Development Cooperation Approaches and Pro-Poor Growth Strategies

1. Development Cooperation Approaches and Pro-Poor Growth Strategies Sachin Chaturvedi March 5-7, 2012

2. What is Pro-Poor Growth ? • Little consensus on what exactly is the pro-poor growth. • Debate between proponents of growth and poverty reduction, highlighting the diversity of regional and country experiences in promoting development • Whether the main focus of development strategies should be on growth or on poverty and/or inequality

3. What is Pro-Poor Growth ?

4. Macro vs. Sectoral Approach What Options for Pro-Poor Growth!

5. What Options for Pro-Poor Growth! • Is Export-led Growth Passe? • Export led growth (ELG) vs. Domestic Demand led Growth (DDLG) • Inclusive Growth

6. Which Sector for pro-poor! • Gallup et. al. 2001 shows that for every 1 per cent growth in the agricultural GDP, the positive impact on the poorest is greater that that from similar growth in manufacturing or services. • Thirtle et al. 2001 demonstrates multiplier effects of agriculture, in the range of 1.35 to 4.62. • Of course such a growth impetus has to have some pre-conditions like equitable distribution of resources (de Janvry and Sadoulet 1996). • Locating poor in different sectors. • Focus on Agriculture: Nexus between agriculture and Poverty

7. Why has Agriculture become relatively Stagnant ? • Splitting up holdings between one generation and the next has led to farming on the edge of poverty, without slack to absorb disturbances • This requires government to step in to smooth out negative shocks to the system (latest example: energy prices) • Over time this has created a complex patchwork of controls, regulations and subsidies which are difficult to remove in a system on the edge of poverty • Access to technology at cost-effective terms • Self-regulating criticality is a term from systems theory. It denotes a system with built-in corrective action to maintain the overall state at the edge of chaos

12. Salient Features of Agricultural Sector • Contribution of Primary agricultural activities varies. Developing countries on an average have share of 13 per cent but that for LA 8 per cent and South Asia has 28 per cent • Extended Agriculture has LA 30 per cent. • In India share in GDP has declines from 45 per cent in early 70s to 16 per cent but the population dependent is still around 57 per cent. • This compares with 44% in China (2002) and 21 % in Brazil (2004).

13. Salient Features of Agricultural Sector • Technology and innovations have proved to be a key source for growth and competitiveness in any economy • Average Real income of small farmers in South India rose by 90 per cent and that of landless labour by 125 per cent between 1973-1994 (WB 2001) • In order to ensure technological competitiveness, technology foresight is becoming an essential element of the strategy process in many organizations. • A 1% increase in labour productivity in agriculture reduces the number of people living on less tht USD 1 a day by between 0.6 % and 1.2% (Thirtle et. al. 2001)

14. The Key Question • Stagnating agricultural results can abort economic take-off • To avoid this happening the agricultural system has to be reformed • Scale is the key issue. To illustrate: average farm size has to increase from 1.5 HA to (say) 10 HA • This will drastically cut agricultural employment which needs to be replaced by creating new alternative employment opportunities • How can this agricultural reform programme be achieved ?

15. Technology foresight for technology and innovation policy - Essential changes and trends in the economical environment. - Key issues in globalisation, internationalisation, integration, regulation, development of the information society, technological change in society. - Sustainable development and sustainable growth, aging and other long-term changes in society. - Changes and trends in national innovation and production systems, such as dynamics and long-term development of industrial clusters and the business environment.

16. Programmes are the main tool for putting technology strategy into practice. • Technology strategy only provides a starting point for planning a new programme, that is why technology foresight is an essential part of the programme process as such. • Technology foresight is part of the concept phase of the programme, when the rationale and goals for the new programme are analysed and set. • Many programmes use foresight tools and mechanisms at the beginning of the programme, to ensure a common vision between participants.

17. Shedding light on future agriculture policy and technology options • 3. New Challenges • Impact of WTO • Climate change • Dynamic urban demand • Private sector development • Biotechnology • Globalized information systems • ………..

18. What is likely in Agriculture ? * More info-intensive world * China and India the “big stories” in the world economy * Escalating energy (and other commodities) prices continue * Escalating water prices * Abrupt climate change * Scale enlargement in agriculture

19. Key Drivers Global competition Access to markets Investments Rural income Better livelihoods Rural/urban differential low Rural NFsector Pressure on Commercial agriculture ag-enterprises

20. Is the Development Cooperation Policy alone can meet these challenges??

21. Development Cooperation and ‘Development Compact’ * Trade - Market Access - Domestic Support Policies - NTBs/Standards * Investment - Enterprise Development - Markets/Value Chain * Technology - Productivity - Value Chains * Sectoral approach – central approach

22. Way Forward * South shares similar poverty and infrastructure issues * When successful solutions are found they need to be transferred if we really want to implement change. * North’s Strength in Technology and its adaption. * Reaching out to the rural poor with research and technologies is a key challenge * Small Farms, value chains and rural economy. * Indigenous Institutions and their adoption. * Narrow Development Gap – LDC Centric Approach