Perspectives on Global Development

OECD Development Centre

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The OECD Development Centre's annual Perspectives on Global Development examines the broad trends and policy issues currently affecting the developing world. Past editions have examined such topics as wealth shifting to the developing world, social cohesion in the light of the shift in global wealth, industrial policy, and boosting productivity.

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Perspectives on Global Development 2012

Perspectives on Global Development 2012

Social Cohesion in a Shifting World You do not have access to this content

OECD Development Centre

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21 nov 2011
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9789264113152 (PDF) ;9789264113145(imprimé)

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"Shifting wealth" – a process that started in the 1990s and took off in the 2000s – has led to a completely new geography of growth driven by the economic rise of large developing countries, in particular China and India. The resulting re-configuration of the global economy will shape the political, economic and social agendas of international development as those of the converging and poor countries for the years to come.

This report analyses the impact of "Shifting wealth" on social cohesion, largely focusing on high-growth converging countries. A "cohesive" society works towards the well-being of all its members, creates a sense of belonging and fights against the marginalization within and between different groups of societies. The question this report asks is how does the structural transformation in converging economies affect their "social fabric", their sense of belonging or put generally their ability to peacefully manage collective action problems.

Recent events in well performing countries in the Arab world but also beyond such as in Thailand, China and India seem to suggest that economic growth, rising fiscal resources and improvements in education are not sufficient  to create cohesion; governments need to address social deficits and actively promote social cohesion if long-term development is to be sustainable.   

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  • Foreword
    The global economy looks radically different from ten years ago. More than 80 countries grew twice as fast as the OECD average in the last decade, lifting hundreds of millions of people out of poverty. This secular convergence trend has only been reinforced by the current crisis. Most emerging economies have weathered the global crisis relatively well and some of them are now the engines of the world economy.
  • Acronyms and Abbreviations
  • Preface
    The year 2011 has seen various forms of social upheaval affect economies and politics not only in the Middle East and North Africa, but in all regions of the world. Events in 2010 and 2011 were not the purview of countries feeling most acutely the bite of the financial crisis. In fact, many of these countries weathered the crisis well, rapidly returning to strong and fast growth. Demonstrations and social unrest seem rather to be linked to a perception that the fruits of growth are not being shared equally, and to a limited scope for participation in the policy making process. Good macroeconomic management and social expenditure, while necessary, have proven insufficient if pursued in contexts where social cohesion is low or deteriorating.
  • Executive Summary
    The world has changed markedly since the beginning of the new millennium. "Shifting Wealth" describes a phenomenon in which the centre of economic gravity of the world has progressively shifted from West to East and from North to South, resulting in a new geography of growth. The new scenario presents some major opportunities and challenges for the creation of socially cohesive societies. This report examines social cohesion in fast-growing developing countries and provides policy makers with recommendations for ways to strengthen it. A cohesive society works towards the well-being of all its members, fights exclusion and marginalisation, creates a sense of belonging, promotes trust, and offers its members the opportunity of upward mobility. This report looks at social cohesion through three different, but equally important lenses: social inclusion, social capital and social mobility.
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  • Ouvrir / Fermer Cacher / Voir les résumés Opportunities and Challenges for Social Cohesion

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    • Shifting Wealth: A Window of Opportunity
      While it is a potential challenge to social cohesion, the shift in the centre of economic gravity from west to east – shifting wealth – also opens a window of opportunity for more inclusive development and stronger social cohesion. The financial and economic crisis has, if anything, further accelerated the ongoing structural transformation where emerging and developing economies recovered more rapidly to pre-crisis levels of economic activity compared to advanced economies. The process of shifting wealth made available a greater range and amount of resources, e.g. larger fiscal revenues, higher export earnings, the continuing build-up of foreign exchange reserves and rents from natural resources. Policies are crucial for the financial sustainability of social protection programmes in a context where gains are potentially volatile and, in some cases, dependent on non-renewable resources (subject to depletion and exhaustion).
    • Social Cohesion and Development
      A society is "cohesive" if it works towards the well-being of all its members, fights exclusion and marginalisation, creates a sense of belonging, promotes trust, and offers its members the opportunity of upward social mobility. As such, this report looks at social cohesion through three different, but equally important, lenses: social inclusion, social capital and social mobility. The measurement of these dimensions should not only involve traditional measures, such as 1.25 dollar-a-day poverty, but should integrate subjective measures such as people’s perception about their own feelings as well. Social cohesion is both a means to development and an end in itself and is shaped by a society’s preferences, history and culture. Shifting wealth provides new opportunities and risks for the development of social cohesion in emerging economies – addressing them requires a holistic policy approach, particularly in the areas of fiscal, employment and social policies.
    • The Challenges for Social Cohesion in a Shifting World
      While bringing opportunities and resources to fuel a more inclusive growth process, shifting wealth poses a series of challenges and risks for the cohesiveness of societies. This chapter focuses on four distinctive areas. First, the processes of shifting wealth and globalisation have been accompanied by structural transformation in fast-growing economies with implications for social inclusion, social capital and social mobility. Second, shifting wealth has not necessarily been associated with sufficient employment creation, more formal jobs, or better gender outcomes. Third, the (re-)emergence of new growth poles has intensified both the pace of urbanisation and South-South migration, which exacerbates the challenges that social cohesion faces in integrating immigrants. Finally, by threatening food security, both the steep increase in food prices observed in the 2000s and the large land-purchases occurring in many developing countries – as fast growing, landscarce developing countries try to secure access to food – could also potentially compromise social cohesion.
    • Inequality
      An equitable distribution of living standards is a central pillar of cohesive societies. Although shifting wealth has brightened the prospects for global income distribution, the transformation of the global economy raises key distributional challenges for social cohesion. A cohesive society reduces inequality between groups and ensures that all citizens – the poor, the middle-earners, and the rich – are socially included. Building a common understanding of what constitutes an adequate standard of living – and how to help those members of society who do not reach it – is an integral part of building a cohesive society. Understanding the complex interactions between opportunities, endowments, and market outcomes underlying distributional change is necessary to the establishment of a development strategy that takes into full account the specific needs and characteristics of a country. Education can help by addressing inequality of both outcomes and opportunities – raising the minimum level of education can offset inequality-increasing pressures originating from the structural changes that shifting wealth has brought with it. Preferences for redistribution as a means of reducing inequality differ from country to country and change over time – understanding how is an additional challenge for policy makers trying to build social cohesion.
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  • Ouvrir / Fermer Cacher / Voir les résumés Building a Policy Agenda for Social Cohesion in Times of Shifting Wealth

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    • Sustainable Fiscal Policies for Stronger Social Contracts
      Shifting wealth increases the availability of resources in many converging countries, creating a window of opportunity to foster social cohesion. Fast economic growth and structural change are producing more development finance flows in converging countries where tax revenues have outpaced those of other developing countries. However, for opportunities to materialise, converging economies must take determined steps to create a stable source of financing by increasing fiscal legitimacy. The current situation in many converging economies is characterised by the state’s low legitimacy as an honest broker between different interest groups, limiting public sector effectiveness in delivering essential services for reducing inequalities and fostering social cohesion. Public policies to increase social cohesion require stable financing and time to mature. Fiscal policies and institutions that loosen the link between current levels of revenue and expenditure – e.g. rainy-day funds that save a share of windfall revenues to maintain social expenditures during bad times – are effective tools for dealing with this challenge. Financing inter-generational redistribution like social pensions out of such funds can foster social cohesion and create a constituency for stable fiscal policy.
    • Employment and Social Protection Policies for Social Cohesion
      Labour market outcomes and social protection are important determinants of social cohesion. Shifting wealth has altered the challenges for employment and social protection. Although it has created opportunities, it has also led to disruption in the form of changing functional distributions of income, tense labour relations, and changes in the risks faced by citizens. Looking at labour market and social protection challenges from the point of view of social cohesion calls for examining labour market institutions and social protection systems not only in terms of efficiency, but also their ability to prevent or mitigate duality and segmentation. Labour market institutions need to evolve to better accommodate the transformation in labour markets if they are to fulfil their price-setting and allocative roles and so produce fair outcomes that are achieved with minimal strife. Social protection systems that are segmented into social assistance for the poor and social insurance for formal workers risk leaving a missing middle among vulnerable but non-poor informal workers. A holistic approach that considers social protection systems in their entirety as well as their interactions with labour market outcomes helps identify such gaps and leads to different choices in programme design.
    • Social Cohesion and Policies for Enhancing Civic Participation
      Governments in many parts of the world are currently confronted by some major governance challenges. They need, as a matter of priority, to defuse social tensions which arise from phenomena such as rising food prices, increases (real or perceived) in inequality, and political exclusion. To complicate matters further, and partly because of new technologies (particularly the Internet), states no longer exercise the same degree of control over their territories as they once did and increasingly have to take into account a myriad of external influences. In such a context, giving space to dissenting voices is fundamental to the creation of a sustainable, socially cohesive society. The harnessing of civic participation and political feedback mechanisms is essential if growth processes are not to be derailed. This is particularly true in the context of shifting wealth, where faster economic growth and more social dislocation require innovative responses. Promoting civic participation and decentralisation could prove to be a powerful tool for improving service delivery as well as something to be valued in its own right. Similarly, women are important agents of change, and facilitating their full participation in democratic life is an important policy objective.
    • Cross-cutting Policy Issues
      A social cohesion policy agenda requires co-ordinating actions across policy areas, in particular to ensure the integration of vulnerable and traditionally excluded groups. The challenges posed by shifting wealth to social cohesion through structural transformation and swings in factor prices also call for coherent action across policy domains. Quality education accessible for all, equal chances for women and men, food security and the integration of migrants are important cross-cutting areas which need to be incorporated into any social cohesion agenda. The current changes in the global economy offer the opportunity to address some long existing inequalities in these areas. This opportunity should not be wasted. A better integration of women into the economy, improved access to land, schools offering shared spaces and a better deal for immigrants in the fast-growing host countries will not only support a cohesive society but also contribute to sustained growth in the long run.
    • Fostering Social Cohesion in a Shifting World
      The structural transformation of fast-growing economies offers various unprecedented possibilities for fostering social cohesion in society, among others the availability of greater fiscal resources that can be used to develop more inclusive social security systems. Implementing a social cohesion agenda at the national and sub-national levels requires sustainable financing, political leadership and, for some countries, external support. The mobilisation of domestic resources, monitoring and evaluating policies with respect to their impact on social cohesion, and a more active promotion of civic participation by donors are examples of how social inclusion, trust, participation and social mobility can be fostered.
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