Statement by Mr. Sha Zukang, Under-Secretary-General for Economic and Social Affairs to the Thematic Discussion of ECOSOC Introducing the Report of the Secretary-General
Geneva, 2 July 2007

“Strengthening efforts at all levels to promote pro-poor sustained economic growth, including through equitable macro-economic policies”

Mr. President,
Excellencies,
Distinguished delegates,
Ladies and Gentlemen,

I have the honour to introduce the report of the Secretary-General (E/2007/68) on the issue of pro-poor sustained economic growth and equitable macro-economic policies.

Eradication of poverty is the overarching goal of the UN development agenda. There is no one way to pursue this objective. A multidimensional approach, taking a long-term view, coupled with measures to immediately alleviate the distress of the poor would enable a balanced focus on present and future generations. These near-term measures include promoting sustained economic growth that also benefits the poorer segments of the population – through policies targeted at the poor, special programmes meant to provide direct relief to the poor, or direct transfers to the poor.

The evidence of recent years points to the necessity of sustained and significant economic growth as the best way to impact on the numbers of those living in abject poverty. This report before you focuses on the complex issue of how to ensure that economic growth results in the improvement of lives of the poor. Clearly, we still need to further study the relationship between sustained economic growth and poverty reduction in order to make our efforts more effective.

There are many ways to approach the concept of “pro-poor growth”. As the report explains, pro-poor growth has been defined as any growth which brings any benefit to the poor. It could also be defined as “growth that is poverty reducing”, leaving aside the question of the relative distribution of growth’s benefits between rich and poor. Yet, pro-poor growth could also mean growth that not only reduces poverty in absolute terms, but also makes a positive impact on income distribution. The diversity of conceptual approaches indicates that this linkage is multifaceted and needs to be seen in a broader context.

The report suggests that policies and measures to translate economic growth into growth that is pro-poor should be determined and shaped by each country’s specific situation. Policies for attaining sustained economic growth and eradication of poverty should be part of the larger framework to achieve development goals. The report proposes some measures for pursuing this path. These are not meant to be either prescriptive or exhaustive.

First, countries should adopt national development strategies, as agreed at the 2005 World Summit. These strategies should be country-led and owned, encompass the broad range of development objectives, and have a long time horizon. And one of the objectives within these strategies should be attaining pro-poor sustained economic growth. This could be achieved by ensuring that broad-based economic growth contributes to the achievement of the internationally agreed development goals, including the Millennium Development Goals.

Second, policies focused on creating and maintaining a stable macroeconomic environment should form an essential part of a broad-based approach to reduce poverty through sustained economic growth. Such an approach needs to make full employment a central objective and to integrate short-term, counter-cyclical fiscal and monetary measures with long-term development policies. There is a need to closely coordinate many aspects of macroeconomic policies, so that fiscal, monetary, exchange rate and capital management policies are consistent with growth objectives and public investment strategies.

Third, despite best intentions, macroeconomic policies could adversely affect the poor relatively more than the rest of the population, either because of their design or their manner of implementation. This should be addressed by targeted measures meant to ameliorate the negative impacts.

Fourth, the issue of inequality needs priority attention. In most of the rapidly growing economies, inequality is on the rise despite declining poverty. Yet, income inequality is recognized as having a direct bearing on efforts to reduce poverty. Hence, there is a need to factor into the design of policies for distributional impacts and equity issues.

These measures need to be refined according to each country’s circumstances. Nonetheless, most developing countries need to build institutional capacity to design and implement such policies. Moreover, they will also need to invest in infrastructure and human resource development. These efforts will require international support, in the form of increased access by developing countries to low-cost financing, including increased and predictable flows of Official Development Assistance.

Excellencies,
Ladies and Gentlemen,

These national efforts and strategies would need to be nurtured by continuous international support and global economic environment which is conducive to development. No doubt, external conditions have a direct bearing on the policy space available for the design of each country’s national development strategy – and on that strategy’s effectiveness. And we face a major potential threat to the world economy, posed by the current global payments imbalances.

The current global situation calls for international coordination of macroeconomic policies. The aim of such coordination is to improve the stability and efficiency of the global economy. As evidenced by somewhat recurrent financial crises, existing international coordination mechanisms need to be made more effective. The regional nature of recent financial crises and a globalization process including “open regionalism” have raised interest in regional cooperation. This renewed interest needs to be supported, for it could play a role in promoting regional stability, thereby contributing to growth. Arrangements at the regional level could complement the work of the global institutions.

While concerns for equity, pro-poor growth and global coordination of macro-economic policies have come to the forefront, there is still a considerable lack of understanding of the linkages among them and how those should be addressed. While this thematic discussion cannot be definitive, it should lead to some valuable further work in this area throughout the UN system. At the same time, the Economic and Social Council – through its Annual Ministerial Review – could facilitate the sharing of experiences in promoting pro-poor sustained economic growth at the national level and within the UN system.

Rising inequality and, at times, tenuous link between robust growth and poverty eradication are serious challenges to the realization of the UN development agenda. We need to tackle these issues through a multi-pronged approach, which is targeted at benefiting the poor, but at the same time addressing larger issues of economic growth and development. We have to adopt an all encompassing approach. I hope that today’s discussion will contribute to this.

Thank you.