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Parliament’s role in poverty reduction: enhancing macro-economic policy approaches

Paper on: "Analysis, monitoring and evaluation of pro-poor macro-economic policy: Role of a pro-active parliament"

Prof Earle Taylor

24 November 2006

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The idea supporting pro-poor macroeconomic policy is not new. What is new is the momentum it has gathered over the past 30 years, and moreso, the array of theories, models and metrics that have emerged in the last decade and a half. Pro-poor policy in developing countries have been shown to be largely supply driven with high external capital and contribution. Africa’s case magnifies this situation, as many of Her national economies are still encumbered by lack of indigenous capacity, rampant corruption, recurring tribal tension, border disputes and wars. Given the various competing demands on government limited resources, the role of parliaments have become even more critical in overseeing pro-poor policies and in monitoring the implementation processes. Linked to this initiative is the challenge to existing and emerging leaders to practice good governance and encourage broadbase citizens’ participation in pro-poor policy formation and execution.


Chenery:1974, a leading development theorist, viewed pro-poor policy as those that sponsor formal growth while at the same time promote access to employment and income stream for lower level skills and low income wage earners. Being one of the leading scholars, Chenery’s perspective provided much fuel to the classical theory of wealth creation by a few and collateral benefits for masses, which argument was, in 1970’s and 80s, popularized in Asia and Latin America through the “trickle down development” hypothesis. Ravallion: 2004, in his ex-post analysis of failed macroeconomic policies of the 70s and 80s in Latin America, gave credence to Chenery’s notion with the evidence “that a 1% increase in per capita income may reduce income poverty by as much as 4% depending on the country and time period”. Their perception of pro-poor growth underpinned, for nearly two decades, the Structural Adjustment Programmes (SAP) and the National Poverty Reduction Strategies (PRSs) of the World Bank, and the Poverty Alleviation Programmes (PAPs) and Poverty Reduction Rrogramme Strategies (PRPS) of the UNDP and drove their loan policy and technical cooperation programmes through most of the 80s and 90s. Despite the evident popularity of these programme strategies, Latin American countries, by the mid 80s had fallen into their worst debt crisis, which carried through to the 90s.

Pursuant to the series of pro-poor macro-economic policy failures of the 90s, the Millennium Summit of World Leaders in September 2000 conceived the Millennium Development Goals (MDGs), and set out an ambitious agenda for reducing poverty and improving living standards of poor nations. The adoption of the Millennium Declaration by all 189-member states of the UN General Assembly was a defining moment for global cooperation as it congealed new commitments from the industrialized countries toward a unified framework for aid, investment, trade and technical cooperation with poor nations. They also agreed on specific measures to assess the compliance and performance of aid recipient countries that included also a set of inter-related host country commitments, clear goals and targets on development objectives, governance systems, peace, security and human rights.

For each MD goal, one or more targets were set, most of them for 2015, using 1990 poverty data as benchmark. Foremost among those goals is the commitment to reduce by half the proportion of people living on less than a dollar a day by 2015, which goal is meaningless by today’s standards. The other MDGs include time-bound targets related to increasing primary education and eliminating gender-based educational disparity; improving environmental conditions; increasing access to safe water; reducing slums; reducing infant and maternal mortality; reducing the spread of HIV/AIDS, and improving access to information technology to support development. Since 2000, the new Poverty Reduction Strategy (PRS) promoted by the UNDP and the WB became the formal statement of development strategy adopted by most developing countries. Designed to provide the basis for concessional assistance and debt relief to poor countries under the heavily indebted poor countries (HIPC) initiative, the strategies were intended to be country-driven, and based on a participatory process of consultations between the government and civil society. Other non-HIPC countries have followed these countries in preparing their own poverty reduction strategies. Despite these initiatives the poverty remained adamant, and in some countries, widened.

According to a recent study done in 2004 by the Development Research Centre (DRC), University of Sussex, on “Migration, Globalisation and Poverty in West and East Africa in the 70s and 80s”, a number of pro-poor policy flaws were identified. The researchers conceded that:

  • there is scope to facilitate the trading and business networks that some diaspora communities have developed abroad
  • in practice there is relatively little in the way of regional policy initiatives on migration and development
  • there is scope for enhanced cooperation across West Africa to create a more integrated labour market for professionals within the region, in order to provide clearer paths for career development and training at a regional level.

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