Diversifying PRSP The Vietnamese Model for Growth-Oriented Poverty Reduction September 1, 2002 Izumi Ohno National Graduate Institute for Policy Studies Background Ongoing global poverty reduction part nership Poverty Reduction Strategy Paper (PR SP) Eligibility for Enhanced HIPC Initiative, ID A/IMF financial support Linkage with country assistance strategies The means to achieve UN Millennium Devel opment Goals (MDGs) Japan and PRSP Agree on basic principles of PRSP
(e.g., ownership, partnership); but Suggested areas for its enhancement: Incorporating country diversity in the current approach Providing strategic alternatives and options for institutional arrangements, etc. Agenda 1. PRSP Overview 2. Country Types and Appropriate Responses 3. Vietnams PRSP Experience: Strong ownership: built on the existing development vision Growth orientation: Asian Dynamism as key factor 1. PRSP Country Status 61 countries engaged in PRSP process [as of Aug. 2002]
18 countries completed Full-PRSPs o/w: 12 Africa, 4 LAC o/w: 15 linked to Enhanced HIPC Initiative IDA/IMF comprehensive review Joint Development Committee (April 2002) PRPS Countries by Progress No. of countries Africa (35) East Asia (6) South Asia (4) Europe & Central Asia (10) Middle East & North Africa (2) Latin America & Caribbean (4)
11 1 3 1 3 1 17 7 2 7
2 Full- PRSP 1 1 4 Interim- PRSP before Interim- PRSP PRSP Countries by HIPC Status No. of Countries Africa (35) East Asia (6) 5 1 1 South Asia (4)
17 7 2 4 4 HIPC Completion Points reached 4 HIPC Decision Points reached Europe & Central Asia (10) Middle East & North Africa (2)
Latin America & Caribbean (4) 10 HIPC Decision Points not yet reached HIPC Sustainable Cases 1 1 Non-HIPC 1 3 PRSP Comprehensive Review: by IDA and IMF The PRSP approach requires flexibility so that both the process and the content of poverty reduction strategies can vary across countries in light of national
circumstances. [IDA/IMF March 15, 2002, p.7] 2. Country Types and Appropriat e Responses 3 key criteria for localizing PRSP 1. Relationship with donors Linkage between PRSP and debt relief Aid dependency Donor composition, etc. 2. Presence or absence of a national development strategy and its quality 3. Causes of poverty Aid Dependency (US$ per capita and % of GDP, 1998) ODA/GDP % 30
Zambia Ghana Nepal Uganda 5 Vietnam Kenya Bangladesh Sri Lanka Honduras Bolivia PakistanIndonesia 0 0
20 40 60 80 100 120 140 ODA/capita US$ Donor Composition Vietnam : Major Donors 1998-2000 Average Others
17.2% Denmark 2.8% Germany 3.6% France 4.6% ADB 12.0% Japan 46.3% IDA 13.5% Donor Composition Uganda: Major Donors 1998-2000 Average UK
20.3% Others 38.0% IDA 14.1% Nether land 5.0% USA 6.9% EU 7.4% Denmark 9.2% Tanzania: Major Donors 1998-2000 Average UK
13.2% Others 41.0% Japan 12.4% IDA 12.2% Germany Denmark 7.0% 7.2% Nether land 8.0% ODA Composition: Grants vs. Loans Vietnam
Bolivia Grants Loans Uganda Tanzania 0% 20% 40% 60% 80% 100% National Development Strategy How is PRSPimported from withouttreated domestically?
2 prototypes: PRSP as a supplementary document PRSP as a primary document PRSP as a Supplementary Document Existing national development plans guide budget, sector plans and PRSP. PRSP supplement, with special attention to poverty reduction Cross-cutting perspective Participatory process, etc. Example: Vietnam PRSP as a Supplementary Document Existing dev. plan govern PRSP
Sector plans supplement Budget PRSP as a Primary Document PRSP co-exists with the national development plan Newly introduced PRSP exerts a stronger influence over budget and sector plans. Examples: Tanzania, Uganda PRSP as a Primary Document Existing dev. plan symbolic PRSP govern Sector plans, budget, MTEF, aid
procedures Institutional Options based on the Existing System PRSP-supplementary: donors should respect and support the existing policy framework (rather than replacing it with PRSP). PRSP-primary: donors can utilize PRSP & related systems and support local capacity building around PRSP. Causes of Poverty Need for correct matching between diagnosis and prescription in each country How poverty is created? How can growth reduce poverty? [Ishikawa 2002] Causes of Poverty (contd.)
Case 1: a poor country equipped with policies & programs to promote social equity and social service delivery system A good growth strategy is needed to improve the purchasing power of the general population. Example: Vietnam Causes of Poverty (contd.) Case 2: a poor country constrained with uneven opportunities due to social discrimination (e.g., gender, racial and ethnic discrimination) Formulation and implementation of efficient & effective pro-poor targeting measures are neededin addition to a growth strategy. Infant Mortality Rate (2000)
100 (per 1,000 live births) 90 80 70 60 Average of low income countries Average of middle income countries 50 40 30 20 Sources: World Bank, World Development Indicators 2002; For Taiwan, ADB, Key Indicators 2001 .
Singapore Hong Kong Japan Taiwan Malaysia Korea Vietnam Thailand China Indonesia
Cambodia Myanmar Lao PDR 0 Philippines 10 % Female Adult Illiteracy Rate (2000) 80 70 Average of low income countries
60 50 40 Average of middle income countries 30 20 10 Sources: World Bank, World Development Indicators 2002; For Taiw an, ADB, Key Indicators 2001 . Korea Philippines Thailand Vietnam
Hong Kong Singapore Taiwan Myanmar Malaysia Indonesia China Cambodia Lao PDR 0 Country Diversity and
Strategic Alternatives Reflect the stages of development (economic, social, institutional etc.), and other country-specific opportunities & constraints. Identify an appropriate mix for each country: pro-poor targeted vs. broadbased growth expenditures [Ishikawa 2002] 3. Vietnams PRSP Experience Recognized internationally as good practice: strong country ownership PRSP renamed to Comprehensive Poverty Reduction & Growth (CPRGS) Strategy CPRGS: as a document subordinate to the core documents which embrace a growth-oriented development vision. Vietnams PRSP Experience Different perspective from the early P
RSPs First East Asian country to complete Full -PRSP (May 2002) PRSP not linked to enhanced debt relief program About Vietnam Population: 78.5 million Located at the heart of East Asia Years of wars and central planning Income per capita: $390 per year Life expectancy at births: 69 years Female adult illiteracy rate: 9% [2000 data, WB]
About Vietnam (contd.) Transition to a market economy Doi Moi policy (1986 ): domestic lib eralization International integration (early 1990s ): trade, FDI, aid flows Achieving high growth rates (7 8% per year) and halving the ratio of extreme pov erty in the 1990s Progress in the Last Decade Real GDP Growth 12.0 Poverty 70
10.0 60 8.0 50 6.0 40 % 37 30 4.0 25
20 2.0 1993 1998 58 15 10 0.0 0 Below Total Poverty Line Source: Government Statistics Office (GSO), Government of Vietnam.
Below Food Poverty Line Source: World Bank, World Bank and Vietnam, [http://www.worldbank.or.jp/06group/RC_flame.htm]. Vietnam is a Large FDI Receiver Low & middle incomecountries 0.9 %of GDP, average 1991- 99 High Income countries 3.2 Chile 3.5
Malaysia 3.2 Argentina 1.6 Mexico 1.2 China 1.1 Brazil 1
Korea, Rep. 0.8 Vietnam (1991- 00) 5.4 0 1 2 3 Source: Government of Vietnam and World Bank, SIMA database (cited from Vietnam 2010 Entering the 21st Centruy , Joint Report of World Bank, ADB and UNDP, November 2000 . 4 5
) 6 (% Asian Dynamism: Key Factor Development driven by trade & investment East Asian growth as collective phenomenon: Flying Geese Pattern Development as catching up (vs. development as poverty reduction) Participation in regional/global production network through intl division of labor Share in World Export Per Capita GNP Growth (%) 7 18
6 16 East Asia (%) 14 5 East Asia 12 4 10
3 8 Sub Saharan Africa 2 6 Sub Saharan Africa 4 1 2 0 0 60s
70s 80s 90s Source: Ministry of Economy, Trade and Industry, White Paper on International Trade 2001, p.78. 60s 70s 80s 90s East Asia Reduced Poverty Despite Currency Crisis Population in Extreme Poverty (%) 60 50
40 30 20 10 0 1990 1999 East Asia Latin America South Asia SubSaharan Africa Asian Dynamism: Key Factor Vietnam with typical East Asian aspiration
National goal: Industrialization & Modernization by 2020 (10-Year Strategy & 5-Year Plan) Very strong interest in narrowing intraregional gaps (vs. original ASEAN) Asian Dynamism: Key Factor Also interested in infrastructure, HRD, trade, FDI attraction Narrow poverty reduction approach, not enough PRSP Approach Goal: Poverty Reduction MDGs CDF/PRSP Means: Pro-Poor Policies
Growth Policies East Asian Aspiration Goal: Equitable Growth < Vietnam > Industrialization & Modernization 5-Year Plan & 10Year Strategy Means: Growth Policies Social Policies Lastly Diversifying PRSP, more flexibility Specific criteria for localizing PRSP
Options for institutional arrangements Strategic alternatives: different causes, different responses Japans Cooperation Country ownership and partnership Supporting balanced growth with equity Creating the enabling environment for trade & investment, through infrastructure, HRD, policy advice, etc. Coping with risks & emerging social problems Through an appropriate mix of grants, loans, and technical cooperation The END For more details, please see our i please see our i nformation module at: http//www.grips.ac.jp/forum-e/
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