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Children and economic growth
25 February 2010
A briefing by Save the Children
Economic growth is a powerful tool for lifting people out of poverty in developing countries. Previous experience shows that reductions in income poverty have been largest in regions which achieved high growth rates. The impact of growth on poverty however is not straightforward and several issues are often overlooked which mean that some groups are left behind in the growth process. In a new briefing paper, Eurodad member Save the Children raises concerns that without a more nuanced discussion on the relationship between economic growth and poverty reduction, children will not fully gain from the potential benefits of growth.
While sustained growth should be a policy priority for low-income countries, a number of key issues have to be resolved to promote more pro-poor growth outcomes. One of these key, and oft-neglected, issues is inequality. The question of whether and how many people are taken out of poverty by growth is influenced by existing wealth distribution in a country. The nature of growth policies also affect the rate at which the number of poor people is reduced; labour-intensive growth in sectors where thepoor are heavily engaged (e.g. agriculture, small enterprises) have greater poverty impact than growth in financial services, for example.
Growth statistics also tend to obscure the real picture for poor people. Measuring growth in terms of average increases in income per capita leave out large parts of the population which are not able to share in the benefits of growth. Aggregate poverty statistics can also mask how different groups slip in and out of poverty over time.
The heavy emphasis in policy debates on increasing incomes, combined with the way aggregated growth data tend to hide the reality for certain groups, risks distorting public policies. Pursuing higher incomes must not be seen as an end goal in itself – it is a better quality of life for the worst off groups that should be the ultimate aim. While growth is assumed to be “good” for the poor, evidence does not indicate that the higher and faster the growth rates, the better the outcomes for children’s welfare. India, for example, continues to have high rates of child mortality and malnutrition despite the spectacular economic growth of recent years.
Too often growth and social policies are pursued as discrete strategies. But decades of research illustrate the need, instead, for comprehensive development strategies that explicitly pursue the goals of equity and poverty reduction, and see growth as a means to this end.
Save the Children wants to see more discussion on the combination and sequencing of economic and social policies to promote pro-poor growth. More importantly there has to be a re-thinking of orthodox economic policies that often lead to governments pursuing growth to the exclusion of other goals. Recovery from the global economic crisis provides a good opportunity to promote patterns of economic growth which improve the lives of people in poverty. UNICEF’s advocacy on “Recovery with a Human Face” calls for economic and social policies that help to realise children’s rights and ensure that the benefits of the recovery reach the most marginalised people. Save the Children argues that improvements in welfare, especially for children, are a key test of whether growth is contributing to poverty reduction.
The briefing “Children and Economic Growth” explains the nuanced relationship between growth and poverty reduction in developing countries. It discusses why some groups specifically children do not necessarily benefit from economic growth. It ends with recommendations to national governments and donors that help promote more inclusive economic growth. The brief is produced by the Development Policy Team at Save the Children UK.
Read the full briefing
To participate in UNICEF's open e-discussion on Recovery with a Human Face, mentioned in the article, please send an email to:
join-recovery-human-face@groups.dev-nets.org