Policies for Protecting the Poor During Economic Adjustment
Adjustment With A Human Face. UNICEF. Giovanni Andrea Cornia, Richard Jolly and Frances Stewart (eds.) Vol. 1, Protecting the Vulnerable and Promoting Growth. (Clarendon Press, Oxford, 1987 313 pp.)
[The following review is reprinted with permission from Trocaire Development Review 1987: Trocaire - The Catholic Agency for World Development, 169 Booterstown Avenue, Blackrock, Co. Dublin, Ireland.]
“There is a tendency among economists to quantify human capital in terms of the pricing of the factors of production by supply and demand, as in the textbook theory of distribution. Economics is an evolutionary science, however, and must accommodate the idea of “a human face”. There is more than sufficient evidence that economic decline threatens human health and welfare in vulnerable groups and this fact contributes a moral dimension to economics. Reducing poverty is an ethical and pragmatic good, which properly negotiated, can be cost-effective. This idea is at the root of the thinking of Giovanni Cornia, Richard Jolly, Frances Stewart, et al, the authors of Adjustment With A Human Face. The foci of their research are the indicators of the deterioration of human welfare in the 1980-1985 period caused by world recession, and the crucial need to factor these indicators into an alternative adjustment policy. The 1983 UNICEF report 'The Impact of World Recession on Children' defined these indicators in terms of infant mortality rates, low birth rates and measurable declines in nutrition levels. The authors of Adjustment With A Human Face have collaborated in writing a series of monographs which study the existing national and international order within an economic frame of analysis, and their conclusions and recommendations on the decline of social welfare in developing countries are specifically addressed to policymakers, practitioners and analysts of the process.
“The effect of deceleration of growth in industrial market economies during the 80's has been particularly painful in its transmission to the developing countries of Latin America and Sub-Saharan Africa. The contraction of trade and capital flows and the cut-backs in commercial bank lending from $38 billion in 1980 to $15 billion in 1985 (World Bank, 1986), together with the stagnation of official development assistance have caused capital importing developing countries to suffer negative transfers and become exporters of resources to the industrialized world. This depletion is compounded by depressed commodity prices, U.S. monetarist policies produced an increase in the real rate of interest which aggravated the debtor nations' crises. These changes in macro-economic performance relate directly to changes in social welfare of developing countries due to the contraction of their government expenditure per capita. A look at the input indicators: decline in gross domestic product, employment and real salaries, and at the process indicators: non-availability of food and social services, and it is not hard to predict the outcome: a drop in the real resources of the poor.
“The term “adjustment” is a policy response designed for developing countries to cope with deficits in their current and capital accounts in the balance of payments, and consequent fluctuations in government budget, and is a policy antidote to rapid inflation and negative economic growth. Prevailing economic adjustment to the effects of recession generally take the form of stabilization policies deflationary in nature, which reduce the real incomes of the poorer sector. This form of adjustment relegates vulnerable groups to a marginal welfare component. Adjustment With A Human Face is a proposal for a radical change of emphasis: “alternative adjustment”, a strategy which decides that poverty alleviation must be an integral part of adjustment policy. The former Director of the International Monetary Fund (IMF), M. de Larosiere, is quoted on this controversial topic: “The forms of adjustment that are most conducive to growth and protection will not emerge by accident. They have to be encouraged by an appropriate set of incentives and policies. They will also require political courage.” (July, 1986). Such incentives for poverty reduction are described in detail, with particular attention to health maintenance. Health, nutrition and education are, in their view, the most important determinants of a nation's potential. Health care is not a consumption good, but a positive economic product which contributes to national development. A mother is the producer at the household level of health as output. Health care projects are vitally useful social capital.
“Immunization and hygiene programmes have high survival impact. Vaccines against measles and polio, and oral rehydration therapy saved the lives of one million children in 1985. Nutrition intervention is as economically productive as financial structural adjustment. “Investment in human resources is at least as vital for economic growth, and exhibits as high returns, as physical investment.” The authors argue a convincing case for a humanitarian programme, using the language of benefit-to-cost ratios and economic efficiency. Economic erosion need not mean erosion of health and welfare.
“Giovanni Cornia, Richard Jolly and Frances Stewart insist that adjustment packages can be designed which simultaneously protect vulnerable groups while restoring economic growth and point to a policy turnaround made by U.S. Secretary of the Treasury, James Baker, at the Annual Meeting of the Fund and World Bank in Seoul, in October, 1985, in which he promoted “growth-oriented adjustment policy”. Essentially, multilateral development banks as well as commercial banks were invited to increase lending; the resulting growth would buoy welfare services. Halting the decline in per capita income is the crucial element in adjustment with a human dimension. In this context, the authors have some criticism to direct to IMF stabilization programmes which they judge give minor consideration traditionally to the effect of income distribution on particular social groups. IMF monitoring is solely on the basis of the performance criteria (the rate of increase of the money supply, the budget deficit as a proportion of gross national product) of the adjustment process, and neglects welfare variables such as the incomes of the poor, or the rate of malnutrition (infant mortality rate, food availability). They feel that emphasis on economic growth is minimal, and little attention given to the distribution of wealth.
“Between 1980 and 1985, forty-seven countries utilized IMF adjustment programmes. In looking at the effect of IMF policies on growth, distributive equity, poverty and child welfare, the authors feel that methodologically, it is not possible to attribute causal responsibility to the IMF for the direct negative effect of macro-economic policies on the poor. However, they do ask for a change of objective. They suggest “meso policies” in taxation, aid, credit and asset distribution, specifically tailored to promote economic growth while meeting the needs of vulnerable groups. This means to prioritize, select, redistribute, and restructure resources and expenditures to maintain the incomes of the poor. They propose sectoral policies which promote small-scale agriculture and industry. They specify targeting of interventions so that resources are redistributed to basic services: housing, sanitation, social security, together with compensatory programmes to subsidize food prices and underwrite public work schemes. Botswana, South Korea, Zimbabwe and Chile are useful examples of countries where “alternative adjustment” projects protect vulnerable sectors.
“Because the absence of adequate data is both a symptom and a cause of the low priority of the human factor, statistics are urgently needed for a comprehensive dossier of information on infant mortality rates and nutrition levels. Malnutrition must be monitored as closely as monetary variables. This stock-taking would be co-ordinated by a central technical unit which would establish a line of reporting to bureaucrats and political decision-makers, involving them directly in matters of social responsibility. Publication of forward indicators of social stress should be included in government statistical publications or in Central Bank Reports.
“In summary, the authors state that it is a matter of national conscience that the human dimension of adjustment be incorporated into political thinking. It should be an intrinsic part of IMF policy requirements and dialogue. The identification of social stress statistics should be a sine qua non in the design of international and government strategy for economic relief.
Rosemary Kevany”
Lessons from Ethiopia
Macalle 1985 (Ministero degli Affari Esteri/Istituto Superiore di Sanita 1986) 128 pp.
When the Italian Medical Team arrived in Makale district, northern Ethiopia, in November 1984, some 80 000 displaced people faced death from starvation and disease. The subsequent Italian-sponsored and conducted relief operation is fully documented in Macalle 1985. At the outset, Italian and Ethiopian authorities agreed on the creation of a series of seven tent camps, each housing about 10,000 people, established an “airbridge” to ferry in some 5000 tonnes of relief supplies and drilled new wells guaranteeing up to 15 litres of water per person per day. The Italian team organized a monthly general distribution of raw foods, providing about 2000 Kcals per person daily, and controlled malnutrition through a supplementary feeding programme for high-risk groups, therapeutic feeding of severely malnourished children and oral doses of vitamin A for every child. These measures, combined with vaccination of children against infectious diseases, led to a reduction in camp deaths to below the Ethiopian national mortality rate. Following seasonal rains in mid-1985, authorities encouraged camp residents to return to their homes by supplying them with farm inputs and food rations. “For the first time,” the authors state, “a grave emergency was resolved in a relatively short time (10 months in all), thus averting what has always been the problem of displaced camps: the dramatic conversion of the intervention into a chronic condition, and the development of a total dependence of thousands of people on international assistance.”
Food Systems Studies from UNRISD
UNRISD has published two new studies in its Food Systems series: Food Systems and Society in Eastern India: Selected Readings, edited by B. Chattopadhyay and P. Spitz; and The Assault That Failed: A Profile of Absolute Poverty in Six Villages of Bangladesh, by M. Hossain. The first contains four essays examining the origins of the 1943 Bengal Famine, the decline of irrigation and crop production in West Bengal between 1850 and 1925, the growth and fluctuation of food grain output in India since independence, and the increasing strength of the Indian farm lobby. The Assault that Failed presents the results of a household survey conducted among 178 poor households in Bangladesh during the 1984/85 agricultural year, when massive food grain imports were needed to stave off the threat of famine. Decisive national action prevented speculation with prices. However, the study says, “It is clear that, at least in the villages studied, a significant proportion of the rural poor were in fact starving. Grains were available locally, but most respondents could not earn a monetary income sufficient to purchase them in adequate quantity, nor did they have access to the land required for self-provisioning”. In the final analysis, the study shows, starvation and hunger must be attacked by removing socio-economic obstacles to adequate food intake. The two studies are the latest in a series of nine produced as part of UNRISD's Food Systems and Society Programme, which has promoted studies in ten countries of Africa, Asia and Latin America.
IN BRIEF
Recent WHO publications include Guidelines for Training Community Health Workers in Nutrition (Geneva, 1986) and The Growth Chart - Tool For Use in Infant and Child Health Care (Geneva, 1986), which is also available in French and Spanish. The Joint WHO/UNICEF Nutrition Support Programmes has produced Traditional Practices Concerning Dietary Management During and After Diarrhoea (1986).
Comparative Analyses of Nutritional Effectiveness of Food Subsidies and Other Food-Related Interventions, by E. T. Kennedy and H. H. Alderman (IFPRI, 1987). Intended as a guide for policy makers. Uses cost-effective analysis to evaluate the success of different strategies in attaining similar nutritional objectives.
Recent publications in FAO's Food and Nutrition Paper Series include: Review of Food Consumption Surveys - 1985, No. 35 (1986), Specifications for Identity and Purity of Certain Food Additives, No. 37 (1986) and Guidelines For Manufacturers and Food Canners. Two new papers have been added to the sub-series of manuals on food quality control: Food Analysis: General Techniques, Additives, Contaminants and Composition, No. 14/7 (1986) and Food Analysis: Quality, Adulteration, and Tests of Identity, No. 14/8 (1986).
Requests for publications should be addressed to the appropriate publisher or agency.
UNITED NATIONS ADMINISTRATIVE COMMITTEE ON COORDINATION - SUB-COMMITTEE ON NUTRITION (ACC/SCN)
The ACC/SCN is the focal point for harmonizing the policies and activities in nutrition of the United Nations system. The Administrative Committee on Coordination (ACC), which is comprised of the heads of the UN agencies, recommended the establishment of the Sub-Committee on Nutrition in 1977, following the World Food Conference (with particular reference to Resolution V on food and nutrition). This was approved by the Economic and Social Council of the UN (ECOSOC). The role of the SCN is to serve as a coordinating mechanism, for exchange of information and technical guidance, and to act dynamically to help the UN respond to nutritional problems.
The UN members of the SCN are: FAO, IAEA, IBRD, IFAD, ILO, UN, UNDP, UNEP, UNESCO, UNFPA, UNHCR, UNICEF, UNRISD, UNU, WFC, WFP and WHO. From the outset, representatives of bilateral donor agencies have participated actively in SCN activities. The SCN is assisted by the Advisory Group on Nutrition (AGN), with six to eight experienced individuals drawn from relevant disciplines and with wide geographical representation. The Secretariat is hosted by FAO in Rome.
The SCN undertakes a range of activities to meet its mandate. Annual meetings have representation from the concerned UN agencies, from some 10 to 20 donor agencies, the AGN, as well as invitees on specific topics; these meetings begin with symposia on topics of current importance for policy. The SCN brings certain such matters to the attention of the ACC. The SCN sponsors working groups on inter-sectoral and sector-specific topics. Ten-year programmes to address two major deficiencies, vitamin A and iodine, have been launched.
The SCN compiles and disseminates information on nutrition, reflecting the shared views of the agencies concerned. A regular Report on the World Nutrition Situation is being issued. State-of-the-Art papers are produced to summarize current knowledge on selected topics. Research priorities for solving nutrition problems are proposed in consultation with agencies and researchers in the field. As decided by the Sub-Committee, initiatives are taken to promote coordinated activities - inter-agency programmes, meetings, publications aimed at reducing malnutrition, primarily in developing countries.
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