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Economic Growth and Human Development

Economic Growth and Human Development. Umrbek Allakulov Summer School on Human Development in Uzbekistan 2010. Outline. Economic growth and human development Links between growth and HD Growth and HD in Uzbekistan Poverty eradication Child mortality Education The case of Karakalpakstan

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Economic Growth and Human Development

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  1. Economic Growth and Human Development UmrbekAllakulov Summer School on Human Development in Uzbekistan 2010

  2. Outline • Economic growth and human development • Links between growth and HD • Growth and HD in Uzbekistan • Poverty eradication • Child mortality • Education • The case of Karakalpakstan • Closing remarks

  3. Economic growth and human development • Impact of economic growth (given by per capita GDP growth) on human development is found to be robust, yet not automatic

  4. Links between growth and HD • two main casual links between growth and human development • Brazil with more than 6% growth rate and Gini coefficient of 0.634

  5. Allocation of resources for HD The three ratios: • the public expenditure ratio as given by the proportion of GNP allocated for public expenditure; • the HD or social allocation ratio, the proportion of public expenditure earmarked for social (HD) sectors; and • the social (HD) priority ratio, given by the proportion of social expenditure for basic social services or other priority areas as defined by the government (Ranis & Stewart, 2000).

  6. Enhancing the links from growth to human development • More equal distribution of income • Expansion of income earning opportunities • Enhancement of access to productive assets • Good governance • Improved community action

  7. Growth and Human Development in Uzbekistan • Initial years – exports restricted and imports liberalized • High rates of inflation – purchasing power decreased • Decline in GDP

  8. Foreign trade • Terms of trade increased - forgo fewer exports in return for more imports • more products and services are made available in the country

  9. Crisis resistant economy

  10. From economic growth to human development • Poverty eradication • HDI of Uzbekistan rose from 0.687 to 0.710 between 2000 and 2007, 119th among 182 countries • Category: more than 10% of the population inhabits on less than $1.25 a day • income poor of Uzbekistan were found to be “asset rich” and “human capital rich”

  11. Poverty eradication

  12. Child mortality • immunization is received by 96%-99% children aged between 12-23 months during the last decade • 70% in 1994 • to reduce by two-thirds of the under five child mortality rate by 2015 - LIKELY

  13. Economic growth – decrease in child mortality? • Better nutrition • Increased public spending on healthcare • Both in absolute and relative terms • From 7% to 12% of total public expenditure • Public spending on healthcare still too low • 2.5% of GDP in UZB and 9% GDP in OECD

  14. Education • Free and obligatory primary and secondary education is guaranteed by the Constitution • average income of those with higher education was 1.6 higher than those without any formal education • 7%-9% of gross national income directed to support education • adult literacy rate of 99.4% and an average years of schooling reached 11.74 years in 2007

  15. Economic conditions and HD in Karakalpakstan • 37% of the total land area of Uzbekistan, although its GDP accounts for only 2.4% of the national income • agricultural production such as cotton, rise, and melons • Karakalpakstan accounts for only 5.6% • Low density • Unattractive for investments • Transportation costs are high as settlements are distant

  16. Economic conditions and HD in Karakalpakstan • Out of its 1.5 million population, 1.1 million live in the rural areas • 50-70% of the rural population is estimated to be poor, out of which 20% is severely poor

  17. Poor economic conditions and HD • Karakalpakstan has one of the highest infant mortality rates as well as one of the highest unemployment rates • more than 40% of population do not have access to safe drinking water • spread of waterborne diseases • Severe droughts in Amudarya threatens the economic well being

  18. Towards economic growth in Karakalpakstan • Majority of the problems can be effectively eliminated through creation of additional income opportunities, employment creation, and diversification of the economy in the region • additional funds to support low income households in the region • incentives for enterprises to attract investments in certain branches of the economy • Enterprises with FDI are exempted from payment of income (profit) tax, property tax, tax for social infrastructure development and area improvement, single tax for microfirms and small enterprises, as well as compulsory deductions to the Republican Road Fund

  19. Investments – key to growth • more than $3.367 million foreign investments in 2007, mainly in the oil and gas sectors • $1.1 billion investment needs are identified

  20. Closing remarks • Economic growth and human development are highly interdependent • BUT(!) not all countries with high rates of growth achieve high levels of human development • economic growth has been translated into human development to a certain degree in UZB • Public spending • further economic growth can be utilized in Karakalpakstan to achieve progress in human development

  21. Questions?

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