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Millennium Development Goals

Yemen highlights

Domestic conflict threatens progress towards the MDGs

UNCDF photo: Yemen city view

Yemen is one of the poorest countries in the Arab region with 35% of its population living below the national poverty line in 2005. Moreover, Yemen's population is growing very rapidly and women lack access to economic opportunities. Overall, the country's progress towards the MDGs is slow. These challenges are amplified by the domestic conflict that erupted in 2011. Unless resolved promptly, the political crisis threatens to make Yemen's prospects for sustainable and pro-poor growth even bleaker, and the MDGs unattainable.


Despite progress, Yemen will not attain most internationally-agreed development goals

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MDG progress achieved by 2015 under a business-as-usual scenario
Graph: MDG progress achieved by 2015 under a business-as-usual scenario

Growth of GDP, Government services and household per capita consumption of 5-6% per year, as seen before the political conflict, would underlie improvements in indicators for primary school completion, child health and access to drinking water and sanitation. The poverty rate would fall, too, although by a small margin. Despite the potential progress, Yemen would fall short of fully meeting any of the internationally-agreed MDG targets by 2015. Large gaps in reaching the MDGs already existed in Yemen at the time of this analysis owing to insufficient allocation of resources to social goals and infrastructure, inefficient use of resources, and slow growth in household incomes.

Achieving the MDGs would require unrealistic increases
in public spending

Average annual public spending on MDGs in baseline and MDG financing scenarios
Graph: Average annual public spending on MDGs in baseline and MDG financing scenarios
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A large and sustained increase in Government spending—relative to the amount spent under a baseline scenario—would be required for Yemen to reach the internationally-agreed MDG targets by 2015. In all instances, the required growth in current consumption spending and capital stocks is more than twice the baseline growth. The challenges would be severe on the financing side, exacerbated by the need to replace declining oil revenues with other sources of financing. Even if the required financing could be mobilized, it would most likely threaten macroeconomic stability. Moreover, it would be extremely difficult to efficiently manage the required expansion in services, including mobilization of the skilled labour that would be needed in the health and education sectors.

 

Better infrastructure and more efficient public spending could contribute to sustainable progress towards the MDGs

Effect of increased public capital spending on per capita GDP (2005-2015)
GRaph: Effect of increased public capital spending on per capita GDP (2005-2015)
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In view of the marked gaps in achieving the internationally-agreed MDGs, Yemen's Government should set targets that are grounded in its reality and priorities. In order to create the most positive impact with available resources, policies should also strive to improve efficiency and allocate a larger share of spending to the areas that have the greatest payoffs in terms of growth and human development. One of the solutions suggested is an increase in transfers received from the rest of the world, which would be used to finance investments in public infrastructure. In such a scenario, infrastructure spending promotes growth and speeds up progress towards the MDGs through its impact on higher per capita income and private demand for education and health services.

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The book's quantitative assessments, conclusions drawn, and policy recommendation are prepared based on the country studies of the project "Realizing the Millennium Development Goals through socially inclusive macroeconomic policies".

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