PRESS BRIEFING BY UNDP ASSOCIATE ADMINISTRATOR

16 July 1996

Press Briefing

19960716 FOR INFORMATION OF UNITED NATIONS SECRETARIAT ONLY

"Without skilful policy management, there is a great danger that growth can become jobless, voiceless, ruthless, rootless and futureless", the Associate Administrator of the United Nations Development Programme (UNDP), Rafeeuddin Ahmed, told correspondents at a Headquarters press conference this morning, as he introduced the 1996 Human Development Report. The Report was seventh in a series issued by the UNDP.

Stressing that a quarter of humanity had experienced a decline in per capita incomes over the last few decades, he said the sharing of benefits of economic growth had been uneven even for the three quarters of the population that had experienced growth. Moreover, the income disparity between the richest 20 per cent and the poorest 20 per cent of the world's people had doubled from 30:1 to 61:1 over the last three decades.

There had been a severe decline in growth in many countries beginning around 1980, he said. Some 100 countries with a population of over 1.5 billion people had experienced a total failure of growth during 1980-1995. Although some 40 of those countries had achieved a modest recovery in the late 1980s or early 1990s, the others were still in decline. Those countries were largely from sub-Saharan Africa and the Commonwealth of Independent States.

However, for three quarters of humanity, economic growth had take place, sometimes at a spectacular pace, as in China and east Asian "industrializing tigers", he said. But that growth had been often unevenly distributed, within nations and between nations, so that the world had became far more polarized and the gap between the rich and the poor had increased further. Between 1965-1980 and 1980-1993, the number of people in countries with negative growth had increased five times, from 200 million to almost 1 billion. The proportion of people enjoying growth of more than 5 per cent per capita a year had more than doubled, while the number of those experiencing negative growth had more than tripled.

Some countries, such as Costa Rica, Cuba and Uruguay, had managed their growth fairly well to enrich the lives of their people, and their ranking on the Human Development Index far exceeded their ranking according to real gross domestic product (GDP) per capita, he said. However, in many countries overall economies had grown without expanding job opportunities. Unemployment affected 35 million people in industrial countries and the unemployment rate was as high as 18 per cent in Finland and 23 per cent in Spain.

Stressing the need for economic growth and human development to move together, he said past experience had shown that whenever lopsided development emerged, it generally lasted for a decade or so before it shifted to either a decline in both incomes and human development or a rapid rise in both. In order to strengthen the links from growth to human development, main policies pursued by countries had included equity in distribution of resources, a high priority accorded to basic social services, wider access to credit and income earning opportunities, community participation and good governance. To strengthen the link from human development to economic growth, many countries had encouraged fast accumulation of human capital through investments in health and nutrition, education and skill training, and research and development.

According to a recent World Bank study of 192 countries, physical capital accounted for only 16 per cent of the total wealth of nations, natural capital for another 20 per cent and human and social capital for as much as 64 per cent, he said. He stressed that education, particularly of females, played a major role in advancing economic growth and human development. For instance, Pakistan and the Republic of Korea had started with roughly similar incomes in 1960. However, the Republic of Korea's GDP grew to three times that of Pakistan's in the subsequent 25 years. Part of the explanation for the discrepancy was that the Republic of Korea's school enrolment rate was 94 per cent as against Pakistan's 30 per cent.

The conventional wisdom, which used to suggest a trade-off between equity and growth, had been totally rejected, he said. However, it should be recognized that the path to a virtuous circle between economic growth and human development started with a focus on people. Every country that had been able to combine and sustain both rapid human development and rapid growth had done so by accelerating advancements in human development first, as in the case of China and Indonesia, or simultaneously with economic growth, as in the case of Botswana. By contrast, those countries which had relied primarily on economic growth, such as Brazil, Egypt and Pakistan, had failed in their efforts as lack of human development had undermined their growth process.

He stressed that job creation served as an essential bridge between economic growth and human development. Unfortunately, economic growth did not always create more jobs. In fact, unemployment rates worldwide had reached unprecedented levels in the last decade. High unemployment hit youth hardest and women often faced more hurdles in the job market than men. Globally, women's earnings averaged 75 per cent of men's. Even though women carried out more than half of the world's economic activities, most of their work remained unpaid and unrecognized.

There was an urgent need to formulate comprehensive employment strategies in all countries, focusing both on overall job creation and on protecting the most vulnerable groups in society, he said. Employment should

UNDP Briefing - 3 - 16 July 1996

be identified as a central policy objective and should not be expected to materialize automatically. He stressed the need for sustained investment in human capabilities through investments in education, health and skills. Also, greater access to credit and land, through land reforms, could increase productivity, employment and growth.

Encouraging the informal sector was vital for employment, he said, adding that its expansion was often discouraged by over-regulation by the government. He emphasized that countries which had combined growth with employment expansion had opted for growth strategies led by labour-intensive sectors in early development stages. Therefore, pricing labour and capital accurately to reflect their market abundance or scarcity was a key to finding the right mix of labour and capital in the growth process.

A correspondent said excessive population growth was often said to swallow up any gains made economically. Was there any recognition of the population factor in the Report?

Mr. Ahmed said the population factor did affect growth. However, it had been noticed that human development led to a decline in the rate of population growth. Higher education and increased literacy often led to declining levels of population, as had been noted in the state of Kerala in India. The Policy Specialist, Human Development Report, Moez Doraid, added that chapter IV of the Report had analysed the impact of population growth as reflected in labour force growth.

A correspondent asked about the extent to which UNDP was responsible for the state of human development in many countries.

Mr. Ahmed said the UNDP had been very active in some countries which had brought together human development and economic growth. It had been active in Malaysia, Singapore, Indonesia and Thailand and had actively promoted human development. But in the end, the decision to focus on human development was a political decision. The UNDP was a United Nations agency and only provided advice. He stressed that it had been clearly stated that the quality of life was not to be measured in per capita and dollar terms alone, but in terms of opportunities that were made available to people.

What was the basis for the claim that more than half the world's work was done by women? a correspondent asked.

Mr. Doraid said the assessment that more than half the world's work was done by women was based on time use statistics that took into consideration both paid and unpaid work. In terms of paid work, men worked more hours. However, when both paid and unpaid work was accounted for, women did more than half the work that needed to be done. The assessment was made on country studies.

UNDP Briefing - 4 - 16 July 1996

Another correspondent asked whether the focus on human and economic development was at the cost of environment.

Mr. Ahmed said the Programme had four areas of focus, which included poverty elimination, sustainable livelihoods, advancement of women, and environmental protection and regeneration. The Report presented today had stated that good quality growth must have several features. It should lead to more employment, more equitable income distribution, promote democratic freedoms, enrich the cultural heritage, and protect and enrich the environment.

* *** *