Challenges To MDG Achievement in Low Income Countries [electronic resource] : Lessons From Ghana and Honduras / Bussolo, Maurizio
Material type: TextPublication details: Washington, D.C., The World Bank, 2007Description: 1 online resource (22 p.)Subject(s): Development Strategies | Economic Theory and Research | Health, Nutrition and Population | Human Development | Income Inequality | International Community | Macroeconomics and Economic Growth | Millennium Declaration | Millennium Development Goals | Policy Research | Policy Research Working Paper | Population Policies | Poverty Reduction | Pro-Poor Growth | Progress | Public Sector Economics and Finance | Public Sector Expenditure Analysis and Management | Social ServicesAdditional physical formats: Bussolo, Maurizio.: Challenges To MDG Achievement in Low Income Countries.Online resources: Click here to access online Abstract: This paper summarizes the policy lessons from applications of the Maquette for MDG Simulations (MAMS) model to two low income countries: Ghana and Honduras. Results show that costs of MDGs achievement could reach 10-13 percent of GDP by 2015, although, given the observed low productivity in the provision of social services, significant savings may be realized by improving efficiency. Sources of financing also matter: foreign aid inflows can reduce international competitiveness through real exchange appreciation, while domestic financing can crowd out the private sector and slow poverty reduction. Spending a large share of a fixed budget on growth-enhancing infrastructure may mean sacrificing some human development, even if higher growth is usually associated with lower costs of social services. The pursuit of MDGs increases demand for skills: while this encourages higher educational attainments, in the short term this could lead to increased income inequality and a lower poverty elasticity of growth.This paper summarizes the policy lessons from applications of the Maquette for MDG Simulations (MAMS) model to two low income countries: Ghana and Honduras. Results show that costs of MDGs achievement could reach 10-13 percent of GDP by 2015, although, given the observed low productivity in the provision of social services, significant savings may be realized by improving efficiency. Sources of financing also matter: foreign aid inflows can reduce international competitiveness through real exchange appreciation, while domestic financing can crowd out the private sector and slow poverty reduction. Spending a large share of a fixed budget on growth-enhancing infrastructure may mean sacrificing some human development, even if higher growth is usually associated with lower costs of social services. The pursuit of MDGs increases demand for skills: while this encourages higher educational attainments, in the short term this could lead to increased income inequality and a lower poverty elasticity of growth.
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