Connect with us

Economy

Fragile States: Employment Programs Must Become a Bridge to Prosperity

MD Staff

Published

on

In fragile and conflict-affected states, governments frequently turn to public works programs to provide temporary jobs to vulnerable populations. A new body of research is showing how policy makers can redesign these programs to transform their short-term benefits into long-term prosperity and stability.

“Millions of dollars have been spent on public works programs to bring jobs to those living in desperate circumstances,” said Asli Demirguc-Kunt, Director of Research at the World Bank. “Only a handful of rigorous studies have examined the impact and design of these programs. It’s a shocking lapse that we’re only just beginning to address.”

Eric Mvukiyehe, an economist with the World Bank’s DIME team, discussed the results of an on-going multi-year, multi-country effort to investigate the links between employment, welfare, and violence at a recent Policy Research Talk. Mvukiyehe and his colleagues have so far conducted seven impact evaluations of public works programs targeting 40,000 households in five conflict and violence-affected countries: Comoros, the Democratic Republic of Congo, Egypt, Tunisia, and Côte d’Ivoire, with results already available for the latter three cases.

The motivation for these programs is twofold: to provide vulnerable households a temporary income when jobs are scarce, and to create opportunities for at-risk youth who might otherwise be drawn to crime to survive.

The results of these programs have been strikingly consistent. In the short-term, they all deliver critical economic benefits for the communities where they are offered, whether measured by rates of employment, income, or consumption. The improvements in economic welfare—even if only temporary—are encouraging since they demonstrate these programs are effective safety nets during emergencies. However, the programs do little to tamp down crime or promote pro-social behaviors.

Results from Egypt illustrate these broader patterns. The country has long struggled with high rates of unemployment, and poor households faced severe deprivation in the wake of the 2008/2009 food and fuel crises. With support from the World Bank, the government of Egypt enacted the Emergency Labor-Intensive Investment Project, which included a component to employ poor youth on a short-term basis to work on health promotion, literacy, and other social service projects.

The program achieved its immediate objectives. Communities that were offered the program benefited from an uptick in employment, a 35 percent increase in monthly earnings, and much higher rates of saving. However, the benefits appeared to wane over time, with rates of employment falling close to their pre-intervention levels within a few months. The program also had little or no impact on measures of violence, conflict, or crime.

Given the results of Egypt’s public works program, as well as similar results in Tunisia and Côte d’Ivoire, Mvukiyehe urged researchers to work with policy makers to transform public works programs from a short-term emergency measure into a bridge to prosperity and stability. This would require targeting beneficiaries more effectively, providing support to participants to transition to the private labor market or start businesses, and identifying ways to more directly target crime and violence.

“We tend to conflate distinct problems and assume that one approach can solve them all,” said Mvukiyehe. “In fragile states, violence and poverty exist side by side, but they are two separate things. We need to be clear about what our priorities are and design programs accordingly.”

To target crime and violence directly, researchers have drawn on insights from the field of psychology. Cognitive behavioral therapy (CBT) is a technique that has proven to be effective at helping at-risk youth challenge harmful patterns of thought, learn how to emotionally self-regulate, and practice new skills and behaviors. Economists and psychologists teamed up to test a CBT intervention in Liberia, a country that has suffered two civil wars in the past three decades. They found that when poor, at-risk youth living in Monrovia were offered both a small cash grant and CBT, crime fell by a striking 37 percent one year after the intervention.

Complementary interventions can also help turn the short-term economic benefits of public works programs into sustained livelihoods. In the Democratic Republic of Congo, the DIME team is currently examining whether interventions such as vocational training and savings mechanisms can lead to enduring gains in employment. In Tunisia, a future evaluation will identify ways to help women overcome the specific barriers they face to participate in labor markets or start businesses.

Finding money to pay for these add-on interventions is no small task, but according to Mvukiyehe better program design could free up additional resources. An analysis of Côte d’Ivoire’s Emergency Youth Employment and Skills Development Project found that better targeting to the most vulnerable groups could drastically improve the cost effectiveness of the program—in principle making financing available to invest in other interventions.

Over the past two decades, the world has made tremendous strides in reducing extreme poverty. But the extreme poor are becoming ever more concentrated in fragile states, where violence and conflict create large barriers to escaping poverty. Whether the world reaches the goal of eradicating extreme poverty by 2030 may hinge on the success of the development research community in designing programs that can address the multifaceted needs of these fragile states.

World Bank

Continue Reading
Comments

Economy

Côte d’Ivoire: Robust growth under the looming threat of climate change impacts

MD Staff

Published

on

According to the Economic Update for Côte d’Ivoire, published today, the short- and medium-term outlook for the Ivorian economy remains positive. The economy is expected to maintain a steady trajectory, with GDP growth of 7 to 7.5% in the coming years. Titled “So Tomorrow Never Dies: Côte d’Ivoire and Climate Change,” the report highlights the urgent need to implement measures to ensure that climate change impacts do not imperil this economic progress and plunge millions of Ivorians into poverty.

“The solid performance of the Ivorian economy, which registered growth of almost 8% in 2017, is essentially due to the agricultural sector, which experienced positive climate conditions. The economy also benefited from a period of calm after the political and social instability of the first half of 2017 and from more favorable conditions on international markets,” said Jacques Morisset, Program Leader for Côte d’Ivoire and Lead Author of the report. “The Government also successfully managed its accounts, with a lower-than-expected deficit of 4.2% of GDP, while continuing its ambitious investment policy, partly financed by a judicious debt policy on financial markets.

However, the report notes that private sector activity slowed in 2017 compared with 2016 and especially 2015, which may curb the pace of growth of the Ivorian economy in the coming years. Against the backdrop of fiscal adjustment projected for 2018 and 2019, it is critical that the private sector remain dynamic and become the main driver of growth. This is particularly important in light of the uncertainty associated with the upcoming elections in 2020, which could prompt investors to adopt a wait-and-see approach.

As economic growth in Côte d’Ivoire relies in part on use of its natural resource base, the authors of the report devote a chapter to the impact of climate change on the economy. They raise an alarming point: the stock of natural resources is believed to have diminished by 26% between 1990 and 2014. Several visible phenomena attest to this degradation, such as deforestation, the depletion of water reserves, and coastal erosion. According to the Intergovernmental Panel on Climate Change (IPCC), climate change could reduce GDP across Africa by 2% to 4% by 2040 and by 10% to 25% by 2100. For Côte d’Ivoire, this would correspond to a loss of some CFAF 380 billion to 770 billion in 2040.

This report sounds an alarm in order to spark a rapid and collective wake-up call,” said Pierre Laporte, World Bank Country Director for Côte d’Ivoire. “Combating climate change will require prompt decisions and must become a priority for the country to maintain accelerated and sustainable growth over time.”

The report pays special attention to coastal erosion and to the cocoa sector, which represents one third of the country’s exports and directly affects over 5 million people. With 566 km of coast, Côte d’Ivoire now boasts a coastal population of almost 7.5 million people, who produce close to 80% of the national GDP. Two thirds of this coast is affected by coastal erosion, with severe consequences for the communities and the country’s economy.

The Ivorian Government, which is already aware of this challenge and has prepared a strategy to confront it, must expedite its implementation. This would have the two-fold effect of developing a “green” economy and creating new jobs.

Continue Reading

Economy

A future of work based on sustainable production and employment

Simel Esim

Published

on

On the first Saturday of July each year, the international community celebrates the International Day of Cooperatives. This year’s theme, Sustainable consumption and production of goods and services is timely, as the ILO works towards a future of work that is based on sustainable production and employment models.

As head of the ILO’s Cooperative Unit, I have witnessed firsthand the positive impact of cooperatives’ commitment to sustainable consumption and production.

In Northern Sri Lanka, for instance, after years of civil war, I saw how cooperatives helped build the resilience of local communities.

A rapid assessment at the start of the ILO’s Local Empowerment through Economic Development project (LEED) indicated that cooperatives were the only “stable” structures present in Northern Sri Lanka before, during, and after the conflict. Since 2010, the project has been supporting agriculture and fishery cooperatives by securing fair trade certification for their products and helping them establish market links.

I’ve also listened to inspiring stories from other parts of the world of how cooperatives have joined forces to contribute to sustainable consumption, production and decent work – often through cooperative-to-cooperative trade.

Some of these stories were shared at a recent meeting in Geneva of cooperative and ethical trade movements.

We heard how Kenyan producer cooperatives’ coffee has found its way on the shelves of Coop Denmark and how biological pineapples from a Togolese youth cooperative are being sold in retail cooperatives across Italy. We heard how consumer cooperatives in East Asia have developed organic and ecolabel products, while educating their members about the working conditions of producers and workers, as well as on reducing food waste and plastic consumption. We also shared ILO experiences in supporting constituents in the field.

The emerging consensus from the meeting was that cooperative-to-cooperative trade can help lower the costs of trade, while ensuring fairer prices and better incomes for cooperative members and their communities. Opportunities exist not only in agricultural supply chains, but also in ready-made garments and other sectors.

Cooperatives at both ends of the supply chain have been joining forces to shorten value chains, improve product traceability and adopt environmentally-friendly practices. At the ILO we have been working with our constituents to improve the social and environmental footprint of cooperatives around the world.

As the ILO continues to promote a future of work that is based on sustainable production and employment models, a priority for us in the coming years is to facilitate the development of linkages between ILO constituents and cooperatives. The aim is to encourage joint action towards responsible production and consumption practices, the advancement of green and circular economies and the promotion of decent work across supply chains.

Source: ILO

Continue Reading

Economy

Mongolia’s Growth Prospects Remain Positive but More Efficient Public Investment Needed

MD Staff

Published

on

Mongolia’s economic performance has improved dramatically with GDP growth increasing from 1.2 percent in 2016 to 5.1 percent in 2017 and 6.1 percent in the first quarter of 2018. While short- and medium-term economic prospects remain positive, Mongolia faces core structural vulnerabilities that hinder its potential, according to Mongolia Economic Update, the latest World Bank report on Mongolia’s economy launched here today. The report also highlights the importance of improving efficiency of its public investment programs given extensive consequences from the overambitious and unrealistic investment programs implemented in the past.

“Last year was a good year for Mongolia with favorable commodities prices and the successful implementation of the government’s economic recovery program,” said Dr. Jean-Pascal N. Nganou, World Bank Senior Economist for Mongolia and Team Leader of the report. “This resulted in improved fiscal and external balances, triggering a slight decline of the country’s public debt.

The recovery is expected to accelerate with a GDP growth rate averaging more than 6 percent between 2019 and 2020, driven by large foreign direct investments in mining. Other than agriculture, which was severely affected by harsh weather conditions during the winter, most major sectors including manufacturing, trade, and transport are expected to expand significantly. On the back of increasing exports and higher commodity prices, economic growth will continue to have a strong positive impact on government revenue, contributing to the reduction of the fiscal deficit.

The unemployment rate dropped to 7.3 percent in the last quarter of 2017, compared to 8.6 percent a year earlier. Still, it increased to 9.7 percent in the first quarter of this year, reflecting Mongolia’s highly seasonal employment patterns due to difficult working conditions in the winter, especially in construction, agriculture, and mining.

The report highlights possible short- and medium-term risks including political risks, regional instability, climate shocks, and natural disasters. The most critical risk identified is a sudden relaxation of the government’s commitment to full implementation of its economic adjustment program supported by development partners.

In addition, the economy remains vulnerable to fluctuations in global commodity prices and a productivity gap. The best long-term protection against these two vulnerabilities is the diversification of the Mongolian economy.

To create a strong buffer against economic vulnerabilities, the government and donors should give a high priority to economic diversification that helps counter the ups and downs of the mining sector. Investing in human capital and strengthening the country’s institutions are the best way to support diversification, together with sound investments in crucial infrastructure,” said James Anderson, World Bank Country Manager for Mongolia.

The report takes a closer look at public investment programs implemented over the past five years, which surged until 2015, contributing to large increases in public finance deficits and the public debt. Mongolia needs to review and reshape its public investment policies and decision-making processes to improve efficiency of public spending, including clear project selection and prioritization criteria, as well as proper maintenance of existing assets.

Continue Reading

Latest

Trending

Copyright © 2018 Modern Diplomacy