Dynamics of Economic Growth and Poverty Reduction The Divergent - PowerPoint PPT Presentation

Dynamics of Economic Growth and Poverty Reduction The Divergent Paths of Tanzania and Zambia Ingo Pitterle and Michał Podolski United Nations, Department of Economic and Social Affairs Economic Analysis and Policy Division UN-WIDER & UNESCAP Global Economic Monitoring Branch Bangkok, 11-13 September 2019

Extreme poverty headcount, $1.90/day (2011 PPP) Increasingly an African Phenomenon 2017 estimates 40 20 % World 0 Africa World ex- Africa Source: UN/DESA estimates based on WB data

Extreme poverty headcount, $1.90/day (2011 PPP) Increasingly an African Phenomenon Source: UN/DESA estimates based on WB data

Global extreme poverty headcounts fall consistently… 75 China 50 % Africa 25 World ex China World 0 1990 2000 2010 2020 2030 *estimates “around” and to the right from the dashed line Source: UN/DESA estimates based on WB data

Global extreme poverty headcounts 2000 M fall consistently… World 1500 M 75 1000 M China World ex China 50 500 M China % Africa Africa M 25 World ex 1990 2000 2010 2020 2030 China World 0 …unlike the total numbers in 1990 2000 2010 2020 2030 certain regions *estimates “around” and to the right from the dashed line Source: UN/DESA estimates based on WB data

GDP – Poverty nexus

GDP – Poverty nexus Almost no extreme poverty in countries with high GDP per capita 80 Extreme poverty 60 headcount, % 40 20 0 0 10 000 20 000 GDP per capita, US dollars (nominal) Source: UN/DESA estimates based on WB data

GDP – Poverty nexus Almost no extreme poverty in countries with high GDP per capita • in “very” long -term, GDP growth should indeed eradicate poverty • what might mean many decades Growth rate Year 4% 6% 8% 10% 1 1,000 1,000 1,000 1,000 10 1,423 1,689 1,999 2,358 20 2,107 3,026 4,316 6,116 30 3,119 5,418 9,317 15,863 1 2,000 2,000 2,000 2,000 10 2,847 3,379 3,998 4,716 20 4,214 6,051 8,631 12,232 30 6,237 10,837 18,635 31,726 Source: UN/DESA estimates based on WB data

GDP – Poverty nexus Almost no extreme poverty in countries with high GDP per capita • in “very” long -term, GDP growth should indeed eradicate poverty 80 Extreme poverty 60 headcount, % 40 20 0 0 10 000 20 000 GDP per capita, US dollars (nominal) Source: UN/DESA estimates based on WB data

• GDP growth does not always imply poverty reduction • And definitely not to the same extent 15 Poverty reduction , total, 2001-2017, 0 percentage point -15 -30 -45 -2.5 0.0 2.5 5.0 7.5 10.0 Annualised per capita GDP growth rate, 2001- N = 83 2017, per cent Source: UN/DESA estimates based on WB data

• GDP growth does not always imply • Even in country groups with narrower poverty reduction initial extreme poverty headcounts • And definitely not to the same extent 15 15 Poverty reduction , total, 2001-2017, 0 0 percentage point -15 -15 -30 -30 -45 -45 -2.5 0.0 2.5 5.0 7.5 10.0 -2.5 0 2.5 5 7.5 10 Annualised per capita GDP growth rate, 2001- 0-20% initial headcount in 2001 N = 83 2017, per cent 20-40% initial headcount in 2001 Source: UN/DESA estimates based on WB data

• GDP growth does not always imply • Even in country groups with narrower poverty reduction initial extreme poverty headcounts • And definitely not to the same extent 15 15 Poverty reduction , total, 2001-2017, 0 0 percentage point 7.4 -15 -15 12.4 -30 -30 1.4 -45 -45 -2.5 0.0 2.5 5.0 7.5 10.0 -2.5 0 2.5 5 7.5 10 Annualised per capita GDP growth rate, 2001- 0-20% initial headcount in 2001 N = 83 2017, per cent 20-40% initial headcount in 2001 Source: UN/DESA estimates based on WB data

• GDP growth does not always imply • Even in country groups with narrower poverty reduction initial extreme poverty headcounts • And definitely not to the same extent 15 15 Poverty reduction , total, 2001-2017, 23.0 7.9 24.7 0 0 percentage point -15 -15 18.5 -30 -30 -45 -45 -2.5 0.0 2.5 5.0 7.5 10.0 -2.5 0 2.5 5 7.5 10 Annualised per capita GDP growth rate, 2001- 0-20% initial headcount in 2001 N = 83 2017, per cent 20-40% initial headcount in 2001 Source: UN/DESA estimates based on WB data

• GDP growth does not always imply poverty reduction • And definitely not to the same extent 15 ZMB Poverty reduction , total, 2001-2017, 0 percentage point -15 -30 TZA -45 -2.5 0.0 2.5 5.0 7.5 10.0 Annualised per capita GDP growth rate, 2001- N = 83 2017, per cent Source: UN/DESA estimates based on WB data

Changes in poverty headcounts at different thresholds 100 Poverty headcount at $1.90/day: Tanzania: from 82% to 41% 80 Zambia: from 48% to 56% 60 $1.90/day $1.90/day 40 2001 2005 2009 2013 2017 Tanzania Zambia *WDI/WD data; and UN/DESA estimates for Tanzania (post-2011), Zambia (post-2015) at $1.90 per day Source: UN/DESA estimates based on WB data

Changes in poverty headcounts at different thresholds 100 Poverty headcount at $1.90/day: Tanzania: from 82% to 41% $3.20/day 80 Zambia: from 48% to 56% $3.20/day 60 40 2001 2005 2009 2013 2017 Tanzania Zambia *WDI/WD data; and UN/DESA estimates for Tanzania (post-2011), Zambia (post-2015) at $1.90 per day Source: UN/DESA estimates based on WB data

Changes in poverty headcounts at different thresholds 100 Poverty headcount at $1.90/day: $5.50/day $5.50/day Tanzania: from 82% to 41% 80 Zambia: from 48% to 56% 60 40 2001 2005 2009 2013 2017 Tanzania Zambia *WDI/WD data; and UN/DESA estimates for Tanzania (post-2011), Zambia (post-2015) at $1.90 per day Source: UN/DESA estimates based on WB data

Changes in poverty headcounts at different thresholds 100 Poverty headcount at $1.90/day: $5.50/day $5.50/day Tanzania: from 82% to 41% $3.20/day 80 Zambia: from 48% to 56% $3.20/day WHY? 60 IF $1.90/day $1.90/day GDP real growth per capita 2001-2017 40 3.5% Tanzania 2001 2005 2009 2013 2017 Tanzania 3.4% Zambia Zambia *WDI/WD data; and UN/DESA estimates for Tanzania (post-2011), Zambia (post-2015) at $1.90 per day Source: UN/DESA estimates based on WB data

It matters where the growth happens Income Income Change, Change distribution 2000 2015 distribution 2000 2011 2000-15 2000-11 group group 91 - 100% 36.0 44.4 8.5 91 - 100% 28.9 31.0 2.1 81 - 90% 15.6 16.9 1.4 81 - 90% 15.8 14.8 -1.0 Tanzania Zambia 61 - 80% 20.6 19.3 -1.3 61 - 80% 21.9 20.7 -1.2 41 - 60% 13.5 10.6 -2.9 41 - 60% 15.4 14.9 -0.5 21 - 40% 9.2 6.0 -3.2 21 - 40% 11.3 11.1 -0.2 11 - 20% 4.1 4.3 0.2 11 - 20% 3.2 1.9 -1.3 0 - 10% 2.7 3.1 0.4 0 - 10% 2.0 1.0 -1.0 Source: UN/DESA estimates based on WB data

It matters where the growth happens Income Income Change, Change distribution 2000 2015 distribution 2000 2011 2000-15 2000-11 group group 91 - 100% 36.0 44.4 8.5 91 - 100% 28.9 31.0 2.1 81 - 90% 15.6 16.9 1.4 81 - 90% 15.8 14.8 -1.0 Tanzania Zambia 61 - 80% 20.6 19.3 -1.3 61 - 80% 21.9 20.7 -1.2 41 - 60% 13.5 10.6 -2.9 41 - 60% 15.4 14.9 -0.5 21 - 40% 9.2 6.0 -3.2 21 - 40% 11.3 11.1 -0.2 11 - 20% 4.1 4.3 0.2 11 - 20% 3.2 1.9 -1.3 0 - 10% 2.7 3.1 0.4 0 - 10% 2.0 1.0 -1.0 Source: UN/DESA estimates based on WB data

It matters where the growth happens Income share by income distribution group, per cent TANZANIA ZAMBIA 20 20 10 10 0 0 2000 2002 2004 2006 2008 2010 2000 2003 2006 2009 2012 2015 0 - 10% 11 - 20% 21 - 40% 0 - 10% 11 - 20% 21 - 40% Source: UN/DESA estimates based on WB data

Gross National Income per capita total growth, constant 2010 USD, by income group* GNI per capita change, constant 2010 US$ 2000-11 2000-15 Income distribution group Tanzania Zambia 91 - 100% 55% 119% 81 - 90% 35% 93% 61 - 80% 37% 66% 41 - 60% 40% 39% 21 - 40% 42% 16% 11 - 20% 52% 5% 0 - 10% 66% -11% *Gross National Income per capita total growth, constant 2010 USD, proportional to the income share of each respective income group interval (WDI), divided by population of each respective income group. Source: UN/DESA estimates based on WB data

Labour Markets • There is a structural shift as agricultural share falls Although agriculture still remains the larges employer • TANZANIA ZAMBIA % Millions Millions % 30 100 7.5 75 2000 2017 2000 2017 75 20 5.0 50 50 10 2.5 25 25 0 0 0.0 0 Employed Agriculture Industry Services Employed Agriculture Industry Services Source: International Labour Organisation

Agricultural and arable land expansion TANZANIA ZAMBIA % % % % 50 20 50 20 Zambia, Agricultural land (% of land area), (L) Tanzania, Agricultural land (% of land area), (L) Tanzania, Arable land (% of land area), (R) Zambia, Arable land (% of land area), (R) 40 40 10 10 30 30 20 0 20 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Source: World Bank, World Development Indicators

Growth of agricultural value added per worker points to: ZAMBIA TANZANIA Poverty Agricultural headcount, valuer added 100 $1.90/day, 100 per worker per cent Index, 2000=100 0 0 2000 2005 2010 2015 2000 2005 2010 2015 Source: UN/DESA estimates; World Development Indicators, World Bank.