PRESS BRIEFING BY UNDER-SECRETARY-GENERAL FOR ECONOMIC AND SOCIAL AFFAIRS

PRESS BRIEFING BY UNDER-SECRETARY-GENERAL FOR ECONOMIC AND SOCIAL AFFAIRS

There was a strong correlation between economic growth and poverty reduction, Jose Antonio Ocampo, Under-Secretary-General for Economic and Social Affairs, said this morning at the launch of the second part of the World Economic and Social Survey 2003.

He noted, however, that growth did not necessarily improve other dimensions of poverty, such as educational and health status.  Long-term growth policies might even have adverse effects on poverty in the short term.  On the other hand, social policies could not always make progress toward economic targets such as reducing income poverty, except when combined with growth.

[Part two of the Survey focuses on the relationship between economic and social policies and poverty reduction.  The first part was launched during the June session of the Economic and Social Council].

Mr. Ocampo said economic stability was essential for poverty reduction, as economic crises had a strong adverse effect on the poor.  Accelerated growth usually involved structural changes that could have adverse effects on certain groups in society, such as workers in certain sectors, older workers and women.

Noting the high correlation between trade liberalization and growth in gross domestic product (GDP), he said that in developed countries, liberalized trade in agricultural and textile goods would result in lower prices for food and clothing, benefiting the poor.  However, poor workers in those sectors could lose their jobs and would need social protection.  In developing countries, the poor would benefit both as workers and as consumers while growth would increase because of comparative advantage.

Land reform was central to reducing poverty in many developing countries, although coercive land reform was politically difficult and rarely successful, he pointed out.  Market-based approaches, such as those used in Brazil, Colombia, Ecuador and South Africa, whereby idle land was sold to poor farmers who received government support, were more successful.  Complementary measures, such as credit policies, legal support, and marketing support, were necessary to ensure that poor farmers could fully integrate into the market.  Agricultural marketing boards had been unsuccessful on the whole as they were inefficient.  However, when those boards were eliminated, functions that helped poor producers, such as price support and stabilization, also disappeared.

He said the Survey also analyzed the effect on poverty of the transition from centrally planned to market economies.  Such transitions had plunged large numbers into poverty, a problem that had been particularly severe in the countries of the Commonwealth Independent States (CIS) and less so in Central and Eastern Europe.  However, after a decade of decline, it was expected that growth would return and contribute to poverty alleviation.

Growth would generally result in poverty reduction, he said, adding that some policies would have better results, especially if combined with social policies that counteracted the negative effects that growth could have on some sectors, and with social protection schemes that allowed the poor to deal better with economic downturns.

Answering a correspondent’s question, Mr. Ocampo said that not all mixes of economic and social policies had the same effect on poverty.  Agricultural and textile trade liberalization would be good for the poor in both developed and developing countries.  However, any trade liberalization would have adverse effects on certain sectors of society and the way to manage such transitions was therefore critical.  The best policy for the poor during an economic crisis was to put in place social policies to reduce its effects before the crisis occurred.  The Survey’s major point was that the best policies for the poor were economic policies that could be supported by social policies.

Commenting on a question about financing of counter-cyclical policies by developing countries, he said the Survey had noted that Asian economies, with a stronger fiscal system, had responded during the 1997/1998 financial crisis with public-sector spending that benefited the poor, while Latin American countries, which had not built a strong fiscal system during their expansion period, had not been able to expand their social policies.  The situation in CIS countries had been worse as it had not been the result of a cyclical downturn but of a structural transformation, which was more difficult to manage.

Responding to a question about the effects on the poor of the ban on Chinese textiles, he said the Survey’s clear conclusion was that textile liberalization would be good for the world’s poor, although it could impact negatively on poor sectors of the industrialized world.  Workers there should be trained in other activities.  Also, there was no presumption that textile liberalization would eliminate textile production in the industrialized world.

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