Recommended readings
for PAGE II themes (1st round:
2016/2017)
Theme 1
Theme 2
Theme 3
Theme 4
Theme 5
Theme 5: Sectoral composition and patterns of economic growth - implications for job-creation, employment and poverty reduction
Motivation
and
situation
analysis
While
it is
generally
accepted
that
rapid
economic
growth is
a favourable
factor
in
reducing
poverty
(at
least
absolute
poverty),
opinions
differ
widely
when
assessing
the
impact
of
growth
on distribution
of
income
and
equity.
Many differences
also exist
in the
literature
on
key
engines
of
growth.
Among the
key
factors
considered
and
often
put
forward
are
the
following:
open
trade
policies,
access to
foreign
capital
and
the
ability
of countries
to
create
a
favourable climate
for
foreign direct
investment,
human
capital
formation
and
the
availability
of
a
skilled
workforce, existence
of
natural
resources,
public
expenditure
policies
and infrastructure
investments,
public
regulatory
policies and
practice,
etc.
As
illustrated in
a
recent
IMF
report
"Sub
Saharan
Africa -
Fostering
Sustainable
and
Inclusive
Growth"
(Regional
Economic
Outlook
2014),
several
authors
are
beginning
to
accept the
idea
that
patterns
of
economic
growth
and
their
impact
on poverty
and
income
distribution
are extremely diverse
even
for
countries
that,
in
principle, are
comparable
in terms
of
size,
access
to the
sea,
natural
resources endowment,
population
growth rate,
education level, etc.
Others are also
wondering
what types
of
sectoral
growth
will
have the
largest
impact
on
aggregate
economic
growth
including
the
impact
on
poverty
and
income
distribution. The
functioning of
the
labour
market,
nationally
and
locally,
is
frequently a
key
determinant in a)
the
mechanisms
transmitting
benefits
of a
higher
growth
rate,
and
b)
the
mechanisms
for
generating
local
development
–
especially
to
understand the
contribution
and
the
access
of men
and
women
to
the
labour
market.
It
is largely
recognised that
changes
in
poverty
brought
by any
macroeconomic
policy
has
two
components: a
distributive component
and
a
growth
component
(Decaluwe
et
al.,
1999; Bourguignon,
2002).
Similarly,
there
is
extensive
literature
and
empirical evidence
on
the
impact of
trade
policy
on
growth
and
inequality
(e.g.
Winters,
2003;
Anderson,
2005).
However,
it
remains
unclear
how
these
elements
could
be
decomposed since
the
sectoral
composition
of
activities and
the
regional
distribution
of
activities are
interlinked and
both
have a
strong
impact
on
regional
poverty
and
income
distribution.
There
is also
a
considerable knowledge
gap
in
the understanding
of
the
impact
of
public
investment
on
poverty
and
particularly
on
the
regional
decomposition
of
poverty.
For
example,
the
studies
of Dumont
and
Mesple
Somps
(2000)
or
Dissou
and
Didic
(2011)
assessed
the
interaction
between
public
infrastructure
and
economic
growth
with some
reference
to
poverty
and
distribution
of
income.
However,
the
link
between
public
infrastructure
and
income
generation
at
the
regional
level was
not
captured.
As
poverty
is more
importantly
a
rural
development
issue
with
substantial
differences
between
agro-
ecological
zones,
the
understanding of
the
interaction between
macro
policies
and sectoral
growth
will help in
carefully
designing
promising
policy
interventions.
The
purpose
of this
thematic
area is
therefore
to explore
the
engines
of economic
growth, to
assess
the
consequence at the
regional
level
in
terms
of
their
effects
on employment
creation
and the
generation
of
income
and
poverty
reduction,
with
particular
emphasis
on
vulnerable
groups
and women.
Research
issues
While
aiming
to
address
knowledge
gaps in
understanding
the
impact
of
patterns
of
economic
growth
on
job
creation,
employment
and
poverty
reduction
in
developing countries,
this
thematic
area
also
seeks
to
improve
our
understanding
on
the
interaction
between
the
labour
markets
and economic growth.
With
these
objectives,
this
thematic
area
will
focus
on
determining sectoral
patterns
of
economic
growth
that
could
lead
to an
improvement
in
welfare and
employment for a
specific
country as
well as cross-country
comparisons; understanding
the
relationship between
economic growth
and
regional
composition
of
poverty;
women’s
participation
in
the
formal
labour
market;
trade
policy,
FDI and
integration
in
the
world
economy; price
shocks
and
compensatory
mechanisms for
the
economies
in
the
agriculture and
energy sectors.
Drawing
on synthesis
of
findings,
the research
will
identify
determining
policies
that are
required
to
support
the
improvement of
proposed
economic
patterns
(e.g.
labour
market,
infrastructure, gender
inclusion,
ICT),
and
relating
these
findings
to
projected
changes
in the
global
economy
and
consequent
challenges for
policy
makers.
Countries
are
very
diverse
in
their
economic
structures.
Depending
on
whether
the
pattern
of
growth is
based
on
natural
resources,
export,
rural-oriented
agricultural
production,
industrial
mass
production (especially
in
Asian
countries) or
the
development
of
services
(telecommunications,
tourism,
etc.),
the
impacts
on
employment
creation
and income
generation for
the
poor
can
be
very
different.
We
therefore
intend to generate
a
number
of
comparative studies
to analyse the
impact
of sectoral economic
growth
policies
and
patterns
on overall
growth
and
employment
creation.
Research
questions
that address
these
issues
include:
·
What
would
be
the
sectoral
effects
on
employment
as a
result
of
increases
in
agricultural total
factor
productivity
(TFP)?
·
What
are
the
benefits
of
specialisation,
in
comparison
to
diversification,
of
the
agricultural sector?
·
Can
higher
growth
rate
in
some
sectors
lead
to a
higher growth
rate in
other sectors?
·
Which
sectors
should
public
investment
be
directed
in order
to
generate
higher
growth rate?
·
Are
sectoral
discriminated
fiscal
measures
favourable
to economic
growth?
·
What
type
of
fiscal
measures
could
lead
to
higher
growth
rate?
·
Which
policies
can
be implemented
to
change
the
sectoral
structure
of
production?
·
Which
sectors
have
higher
payoff
in
terms
of
employment creation
and
formality
of
employment?
In
developing countries, rural
poverty
generally
exceeds
urban
poverty.
The
regional
dimension
of
economic
growth
is an
important
issue
especially if an
equitable
distribution
of
the
benefits
of growth is
considered
to be
an
important
factor
of
stability
in
a
country.
High economic
growth
in
urban
areas may
have
very
low impact
on
poverty
in
general
and even
lower
on
extreme
poverty,
particularly in rural
areas.
Regional
dimension
of
poverty
can
be
related
to
the
nature
of
regional
economic
activities and
some
studies
have
shown
the
strong
impact
of
agricultural
growth
on
reducing
rural
poverty.
These issues
will
be
analysed
in
order
to
illustrate the
ways
in
which
regional
economic
policies
at
sub-national level
could
have a
significant
impact on
overall
economic
growth and
poverty
reduction
through
employment
creation.
·
What
would
be
the
regional
impacts
of
external
shocks
(positive
and
negative)
on
economic
growth and
regional
poverty?
·
Which
regional
policies
are
applicable
to
mitigate
the negative
regional
impact
of
some
external
shocks?
·
How
would
changes
in
the
labour
market
regulation
(e.g.,
minimum
wages) impact
regional
labour
market?
·
What
types
of
policies
could
be
implemented
to reverse
the direction
of
labour
mobility
from rural
to
urban
areas?
·
What
are
the
consequences of
fiscal
measures
that
favour
some sectors
on
regional
poverty?
Women
often
have less
access
and participation
to
the
formal
labour market
than
men
and
certain
activities
are
identified, socially
and
culturally,
as
“reserved”
either
for
men or
for
women.
In
many
countries
the
textile
and
garment
industries
are typically
female
jobs
while
natural
resources
sectors
are
predominantly male. As
women are
often
relegated
to
employment in
the informal
sector
with low
pay and
precarious livelihood,
sectoral
growth
strategies are
therefore
important
to
enable
women
to
access
formal
employment
and
participation
in
the
modern
economy. In
addition,
policies
that acknowledge
gender
differentiation
can
be important
to
support
women’s
participation
in
the
formal
labour
market.
For
example,
fiscal
measures
can
provide
incentives
for
companies
in
hiring
female
staff.
We
would
therefore
bring
attention
to
these issues
while taking
into
account the
macro
context
- in
particular the
budget
constraint of the
government in the
short
term
and
in
the
long
term.
·
What
would
be
the
economy-wide
impact
of
subsidising
(formal)
female
employment in
selected
sectors
under
alternative
financing
mechanisms?
·
How
sensitive
are
the
results
to
different
assumptions regarding
labour
mobility
among
sectors,
especially
for
women
in comparison
to
men?
·
What
would
be
the
economy-wide impact
of
such
policies
on
the
unpaid
activities
(i.e.
home
care)
performed
by
women?
Free
trade
policies
and
integration
into
the
global
economy
are
often
seen
as means
to
accelerate economic
growth.
The
reduction
of trade
barriers
and
trade
facilitation
measures
are
expected
to
attract
foreign
firms to
increase
their
direct
investments.
The
distribution
of
these
foreign
direct
investments by
sector
across activities will
have
major
impacts
on
the
pattern
of
growth
and
distribution of
benefits
in
terms
of
sectoral
job creation
and
income
generation
for
different
strata
of
the
population.
We
would
therefore
aim to
conduct
retrospective
and
prospective
analysis
on
sectoral
trade
and
foreign
direct
investment
patterns
to
propose
economic
policy
options
for
job
creation
through
following
research
questions:
·
What
would
be
the
economy-wide impact
in
terms
of
employment
and
welfare
from
sectoral
patterns
of
FDI-led
growth?
·
How
would
FDI
increase
in
natural
resource-based
and
services
sectors
affect
the
employment and
welfare
in an
economy?
·
What
would
be
the
employment consequences
of
sectoral
public
investment?
5.5
Price
shocks
and
compensatory
mechanisms
for
economies
based
on
the
development of
the
agriculture, mining
or energy
sectors
Fluctuating
world
prices
of
major
agricultural commodities
and
mineral
or
energy
resources
pose major
problems
for
economies
that rely
their
growth
strategies
on
development
of
the
international market
of
these
commodities.
In many
cases
the
impact
on
employment
and
income
can
be
significant both
at the
household
and firm
level.
Distributional
effects
of
these
shocks
are
significant
but
public
policies
to
mitigate
them are
not
clearly
identified.
In
this
regard, we
would
seek
to
generate
some
case
studies
to
determine
the effects
of
public
policies
that
can
be set
up to
mitigate
the
negative
effects
of
these
price
fluctuations:
·
What
would
be
the
regional
employment
consequences
(for
men
and
women)
of
trade
reforms
and international
prices
fluctuations?
·
What
would
be
the
regional
and
sectoral
consequences
of
the
recent
drop
in
international prices
of
oil
and
other
natural
resources?
·
What
would
be
the
best
strategy
to
compensate for
volatile
world
prices
for commodities?
·
What
would
be
the
effect
on
employment and
welfare
of
alternative policies
such
as
budget
rules
(e.g.
sovereign
fund) to
compensate for
volatile
public
revenue
from
natural
resources?