Cultural Context as Important as Poverty Levels in Assessing Importance of Equity for Economic Growth, Second Committee Told

3 November 2010

Cultural Context as Important as Poverty Levels in Assessing Importance of Equity for Economic Growth, Second Committee Told

3 November 2010
General Assembly
Department of Public Information • News and Media Division • New York

Sixty-fifth General Assembly

Second Committee

Panel Discussion (PM)

Cultural Context as Important as Poverty Levels in Assessing Importance


of Equity for Economic Growth, Second Committee Told


Delegates Hold Dialogue with Heads of United Nations Regional Commissions

In assessing the importance of equity in evaluating different growth strategies, the international community must consider the cultural context rather than simply comparing poverty levels, Jan Kubiš, Executive Secretary of the Economic Commission for Europe (ECE), told the Second Committee this afternoon during its annual dialogue with the United Nations regional commissions.

Discussing this year’s theme, “Growth with equity: the regional experience”, he noted that there was less inequality in Europe than in other world regions, despite growing equality since the early 1990s.  Many European Governments had begun moving closer to the American model of a competitive market economy in efforts to increase competitiveness and economic growth, he said, noting, however, that markets alone did not provide equitable income distribution.  Social transfers, such as health, pension and social assistance benefits, were necessary to significantly reduce the incidence of poverty.

Transition countries faced a number of challenges in creating economies with a greater emphasis on equity or “pro-poor growth”, he said.  A strong, efficient Government was needed to create a highly equitable economy, but many governmental institutions in such countries were poorly designed and managed, he noted, stressing the need for diversification to create many well-paid jobs and reduce inequality.  Vulnerable migrant populations were often excluded from social benefits, he added.

Describing issues related to gender-based, ethnic, geographic and intergenerational inequality, he said the Europe stood out for having achieved relatively high levels of equity as well as high living standards.  However, many programmes responsible for those achievements now seemed fiscally unsustainable and would need to be modified, often at high social and political cost.  An integrated policy network should strike the right balance between macroeconomic, structural and social policies in pursuit of multiple objectives, he said, pointing out that arguments for pro-poor policies must assess realistically the scope for income redistribution and the available fiscal space for social protection.  Finally, he underscored the need for reliable and timely data on educational attainments, labour-market performance and access to housing and health care for disadvantaged groups in monitoring the success of Government policies.

Yousef Nusseir, Director of the Economic and Social Commission for Western Asia (ESCWA), said the Commission had shown strong resilience to the 2008-2009 global financial crisis, but while Arab countries were on track to halve the percentage of people living on less than $1.25 per day, poverty remained high and heavily concentrated in rural areas.  Unemployment was also relatively high, particularly among youth, he said, describing “jobless growth” in the region and elusive gender equality.  Women’s participation in the labour market and their political representation was among the lowest in the world.  “In sum, the Arab region should strive to create a framework that encourages more inclusive growth, which will reduce poverty, mitigate the looming employment challenge, alleviate gender disparities and make the countries more resilient to external factors.”

He went on to say that the “green economy” held potential for job creation and new sources of income, adding that “greening the brown” could contribute to improving the environment.  Several “pro-poor” strategies must be pursued in the region, such as improving the investment climate by shifting from consumption-led growth to an economic path fuelled by higher sustainable investment, he said, noting that the ESCWA countries typically invested less than 25 per cent of gross domestic product (GDP) versus 25 per cent to 30 per cent in emerging Asian countries.

It was also important to empower poor and vulnerable people, while using regional coordination to promote economies of scale, intra-industry trade and the region’s trade with the rest of the world, he emphasized.  Pro-poor fiscal reform should aim to enhance Government legitimacy through more equitable tax systems that used more revenues to provide social services for the poor, more stringent rules and penalties for tax evasion and corruption, as well as microcredit programmes for the poor and marginalized.

Alicia Barcena, Executive Director of the Economic Commission for Latin America and the Caribbean (ECLAC), said that during the current decade, the region had been able to grow with equity for the first time.  It was learning from its past mistakes, particularly from the “lost decade” of the 1980s, and becoming more macroeconomically prudent and socially progressive.  The policies of the 1980s had neither produced the rapid, sustained economic growth expected nor closed the productivity gaps, she said, adding, however, that despite today’s improvements, the region remained excessively dependent on resource-based production as opposed to energy-based production, which had kept productivity low.

She noted, however, that sound fiscal policies and better public-debt profiles, more flexible exchange rates, an unprecedented international reserve and a regional current-account surplus, alongside economic growth, had produced positive results from 2003 to 2008.  Poverty had fallen from 44 per cent to 33 per cent, unemployment had shrunk from 11 per cent to 7.3 per cent, the volume of trade had expanded by 49 per cent, per capita GDP growth stood at more than 3 per cent annually, the terms of trade had expanded 25 per cent and external financing was more readily accessible.  Moreover, for the first time in the region’s history, equality indicators had improved and income in poor households had grown 20 per cent, she said.

While the region’s rate of poverty reduction had slowed in 2009, it had not erased the substantial gains of the past six years, she pointed out.  The region had recovered faster from that economic downturn than from the other recent crises, and its GDP was likely to grow by as much as 6 per cent in 2010.  However, the downturn had raised questions about the region’s dominant economic model, which had produced the most unequal income distribution in the world, in addition to increasingly heterogeneous production patterns, racial, ethnic and gender discrimination and vulnerability to climate change.

Abdoulie Janneh, Executive Secretary of the Economic Commission for Africa (ECA) said the continent had experienced economic growth of almost 6 per cent annually since 2000 after two “lost decades”.  It had also shown resilience during the economic crisis, with 2 per cent growth in 2009.  African economies, driven by commodity exports and services such as banking, telecommunications, tourism and construction, were expected to grow by an annual average of 5 per cent in 2010 and 2011, he said.

However, the continent’s relatively laudable growth performance had not generated enough jobs, particularly for the burgeoning youth population, nor had it been as equitable as it should be, he noted.  Current unemployment rates were high in Africa’s three largest economies, standing at 25 per cent in South Africa, 19 per cent in Nigeria and 9 per cent in Egypt.  For economic growth to be sustainable, it must be backed by regional integration, adequate finance and diversified production strategies.  It must focus on the needs of such vulnerable groups as women, youth and the elderly, who grappled with low incomes, lower levels of education than others, poor health and under-representation in political and policymaking processes, he said.

According to the ECA’s 2010 Economic Report, he continued, relatively strong growth had not translated into meaningful job-creation or reduced poverty and inequality, partly because investments had gone mainly to the capital-intensive extractive sector while agriculture, which accounted for a significant share of employment, was still characterized by low growth in productivity and limited job opportunities and income.  Public spending on free education and health care, cash transfers, public works and infrastructure had helped to address Africa’s equity concerns, he said, citing the example of Ghana, which had introduced cash transfers and other social protections for 160,000 families living in extreme poverty.  Algeria had markedly reduced unemployment by creating jobs through investment in infrastructure, agricultural production as well as small and medium-sized enterprises.

In the long term, the best way to achieve growth with equity was to move African economies from their reliance on low-employment-generating natural resource extraction to labour-intensive manufacturing and agro-industries, he stressed.  There was also a need for investment in infrastructure, human capital and incentives for private-sector employment.  With Africa’s combined consumer spending of $860 billion in 2008, and combined reserves of $470 billion at the end of 2009, there was room to mobilize more domestic resources, he said.

Geetha Karandawala, Secretary of the Economic and Social Commission for Asia and the Pacific (ESCAP), said disparities across countries were most pronounced in the slow progress made by least developed countries, landlocked developing countries and small island developing States in pursuing the Millennium Development Goals.  As seen through that lens, the region’s dynamic growth performance had not been matched by equitable distribution of benefits.  Overall, however, the region had achieved great success in the area of poverty, she said, noting that between 1990 and 2008, countries in Asia and the Pacific had reduced the number of people living on less than $1.25 a day from 1.5 billion to 947 million.  However, the region had been slow in reducing the extent of hunger, child mortality, improving maternal health and providing basic sanitation.

According to a 2010/2011 report prepared by ESCAP, the Asian Development Bank and the United Nations Development Programme (UNDP), South-East Asia had made the greatest progress in the region, she said.  The subregion had already achieved nine of the 21 assessed indicators and was on track for anther four.  North and Central Asian countries as a group had already achieved nine indicators as well.  However, in considering how the growth process affected people, it was clear that a large number of them were becoming increasingly deprived of basic Millennium Goals services.

An interesting aspect of growth with equity was the different paths countries took and the varying speeds at which they attempted to reduce income poverty, she noted.  In 15 Asia-Pacific developing countries that ESCAP had examined, per capita GDP had risen from $1,880 in 1990 to $3,700 in the early 2000s, an increase of almost 100 per cent.  However, annual per capita household consumption had failed to keep pace, going up by only around 66 per cent from $770 to $1160 during the same period, she said, underscoring the need for policies and programmes that promoted equity in leveraging the benefits of economic growth.

She went on to say that ESCAP was working to promote inclusive and sustainable development, operating on several tracks to bridge existing gaps.  It focused particularly on rebalancing Asia-Pacific economies, strengthening social protection, reducing gender gaps, ensuring financial inclusion and exploiting the potential of regional cooperation, among other things.  With regard to boosting international development assistance and financing for closing Millennium Goals gaps, she cited an ESCAP study which found that the region would require $636 billion in additional resources from 2010 to 2015.  “These countries need to be assisted through official development assistance,” she said, noting that it was harder for them to attract aid from traditional donors.

In the ensuing discussion, delegates stressed that the commissions would be invaluable in preparations for the 2012 United Nations Conference on Sustainable Development, or Rio+20, since as they were at the heart of the various regions.  Chile’s representative noted that the financial crisis had hit developing countries hard, slowing their pursuit of the Millennium Goals.  Significant pockets of poverty remained in middle-income countries, which contributed to high levels of inequality.  In that regard, he asked about the commissions’ experience in addressing the characteristics of those countries.  Expanding on that point, Guatemala’s representative noted that the financial crisis had unequally affected Latin American countries, asking how ECLAC viewed its impact on trends towards growth with equity.

Ms. Barcena replied that several middle-income countries in her region, particularly in South America, had registered some of the highest levels of poverty, and the financial crisis had only worsened the situation, leading to severe inequalities.  Mr. Janneh said there were very few middle-income countries in Africa, but ECA remained conscious of their needs, working to support their efforts.  Mr. Nusseir noted that ESCWA was collaborating with other regional commissions, including the North Africa Office of ECA and ESCAP, in addressing local and regional initiatives.

Mr. Kubiš said most countries of emerging Europe and Central Asia had registered substantial reductions in poverty levels but the financial crisis had hit them “very hard”.  According to the World Bank, 36 per cent of the region’s population had been considered poor or at risk of poverty in 2009, two fifths of whom lived in the Russian Federation and Turkey.  Wealthy countries had also been hit hard, he said, underscoring the need to reduce budget deficits and general indebtedness.

Making an introductory statement earlier, Joseph Deiss, President of the General Assembly, said the role and impact of key economic and social issues must be strengthened, calling for the Committee’s practical guidance on reaffirming the importance of the Assembly’s work in the field of economic issues.  The subsidiary body’s discussions would significantly alleviate the workload in the plenary.

He commended efforts to improve the Committee’s working methods and practices and its Bureau’s decision to limit the number of side events held.  Many of the topics discussed in the Committee were relevant within other United Nations bodies, and it was therefore important continuously to provide clear messages and strategic political guidance.  This afternoon’s dialogue with regional commissions was a good example of such interaction, he said.

Regional experiences of growth with equity were especially relevant because achieving inclusive growth was essential in laying the foundation for sustainable development, he said.  Thus far, the paths that the regions had taken towards growth and combating global crises had varied, and it was critical that they share best practices, he emphasized.

Finally, he noted that the Committee was working against the background of the strong signal sent by world leaders at the recent Millennium Development Goals Summit.  “I trust that you will take advantage of the political momentum to ensure that concrete actions are delivered.”

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For information media • not an official record
For information media. Not an official record.