Dimensions of Poverty in MNA. Mustapha Nabli, Chief Economist Middle East and North Africa Region The World Bank

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1 Dimensions of Poverty in MNA Mustapha Nabli, Chief Economist Middle East and North Africa Region The World Bank

2 Distribution of the world population living on less than PPP US$ 1 a day (total 1.2 billion) Sub-Saharan Africa 24.3% East Asia and the Pacific 23.2% Eastern Europe and Central Asia 2.0% South Asia 43.5% Middle East and North Africa 0.5% Latin America and the Caribbean 6.5%

3 Distribution of the world population living on less than PPP US$ 2 a day (total 2.8 billion) Sub-Saharan Africa 17.0% East Asia and the Pacific 31.9% South Asia 39.1% Middle East and North Africa 2.2% Eastern Europe and Central Asia 3.3% Latin America and the Caribbean 6.5%

4 MNA is one of two regions where the number of poor declined between to 1998 change in the number of poor living on less than PPP US$ 2 a day (millions) East Asia and the Pacific Eastern Europe and Central Asia Latin America and the Caribbean Middle East and North Africa South Asia Sub-Saharan Africa Total

5 But progress in MNA has stalled Trends in Head Count Index, PPP US$2 per day

6 Some caveats MNA region only six countries Algeria (1988, 1995) Egypt (1991, 1995) Jordan (1987, 1992, 1997) Morocco (1985, 1990, 1999) Tunisia (1985, 1990, 1995) Yemen (1992, 1998) All regional estimates derived from these surveys missing countries typically take regional averages

7 Countries are different Changes in Poverty from 1990 to 1998 ( $1/day; $2/day) and comparisons to national poverty lines 50% 40% 30% 20% 10% % 23.0% % % % % 0% $ 1 day $ 2 day $ 1 day $ 2 day $ 1 day $ 2 day $ 1 day $ 2 day $ 1 day $ 2 day $ 1 day $ 2 day Algeria Egypt Jordan Morocco Tunisia Yemen

8 Serious data availability issues Data coverage, access and timeliness Share of population covered by SA EAP LAC ECA AFR MNA...comparable data for at least two points in time open access to data

9 Income measures alone are not enough Youth Illiteracy Rates (age 15-24) and Public Spending on Education percent illiterate percent of GNP 0 East Asia & Pacific Europe & Central Asia Latin America & Carib. Middle East & N. Africa South Asia Sub-Saharan Africa 0 male male female female public exp on education (1997)

10 Income measures alone are not enough Infant Mortality Rates per 1,000 live births Access to improved water source (% of population) EAP ECA LAC MNA SA AFR 0 EAP ECA LAC MNA SA AFR

11 Volatility a significant cause of vulnerability in MNA Terms of trade movements Political instability Climatic variations

12 Growth is important for poverty alleviation US$1 a day: A 1% increase in growth reduces (on average) the percentage of poor (headcount index) by 2% If 50% of the population is poor with a 5% growth rate, the percentage of poor drops by 10% from 50% to 45% At the time of Claiming the Future (1995), the MNA elasticity was between -2.8 to -8. Conclusion at the time: Growth is good for poverty reduction everywhere, and particularly in MNA.

13 Economic growth as a force for poverty reduction in the 80s and90s

14 Growth is important for poverty alleviation, but.. Latest surveys in MNA show a pattern which is not nearly as clear as it was in Three examples Morocco Tunisia Jordan

15 Morocco: traditional pattern low growth, sharp increase in poverty Morocco: growth of per capita real mean consumption and change in the level of the HC index (at domestic poverty line) 8.0% 4.0% 0.0% -4.0% -8.0% -12.0% -16.0% -20.0% -24.0% 5.8% 2.5% -8.0% -19.7% from from HC index change Grwth in real per capita consumption (from HH survey)

16 Tunisia: good growth but disappointingly little poverty reduction Tunisia: growth of per capita real mean consumption and change in the level of the HC index (at domestic poverty line) 12.0% 10.0% 8.0% HC index change 4.0% 0.0% 0.2% 4.1% Grwth in real per capita consumption (from HH survey) -4.0% -3.6% from from 90-95

17 Jordan: low growth, small reduction in poverty, improved income inequality Jordan: growth of per capita real mean consumption and change in the level of the HC index (at domestic poverty line) 12.0% 11.9% 8.0% 4.0% 0.0% -4.0% -8.0% -12.0% -16.0% -3.2% -11.4% -32.5% from from HC index change Grwth in real per capita consumption (from HH survey)

18 The role of growth Need to understand deeper what leads to equitable growth Links of growth and poverty What drives inequality

19 Income distributions in MNA are about average 70 Gini Coefficients for 106 Countries Unweighted avg: Sierra Leone Brazil Gini Index Belgium Austria Slovak Rep Korea Egypt 28.9 Nigeria Russia Peru Mor 39.5 Tunisia 40.2 Jordan 36.4 Yemen 39.5 Algeria

20 But income distributions in MNA seem to be pro-poor

21 The link to employment The unemployed are more likely to be poor or are the poor more likely to be unemployed? Egypt: 28% of unemployed are poor. Unemployment rate among the poor is 14%, among the non-poor it is 12%. Morocco: unemployment among the urban poor is 31.5%, higher than the national average of 25.7%. But, overall, 80% of the poor are employed. Jordan: households with more than four workers have the highest incidence of poverty.

22 The link to employment The link needs more extensive investigation and a nuanced approach informal sector and the public sector employment area (tradable/non-tradable, rural/urban, different sectors) separating out other factors -- such as differences in assets

23 A view of poverty Opportunity Empowerment Security

24 A few research areas Deepen the understanding of poverty in selected countries. What is pro-poor growth? What drives inequality; why do MNA income distributions seem to be propoor? Assess impact of structural adjustment and trade regimes on labor markets, inequality and poverty.

25 A few research areas Dynamic view of poverty: movements into and out of poverty, the effect of volatility, and the policy implications. The link to employment. A focus on vulnerable groups, such as women head of households, children, elderly and the handicapped.

26 A few research areas Access to services and public expenditures. Social protection, including the safety net and subsidies. Migration. Globalization.

27 Going forward Interesting and important research agenda Break-throughs in data availability should allow for robust progress