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Tuesday, 9 December 2008

Development Indicators

The World Bank launched last week its annual flagship report on Africa, the Africa Development Indicators. The report presents data from 1965 to 2006 for 53 African countries and 5 regional country groups, arranged in separate tables or matrices for more than 450 indicators of development (including the infrastructure development indicators partially discussed on Infrastructure challenges, revist'd..). It also includes an essay on a specific topic of current interest for Africa : Youth and Employment in Africa – The Potential, the Problem, the Promise. You can access on-line and download the full report as well as its pocket version, the little data book on Africa.

2 comments:

  1. Cho,

    Thanks for the reports! Some very interesting bits, including this "box" from the appendices which backs up what so many have been saying here about agriculture, and the relation to the fuel/power economy:

    "Box 3 Using Data to Inform Policy: Impact of the Food Price Crisis in Africa and Policy Responses

    What do higher food prices mean for poverty in Africa? A series of recent papers — based for the most part on recent household survey data — finds that rising food prices generate higher poverty because the adverse impact on households that are net food consumers outweighs benefits to net food producers. The series also uses the survey data to examine common policy responses in order to determine which are likely to have the largest benefit for the poor.

    Data from a dozen countries are used to simulate the poverty impact of higher food prices. The measurements obtained when considering only the effect on consumers are considered as upper-range estimates. Those also factoring in producer gains are considered as lower-range estimates, because producers may not reap the full benefit of price increases (market intermediaries may keep part of the higher food prices to boost their margins or pay for higher transport costs, while producers face higher operating costs that limit their profits). With a 50% increase in selected food prices, upper-range increases in poverty measures range from 1.8 percentage points in Ghana to 9.6 points in Senegal. The average impact, considering both upper- and lower-range estimates, is around 3.5 percentage points. For Africa as a whole, this would mean 30 million more poor people. Poverty mapping techniques show that the degree of impact varies within countries. This poses a dilemma in focusing policy responses, since the hardest-hit areas in a country often are not the poorest.

    As a first step in dealing with the crisis, governments have reduced food taxes. But such tax cuts have large fiscal costs and are poorly targeted. For example, the share of rice consumed by the poorest 40% of the population ranges from 11% in Mali to 32% in Sierra Leone.

    Therefore, on average only about 20 cents out of every dollar of tax cut might benefit this group. In addition, if markets are dominated by a few traders, tax cuts may not be fully passed on to consumers. And lowering import tariffs may hurt domestic producers if prices of locally produced foods adjust to international prices.

    Expanding social protection programs shows more promise. In Burundi and Liberia household survey data suggest that the poor are roughly as likely as the non-poor to benefit from food aid. This does not constitute good targeting, but it is better than tax cuts. Simulations suggest that geographic targeting is required to avoid high leakage in labor-intensive public programs since most countries have large populations working without pay or at very low pay. Thus, even among the non-poor, participation in public programs could be high even if wages are low. In addition, part of the wages paid through public works may not reduce poverty because of substitution effects (participants typically have to give up some sources of income to enroll in the programs).

    The most promising interventions are those boosting agricultural productivity. Mali’s rice initiative aims to increase production by 50%. Using a dynamic computable general equilibrium model for Mali, analysis shows that a 15% increase in productivity could generate a large increase in rice production that would ultimately reduce poverty despite the increase in international rice prices. By contrast, the model suggests that import tax cuts would not reduce poverty by much. Another finding is that the general equilibrium effect of the increase in international rice prices is about half the impact predicted using household surveys. This suggests that without policy interventions, behavioral changes following price increases could help offset part, but certainly not all, of the adverse impact on the poor.

    Another general equilibrium finding relates to the relative way in which households are affected by oil and food price increases. Using social accounting matrices, analysis shows that in some countries the indirect multiplier effect of higher oil prices may be more severe than that of higher food prices. This suggests that even though the food price crisis has recently attracted more attention, the effects of the oil price crisis must also be dealt with.
    Source: Wodon (2008)."

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  2. I was struck by the last paragraph :

    "Another general equilibrium finding relates to the relative way in which households are affected by oil and food price increases. Using social accounting matrices, analysis shows that in some countries the indirect multiplier effect of higher oil prices may be more severe than that of higher food prices. This suggests that even though the food price crisis has recently attracted more attention, the effects of the oil price crisis must also be dealt with. Source: Wodon (2008)."

    I need to follow-up the reference, to better understand whether this is a urban or rural effect. I am also interested to know whether the reverse may be true i.e. reduction in oil prices may have a more positive multiplier impact than reduction in food, however, "positive" is defined.

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