Poverty and Hunger Reduction – New Mix of Growth and Social Protection Needed to Achieve MDG1

Poverty and Hunger Reduction –
a new mix of growth and social protection
policies is needed to achieve MDG1

Joachim von Braun
Director General
International Food Policy Research Institute
Session “MDG 1: Halving Income
Poverty and Hunger”; Department for
International Development, workshop,
London, October 3, 2007

Overview

1. Progress towards MDG 1

2. Pro-poor growth, poverty and hunger

3. Social protection for poverty
reduction and growth

4. The way forward

Joachim von Braun, IFPRI, October 2007

Urbanization of poverty? …very slowly

Urban and rural share of the poor (%)
1993 2002
18.88 24.67

75.33

81.13 urban share of the poor (%)

rural share of the poor (%)

Source: Ravallion et al., 2007
Note: Poverty line is set at $1.08/day


Mixed evidence: Poverty at $1 (PPP)
as % of total population

50

40

30

20

10

0
1981 1984 1987 1990 1993 1996 1999 2002 2004

East Asia & Pacific Europe & Central Asia
Lat. Am erica & Caribb. Middle East & N. Africa
South Asia Sub-Saharan Africa

Source: WDI 2007

Looking beneath the dollar-a-day line
Subjacent poor Medial poor Ultra poor
($0.75 and <$1): ($0.50 and <$0.75): (<$0.50):
485 mln in 2004 323 mln in 2004 162 mln in 2004
LAC MENA
ECA MENA ECA 0.4 mln
3 mln ECA 1.1 mln 11.5 mln 0.2 mln
LAC MENA LAC 0.9 mln
EAP
19 mln 3.3 mln 16.6 mln
8.8 mln

SSA
87.0 mln EAP SSA
EAP 51 mln SA
109.3 mln 90.2 mln
19.7 mln

SSA
SA 121 mln
SA 162.9 mln
263.6 mln

Source: Ahmed et al. IFPRI, 2007

The share of the poorest in SSA is growing
Change in the share of poor living below .50$/day 1990-2004

0.5

0.06 0.14
0
% point change

-0.5
Developing World
-0.7
-1 East Asia & Pacific
-0.9
South Asia
-1.5 -1.4 L America & Caribb.
Sub-Saharan Africa
-2
Source: Ahmed et al. 2007

Progress on MDG 1…mixed evidence

Prevalence of poverty Prevalence of undernourishment
2.5 1.5

Hunger ratio: [2002-04/1990-92]
Poverty ratio: [2002-04/1990-92]

MDG Target
2.0
1.0
1.5
MDG Target
1.0
0.5

0.5

0.0 0.0
EAP ECA LAC MENA SA SSA AP ECA LAC MENA SSA

Based on data from FA0 2006; World Bank 2007

Hunger: Regional and country progress
2.0

Central Africa
Hunger ratio: [2002-04/1990-92]

Regress
1.5

Middle East Tanzania
Mexico Central America
1.0
India
N. Africa South Asia East Africa
China Kenya
Nigeria Caribbean Southern Africa
Ethiopia

Progress
W. Africa
S. America Mozambique
0.5
SE Asia Uganda

Ghana
MDG Target

0.0
0 10 20 30 40 50 60
Prevalence of undernourishment 2002-04 (%)

Joachim von Braun, IFPRI, October 2007 Based on data from FA0 2006

Global hunger

35
Sub-S Africa
undernourishment 2004 (%)

30 213
S Asia
25
Prevalence of

300
E Asia & 20
Pacific
15
227 M East &
Europe &
52 10 N Africa
C Asia
23
37
L America & 5
Caribb
0
-4 -3 -2 -1 0 1 2

Annual change in prevalence of undernourishment 1992-2004 (%)

Source: FAO 2006, World Bank 2007

What Hunger?
Global food and nutrition challenges
Type Causes People affected
Hunger Deficiency of calories 0.9 billion
and protein

Children Inadequate intake of 146 million
underweight food
and frequent disease
Micro-nutrient Deficiency of vitamins More than
deficiency and minerals 2 billion

…and their mortality effects (ca. 50 % of <5 mortality)

Source: Based on data from FAO 2006, Micronutrient Initiative and UNICEF 2005, UNICEF 2006, WHO 2006

Limitations of MDG 1

The MDGs help to focus, but lack…
• Vision
• Realism
• Adequate policy instruments
• Reliable monitoring process
• Accountability


Framework of challenges for poverty reduction
The Critical Square

Governance & Economic
Conflicts Growth

Innovation Productivity (e.g.
in agriculture)
& Capacity


What type growth?
Comparison of Poverty-Growth Elasticity
Agriculture- Non-agr.-led Staple-led Ag-export-
led growth growth growth led growth
scenario scenario scenario scenario
Ethiopia -1.7 -0.7 -1.8 -1.4
(2003-15)
Ghana -1.8 -1.3 -2.1 -1.1
(2003-15)
Rwanda -1.4 -0.8 - -
(2003-15)
Uganda -1.6 -1.1 -1.4 -1.4
(1999-2015)
Zambia -0.6 -0.4 -0.6 -0.5
(2001-15)
Sources: Simulation results from economy-wide multi-market models for Ethiopia, Ghana, Rwanda
and CGE models for Uganda and Zambia (Diao and Thurlows, IFPRI 2005)

Continent-wide Ag GDP and GDP Growth rates have been steady
and growing since 1992
Agriculture, value added (annual % grow th)

GDP grow th (annual %)

9
Percent (%)

6

3

0

-3
1980

1982

1984

1986

1988

1990

1992

1994

1996

1998

2000

2002

2004

2006
Joachim von Braun, IFPRI, October 2007 Fan, draft, IFPRI, 2007

But: Mixed picture
of agricultural growth in Africa

Joachim von Braun, IFPRI, October 2007 Source: IFPRI/CAADP using UNSD Database

Progress against CAADP’s 6% goal (2005)

Zimbabw e
Malaw i
Burundi
Zambia
Cote d'Ivoire
Sw aziland
Lesotho
Mozambique
Madagascar
C Af Rep.
Congo, Rep.
Guinea
Botsw ana
Namibia
Gabon
Burkina Faso
Togo
Ghana
Cameroon
Benin
Gambia
Uganda
Tanzania
Rw anda
DRC
Guinea-
Chad
Kenya
Senegal
Mali
Mauritania
Nigeria
Eritrea
Ethiopia
Angola
-12 -6 0 6 12 18
annual percent grow th (%)

Africa: Required effort is enormous
Required Annual Agricultural Growth Rates
To achieve MDG1 (%)
2003 – 2015 6.20%

2005 – 2015 7.50%

Required Annual Growth in Agricultural Spending
To achieve MDG1 (%)
Past, 1992 - 2004 6.1%

Required, 2005 - 2015 21.0%
Required Annualized Spending (Billion Dollar, 2000
Price)
Source: Fan et al. IFPRI (work in progress) 2005 – 2015 $32.5

Required annual Ag Growth Rate (%)

12
15
18

0
3
6
9
Zimbabwe
Burundi
Guinea-
Madagascar

Kenya
Niger
Lesotho
Togo
Cote d'Ivoire
Central

Source: Fan et al., IFPRI (work in progress)
Chad
Namibia
Zambia
Benin
Guinea
Gambia
Malawi
Senegal
Swaziland
Nigeria
Mali
Burkina
… and this varies by country

Tanzania
Mauritania
Ethiopia
Required annual agricultural growth rates to meet MDG1

Cameroon
Uganda
Ghana
Mozambique

Growth matters: hunger - income linkage
Hunger and GDP/ capita in developing countries
Undernourishme
nt (% of pop)
Log. (1990-1992)
50
Log. (2001-03)
Log. (1995-1997)
40

30

20

10

0
0 1000 2000 3000 4000 5000 6000
GDP per Capita (in constant 2000 US$)

Source: von Braun, regressions based on data from World Bank (2005) and FAO (2005)


Performance in hunger index and income –
selected big countries
Trends in the Global Hunger Index and Gross National Income per capita
45 (1981, 1992, 1997, 2003)

40

35

30
Bangladesh
Global Hunger Index

India
25

20
Vietnam

15

10

China
Brazil
5

0
0 2,000 4,000 6,000 8,000 10,000 12,000
Gross National Income per capita Source: Wiesmann, IFPRI, 2007


Performance in hunger index and income –
Africa

Sub-Saharan Africa, Trends 1981-2003
50

45

40

Ethiopia
35
Global Hunger Index

Zambia
30
Mozambique
25
Malawi
20 Kenya
Senegal
Uganda
15 Ghana

10

5

0
0 500 1,000 1,500 2,000 2,500
Gross National Income per capita Source: Wiesmann, IFPRI, 2007


Government effectiveness

Green: Best quartile (over 75th percentile),
with top 10th colored in darker green
Yellow: second best quartile (over 50th)
Orange: third quartile (over 25th)
Red: fourth quartile, with bottom 10th in darker red

Joachim von Braun, IFPRI, October 2007 Source: Kaufmann et al. 2005

Decentralization and growth

Statistically significant correlations
between decentralization and growth
Administrative:
Responsibility for civil servants: 0.50

Fiscal:
Reliability of fiscal transfers from center to
local government: 0.45

Source: Birner 2007

Hunger, growth and governance
Proportion of undern. progress indicator

Ethiopia Ghana
1.0
Brazil
Nigeria Uganda China
0.5
Kenya India
0.0
-0.5 -10 -5 0 Tanzania 5 10

-1.0
-1.5
-2.0
-2.5
Congo, DR
-3.0
Annual growth rate in GNI per capita, 1990-2004 (in %)

Low gov effectiveness Higher gov effectiveness
Source: Wiesmann 2007
Low gov. effectiveness is assigned to countries in the lowest
Joachim von Braun, IFPRI, October 2007 quartile of Worldwide Governance Indicators

Hunger Index and Income, War, HIV/AIDS
Global Hunger Index
Sub-Saharan Africa

Joachim von Braun, IFPRI, October 2007 Gross National Income per capita Source: Wiesmann, IFPRI, 2006

Poverty comes down too slowly in the
general growth process
• Growth remains key in Africa but the
kind of growth needs re-visiting
• Role of rural and agriculture growth in
Asia underestimated
• Discrimination and exclusion
underestimated
• The need for higher social protection
undervalued


To be kept in mind: The dynamic nature of
poverty

% escaped % fell into
Study Period poverty poverty

Bangladesh Sen (2003) 1987-00 26 18
Haddad & Ahmed
Egypt (2003) 1997-99 6 14

India, Rajasthan Krishna (2004) 1976-01 11 8
Krishna et al
Kenya, Western (2004) 1978-03 18 19
Carter & May
South Africa (2001) 1993-98 10 25
Deininger & Okidi
Uganda (2003) 1992-00 29 12

Source: Krishna 2007

New Overlaps: More Shocks to
Social Safety of the Poor

• Increased food price inflation

• Health risks: multiple threats (avian flu,
HIV/AIDS, TB, Malaria,…)

• Climate change risks

 The need for social protection is rising


Types of social protection

• Health insurance
• Social security (e.g. pension for old-age)
• Safety nets (productive)
Nutrition support
Conditional/unconditional transfers
Employment guarantees
Microcredit / Microinsurance
Crop insurance


Social protection and MDG1

Targeted social protection makes four contributions to
the achievement of MDG1:

1. By transferring resources to poor households, it
has a direct effect on reducing poverty and hunger.
2. By protecting assets, it prevents households from
falling into poverty
3. By building community assets that are associated
with income growth
4. By making it possible for households to undertake
investments that lead to sustainable income
growth and reductions in poverty and hunger


Impact of social protection programs (1)

• Ethiopia (PSNP):
Increased fertilizer use by 11% points (66% increase
compared to control group) and use of improved
seeds by 4.8% points (Gilligan et al. in prep.)

• India (NREGA):
Provided employment = to 1 bn person-days/year
(Drèze and Oldiges 2007)

• Bangladesh (FSVGD):
Reduced extreme poverty by 30% points and
increased per capita calorie intake by > 10%
(Ahmed et al. 2007)


Impact of social protection programs (2)

• South Africa (Old-age pension program):
Pensions received by women improved health and
nutrition of girls (weight-for-height) by 1.2 std. dev.
(Duflo 2003)

• Mexico (Progresa / Opportunidades):
CCTs reduced severity of poverty by 46%
(Skoufias 2005)

• Guatemala (Childhood nutrition intervention):
- Increased male wages by 46% in adulthood
- Increased female grade attainment by 28%
(Hoddinott et al. forthcoming)

The need for nutrition interventions early

Weight for age by region
0.5
0.25
NCHS
0
Reference
-0.25
Z-score (NCHS)

-0.5
-0.75
-1
-1.25
-1.5
-1.75
-2
0 3 6 9 12 15 18 21 24 27 30 33 36 39 42 45 48 51 54 57 60
Age (months)

Africa Latin America and Caribbean Asia
Shrimpton et al. 2001

Guatemala: Improving early childhood nutrition has large
impacts on adult education and economic productivity

Grade attainment Nutritional intervention
27%
(women) among Guatemalan children
0-7 years old (’69-’77)
Cognitive ability 8%
Follow-up in adults 25-42
years old (’02-04)
Reading
17%
comprehension
Investments in early
childhood nutrition have a
long-term economic
growth effect
Income earned per
hour worked 20%
(men)

0% 5% 10% 15% 20% 25% 30%

Joachim von Braun, IFPRI, October 2007 Source: Hoddinott et al. Lancet (in revision)

Findings
• Slow progress in
reducing poverty and
hunger
• Mixed success in
reaching the poorest
with growth ( the
where, how matters)
• “business as usual”
is not good enough
to reach MDG1 and
move beyond it
• What in addition and
what next ?

Interventions for the poorest to move out
of poverty and end hunger
1. Improved access to factor markets and
basic services (employment; information)
2. Prevention of food price inflation (agric.
growth)
3. Insurance against health shocks
(innovative)
4. Preventing child malnutrition
(comprehensive coverage)


Action and Research
on designing safety nets needed
1. Transactions costs: administrative capacity,
information, decentralization; PPP
2. Switching systems or adding components
(CCTs; employment guarantee)
3. Political sustainability: commitment,
structure of institutions
4. Innovation & optimization: learning by doing;
impact studies & experimental designs;
finding optimal mixes of social protection
policies

Can it be paid for?
Spending on social protection by rich and poor
• Health (% of GDP)
- Germany, France, Sweden: 7-8%
- India, Somalia, Georgia: < 1%

• Pensions (% of GDP)
- Austria, Greece, Poland: 11-13%
- Nigeria, Bangladesh, Mozambique: < 1%

• Social assistance (% of GDP)
- Pakistan, Peru, Colombia: < 1% Source: Dethier 2007

Mainly from domestic funding … not only a
matter of more development aid

Hunger, poverty and growth: Conclusions

1. Growth has been key for poverty reduction …
but less so for hunger reduction

2. Re-balancing investment for growth and
social protection needed now

3. …and phasing in social protection earlier in
the growth process

– also in Africa

IFPRI 2020 Conference Oct 2007 Beijing on “Taking
action for the worlds poor and hungry people”

http://www.ifpri.org/2020chinaconference/index.htm


Poverty and Hunger Reduction – New Mix of Growth and Social Protection Needed to Achieve MDG1

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