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World Economic and Social Survey 2010

Retooling Global Development

image of World Economic and Social Survey 2010
The Survey points out promising directions for reform, including strengthening government capacities for formulating and implementing national development strategies; doing more to ensure that official development assistance is aligned with national priorities; strengthening the international trade and financial systems so that countries with limited capabilities can successfully integrate into the global economy; creating new mechanisms for dealing with deficiencies, such as specialized multilateral frameworks through which to govern international migration and labour mobility, international financial regulation, multinational corporations and global value chains regulation, as well as sovereign debt workouts. Most importantly, the Survey highlights the need for a strong mechanism for global economic coordination which establishes coherence across all areas of global economic governance.

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Retooling poverty reduction strategies: Towards a new consensus?

While it was always an underlying aspiration, poverty reduction was not an explicit direct goal of initial development programmes. Rooted in modern growth theory which dominated early development theory, development policies of the 1950s and 1960s focused on promoting modern industrial development to accelerate overall economic growth. Industrial growth was supported through trade protection, cheap credits and subsidies and large-scale public investments in infrastructure. Output growth was expected to “trickle down” to the entire population and reduce poverty through rising wages and employment generation, even if initially poverty reduction might not be commensurate with the rate of output growth, as rising income inequality was expected to be an inevitable, although temporary side effect of industrialization. Capital productivity growth would lead to rising profit shares and allow for higher savings to finance domestic investment. Over time, at higher levels of development, gains from growth would be shared more broadly with faster real wage growth and dynamic employment expansion.

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