Rolph van der Hoeven

Poverty Reduction with Growth and Redistribution

In the late 1990s the bilateral and multilateral development agencies placed increasing emphasis on poverty reduction in developing countries. This led to the establishment by the United Nations of the ‘International Development Targets’ for poverty reduction. The target of poverty reduction might be achieved through faster economic growth alone, through redistribution, or through a combination of the two. This article presents an analytical framework to assess the effectiveness of growth and redistribution for poverty reduction. It concludes that redistribution, either of current income or the growth increment of income, is more effective in reducing poverty for a majority of countries than growth alone.

Computable General Equilibrium Models, Adjustment and the Poor in Africa

Abstract Sahn and others at Cornell have conducted a major research program on the impact of adjustment policies on the poor in Africa, making use of Computable General Equilibrium (CGE) models. Their work was summarized in World Development April 1996. They concluded that adjustment policies have not hurt and may have helped the poor. This paper shows that such conclusions are highly dependent on the assumptions made about parameters, relationships and closure in the models. Moreover, in Madagascar and Tanzania, where the Cornell models suggest the poor benefited from adjustment, there is evidence of worsening social and economic indicators. Our conclusion is that the Cornell results are more a reflection of the assumptions made in developing the CGE models than of reality.

Manufacturing output, employment and real wages in the 1980s: Labour's loss until the century's end

During the 1980s most developing countries experienced sharp declines in manufacturing output and real wages, whilst their manufacturing sectors were supposedly ‘restructured’ or made more competitive by having to confront market forces. This article examines the extent to which macroeconomic adjustment and industrial restructuring policies succeeded in achieving their objectives.

Adjustment with a human face: Still relevant or overtaken by events?

Abstract This paper describes the extent to which the policy recommendations of “Adjustment with a Human Face” have been accepted. The concept has been accepted in principle, but large gaps remain in actual implementation. Some policy recommendations, such as the need for compensatory programs, have been more fully accepted and implemented than others, such as the need to stimulate productivity by poor households and to involve different social groups in policy making. The paper concludes that adjustment policies should be part of a long-term development strategy which emphasizes structural changes for countries to grow out of structural poverty. As such, the policy recommendations of “Adjustment with a Human Face” still remain valid, albeit with changes in emphasis on their various components.

Policy analysis in a socioeconomic model of basic needs applied to four countries

Abstract This article summarizes the results of a socioeconomic model of basic needs that was applied to four countries—Brazil, Colombia, India, and Kenya. A modeling approach was thought necessary in order to make more precise the concept of basic needs. Although the work has not been entirely successful in doing that, from the policy experiment attempted, and given the limitations of the models used, we believe that an approach centered on the provision of basic needs will help the poorest satisfy their needs more quickly than is possible under alternative approaches.

Income Inequality and Employment Revisited: Can One Make Sense of Economic Policy?

Abstract This article discusses growing inequalities in the context of employment and labour market policies and how the latter can contribute to lowering inequalities. It discusses what is meant by income inequality, why it is remains important to focus on income inequality, which measures of income inequality are relevant and how we have arrived at growing income inequality. A last section reviews what can be done about growing inequality. The current situation is dominated by globalization, which has influenced the functioning and outcome of various aspects of the labour market. Greater attention to labour market institutions and greater coherence between economic and labour market policies is therefore necessary to stem growing inequality. Past examples of combining growth with equitable income distribution are often examples of restrained capitalism. Either social pacts or government bureaucrats and political elites provided the restraint. The current crisis and the public concern for improved income equality might engender renewed political will to make employment creation and income distribution important objectives for economic policy‐making.This article discusses growing inequalities in the context of employment and labour market policies and how the latter can contribute to lowering inequalities. It discusses what is meant by income inequality, why it is remains important to focus on income inequality, which measures of income inequality are relevant and how we have arrived at growing income inequality. A last section reviews what can be done about growing inequality. The current situation is dominated by globalization, which has influenced the functioning and outcome of various aspects of the labour market. Greater attention to labour market institutions and greater coherence between economic and labour market policies is therefore necessary to stem growing inequality. Past examples of combining growth with equitable income distribution are often examples of restrained capitalism. Either social pacts or government bureaucrats and political elites provided the restraint. The current crisis and the public concern for improved income equality might engender renewed political will to make employment creation and income distribution important objectives for economic policy-making.

Poverty and Structural Adjustment: Some Remarks on Tradeoffs between Equity and Growth

The adjustment experiences of the 1980s and the adjustment and liberalisation experiences in the 1990s have led to renewed attention being paid to poverty and inequality in debates about economic development. Inequality was a topical issue in the 1970s when major attention was given to it by scholars and international organisations such as ECLA and ILO. The emphasis on adjustment policies in the 1980s relegated inequality discussions to the sidelines, notwithstanding a greater concern for poverty at the end of the 1980s and in the 1990s. One stream of thought continues to argue that the best way to tackle poverty is to grow out of it. According to this view, income inequality is often the consequence of deep-rooted societal structures, which will take time to change. Others have regarded measures to reduce inequality as detrimental to growth and therefore not warranted during periods of adjustment when all emphasis must be placed on the speedy return to sustainable growth. Such views have not, of course, been uncontested (van der Hoeven 1995; ILO 1996; Ravallion 1997) but only recently has a concern for inequality entered into mainstream discussion of structural adjustment and liberalisation (Rodrik 1998; Stiglitz 1998; Tanzi and Chu 1998). This renewed attention can be partly explained by very specific sociopolitical reasons. Not only may large inequalities be harmful to growth (following the analysis of the so-called ‘new growth theory’) but also large inequalities may promote coalitions of different groups in various countries to oppose measures designed to liberalise both trade and capital flows.

Full Employment Target: What Lessons for a Post-2015 Development Agenda?

Abstract Traditional development aid interventions, as formulated in the Millennium Development Goals, might not be the most effective response for the poor to grow out of poverty due to the triple crises of nutrition, finance and environment, in addition to the changing geopolitical landscape. New challenges therefore need to be confronted in a post-2015 agenda, which could be the best part of a global social contract in which all concerns should therefore be discussed in order to reach the goal of full and productive employment. Coherent policies both at national and international levels are needed that go far beyond concerns of development aid and successful technical assistance projects. The challenge is to have these policies well articulated in a post-2015 development agenda, otherwise full employment would remain a lofty and elusive goal.Traditional development aid interventions, as formulated in the Millennium Development Goals, might not be the most effective response for the poor to grow out of poverty due to the triple crises of nutrition, finance and environment, in addition to the changing geopolitical landscape. New challenges therefore need to be confronted in a post-2015 agenda, which could be the best part of a global social contract in which all concerns should therefore be discussed in order to reach the goal of full and productive employment. Coherent policies both at national and international levels are needed that go far beyond concerns of development aid and successful technical assistance projects. The challenge is to have these policies well articulated in a post-2015 development agenda, otherwise full employment would remain a lofty and elusive goal.

Employment, Inequality and Globalization: A Continuous Concern

1. Introduction: Employment, Inequality and Globalization: A Continuous Concern Rolph van der Hoeven 2. Employment, Basic Needs and Human Development: Elements for a New International Paradigm in Response to Crisis Richard Jolly 3. How the New Poverty Agenda Neglected Social and Employment Policies in Africa Thandika Mkandawire 4. Says Law, Poverty Persistence, and Employment Neglect Alice H. Amsden 5. Income Inequality and Employment Revisited: Can One Make Sense of Economic Policy? Rolph van der Hoeven 6. Income Distribution under Latin Americas New Left Regimes Giovanni Andrea Cornia 7. Does Fast Growth in India and China Help or Harm US Workers? Alex Izurieta and Ajit Singh 8. The Crisis of Globalization as an Opportunity to Create a Fairer World Rob Vos

Social Development during Periods of Structural Adjustment

In this chapter, we shall focus on social development in Latin America during the period 1980–90, in which most Latin American countries applied adjustment policies. In assessing social development, we shall use so-called social outcome indicators such as poverty, health status, education levels and employment status; process indicators which are the outcome of economic and social policy measures, such as the personal and functional income distribution, the intersectoral distribution of production and employment; and input indicators, which are, in most cases, more closely related to policy variables such as expenditure on social services, and human capital formation.