changes on Poverty

This paper develops a methodology to measure the impact of price changes on poverty measured by an entire class of additive separable poverty measures. This impact is captured by means of price elasticity of poverty. The total effect of changes in price on poverty is explained in terms of two components. The first component is the income effect of the change in price and the second is the distribution effect captured by the price changes. It is the distribution effect which determines whether the price changes benefit the poor proportionally more (or less) than the non-poor. This paper also derives a new price index for the poor (PIP). While this index can be computed for any poverty measures, our empirical analysis applied to Brazil is based on three poverty measures, the head-count ratio, the poverty gap ratio and the severity of poverty. The empirical results show that price changes in Brazil during the 1999-2006 period have occurred in a way that favors the non-poor proportionally more than the poor. Nevertheless, during the last 2-3 years the price changes have favored the poor relative to the non-poor.

Inequality of Human Opportunities in Developing Asia

This paper analyzes the equity of opportunity in basic education and infrastructure services in seven developing countries, namely, Bangladesh, Bhutan, Indonesia, Pakistan, the Philippines, Sri Lanka, and Viet Nam. The analysis applies a method developed by the World Bank called the Human Opportunity Index (HOI). The HOI measures the total contribution of individuals’ socioeconomic and demographic circumstances to inequality of opportunity in accessing basic services. A new methodology presented in this study, however, provides a way to quantify the relative contribution of each circumstance variable to the inequality of opportunity. Results of the empirical analysis indicate that more needs to be done to improve the distribution of economic benefits. Opportunities to access basic education and infrastructure services in the seven countries vary widely in terms of availability and distribution. The study also finds that inequality of opportunity is driven mainly by per capita household expenditure. This suggests that household poverty plays a crucial role in determining equitable access to basic services.

Pro-poor growth: The Asian experience

The basic idea of globalization is that it moves resources from less productive uses to more productive ones, thus enhancing economic growth by utilizing comparative advantage, which is endowed differently from one country to another. Similarly, some are in favour of globalization because many economies have achieved unprecedented material progress, contributing significantly to a reduction in global poverty. However, a recent study by Kakwani and Son (2007) has shown that the current process of globalization is generating unbalanced outcomes; many countries and people are left out of the benefits of globalization. Kakwani and Son’s cross-country study of eighty countries during the period of 1984–2001 revealed that, out of 237 growth spells, 106 (44.7 per cent) had negative growth rates and 131 (55.3 per cent) positive growth ones.1 Of 131 spells when growth rates were positive, growth was pro-poor in 55 (23.2 per cent) cases and anti-poor in 76 (32.1 per cent) cases. In 53 out of 106 spells of negative growth rates, the poor suffered a proportionally greater decline in their consumption compared to the non-poor. For a rapid reduction in poverty, a country needs to achieve positive growth rates that are pro-poor. According to these results, this does not seem to be happening globally.

Cash Transfers for School-Age Children in African Countries: Simulation of Impacts on Poverty and School Attendance

Drawing on data from 15 African countries, simulation models suggest that to reduce the poverty headcount ratio by increasing incomes among poor households, cash transfers would have to be sizeable - in the range of 2-8% of GDP. Even then, an increase in income, by itself, would not suffice to increase school attendance significantly. Higher impacts at lower cost could be achieved by making transfers targeted and conditional. However, the administrative costs of detailed targeting (e.g. by income) are known to be high. On the other hand, some broad measures, such as targeting rural children only, produce results almost as good as income-linked targeting and, given their low administrative costs, are to be preferred. Copyright 2006 Overseas Development Institute.

Closing Development Gaps: Challenges and Policy Options

There are significant income and nonincome development gaps around the world. Closing these gaps will require not only increasing and sustaining economic growth in low-income regions, but also policies that close nonincome development gaps directly. Governments need to support private investment and entrepreneurship by investing in human capital and infrastructure; developing the financial sector; improving governance; and eliminating other impediments created by market, institutional, or policy failures. Policy makers should improve access to and quality of health, education, and other social services. This means better targeting and increased public spending on social services that directly benefit the poor; innovative delivery mechanisms informed by rigorous evaluation; and social protection systems. The experience of developing Asia and others has shown that external trade and finance—including foreign direct investment, remittances, and aid—play a critical role. It is therefore imperative that governments continue to promote globalization and regional integration.

How Has Asia Fared in the Global Crisis? A Tale of Three Countries: Republic of Korea, Philippines, and Thailand

The global economic crisis in 2008–2009 had varying impacts on economies in Asia and the Pacific. This paper studies the impacts of the global crisis, with emphasis on the labor market, on three Asian countries: Republic of Korea (Korea), Philippines, and Thailand. It develops a crisis index that measures the impacts of the crisis by comparing actual values of economic indicators during the crisis period (2008–2009) with counterfactual indicators derived from each country’s pre-crisis (2001–2007) long-term trends. The study finds that all three countries were significantly affected by the crisis, but the severity and channels of these impacts varied widely: Thailand suffered the most in terms of reduced growth in gross domestic product, Korea suffered the worst in reduced employment, and Philippines’ output was affected only in 2009. In the labor market, the study finds that the crisis led to significant job losses in all three countries and highlighted underlying problems, particularly Korea’s problems with youth unemployment, and Philippines’ and Thailand’s vulnerable industrial sectors.

A Cross-Country Analysis of Achievements and Inequities in Economic Growth and Standards of Living

This paper compares achievements and inequalities in standards of living across countries. Achievement is measured by an index constructed to reflect greater achievement for an increase in the standard of living of a country already at a high level of development compared to an equal increase in a country starting from a lower base. The paper tests for the statistical relationship between indicators of standards of living and per capita income using data from 177 countries covering 2000–2007. It analyzes disparities between countries of achievement in standards of living and explains inequality in achievement in standards of living both within and between regions. Furthermore, the paper estimates the number of years it will take for different regions and selected Asian countries to catch up with the average standard of living of the industrialized countries.

On assessing pro-poorness of government programmes:international comparisons

This paper proposes a new ?Pro-Poor Policy (PPP)? index, which measures the pro-poorness of government programmes, as well as basic service delivery in education, health and infrastructure. The index provides a means to assess the targeting efficiency of government programmes compared to perfect targeting. The paper also deals with the policy issue of how targeting efficiency of government programmes varies across various socioeconomic groups. To this effect, the paper develops two types of PPP indices by socioeconomic groups, which are within-group and total-group PPP indices. The within-group PPP index captures how well targeted a programme is within a group. On the other hand, if our objective is to maximize poverty reduction at the national level, the targeting efficiency of particular group should be judged on the basis of total-group PPP index. Using micro unit-record data on household surveys from Thailand, Russia, Vietnam, and 15 African countries, the paper evaluates a wide range of government programmes and basic services.