Sustainable Social Development in a Period of Rapid Globalization: Challenges, Opportunities and Policy Options

Chapter VII: Policy implications

A. ECONOMIC GROWTH DOES NOT NECESSARILY REDUCE POVERTY

R apid globalization poses new opportunities and challenges for sustainable social development. On the one hand, globalization can mean that the national social policies of Governments are superseded by more powerful global forces over which they have little or no control. On the other, globalization has brought hope for new opportunities in terms of increased trade, markets, new technologies, foreign investment, employment and participation in development, facilitated communications among people and increased cross-border flows of people and knowledge.

In this context, the ESCAP region as a whole has clearly made some remarkable progress in terms of achieving strong economic growth, reducing poverty and improving social conditions. The absolute number of persons living in poverty and their percentage in the total population have declined. In many countries, especially in the East and South-East Asian subregions, the declines have been massive. Economic growth, in part attributable to these countries’ participation in globalization processes, has yielded major successes in poverty reduction.

However, a closer examination of recent trends is more disquieting. There are several exceptions to the positive growth over the past decade, including the Central Asian countries, Afghanistan, Mongolia and the developing Pacific island economies. That over 800 million persons in the region continue to live in poverty must be considered a failure of policy and programmes. Statistics for the ESCAP region as a whole are dominated by the weight of China and India. As both of these countries achieved significant reductions in poverty during the 1990s, regional averages show improvements. Some countries faced setbacks, however. The percentage of the population below the national poverty line in Pakistan increased steadily throughout the 1990s. It also increased in Sri Lanka between 1991 and 1996. Some economies in transition, such as Kazakhstan, Kyrgyzstan and Mongolia, suffered at least temporary reverses associated with economic structural transformation.

The number of persons living below national poverty lines increased by at least 13 million in East and South-East Asia owing to the 1997-1998 financial crisis. Since that time, large numbers of people in Indonesia, the Philippines, the Republic of Korea and Thailand have descended into poverty. The current global slowdown in economic growth makes it difficult for those and other countries to lift significant numbers of people out of poverty.

Attention must be paid to the definitions and measurement of poverty. The commonly used measure of poverty, existing on less than $1 per day, tends to underestimate the number of poor people. When the poverty line is drawn at $2 per day, estimates of the number of people in poverty commonly double or triple. Because most national poverty lines are above $1 a day, they yield higher estimates than the international measures. For example, in the Philippines in 1998, 14.6 per cent of the population lived on less than $1 per day, but when the national poverty line is used as the standard, 43.0 per cent of the population were living below that line. Conversely, the national poverty line in China is more restrictive so that, while 17.4 per cent of the population lived on less than $1 per day in 1999, only 3.7 per cent fell below the national poverty line.

Poverty must also consider local relevance, because poverty can mean different things in different societies. Absolute poverty, or complete material destitution, has been quantified by the World Bank as living on less than the equivalent of $1 per day. Relative poverty means living in a considerably worse way than other people in the same society. Poverty in the developing Pacific economies is rarely as visible or as extreme as it is in some of the harshest parts of the world, but there are people who are truly disadvantaged and deprived compared with other people in their community or country, and that defines poverty there. Surveys carried out in the 1990s have revealed large differences in income and well-being within several developing Pacific island economies.

The monitoring of poverty requires frequent collection of statistics that are comparable over time and representative at the national and subnational levels. Particular attention must be given to the collection and collation of reliable and consistent time-series data on the Millennium Declaration development goals and targets. International donor countries and agencies, and national Governments, need to give continuing attention to the regular collection of statistics that will enable the measurement not only of income poverty but also of other aspects of human poverty and related social indicators such as illiteracy, malnutrition, morbidity and mortality rates, and lack of access to safe drinking water and sanitation.

Social development goals require long-term time frameworks. In other words, poverty reduction and social equity are long-term goals. Macroeconomic policy, however, operates in a short-term time frame, aiming at a stable, sustainable pace for aggregate economic variables and major factors such as wages, inflation, interest rates and exchange rates. The challenge – indeed, the need – is to integrate the two: social policy and economic policy. Such integration is what counts not only for sustainable social development, but also for sustainable macroeconomic adjustment and structural reform.
In view of the diversity of national situations and institutional arrangements, there is no single “one-size-fits-all” package of measures that could be applied in all countries. However, the following broad policy implications can be drawn:

(a) There is a need to review the political dimensions of economic decision-making and their positive or negative impact on achieving social development goals as well as on the efficacy of macroeconomic policies. In the consultative process, all the relevant authorities should be involved, not only the economic or finance ministries;
(b) Fiscal policy is another area in which macroeconomic policy can affect social policy. In most of the developing countries in the region, there is a real need for the provision of social services, especially for the poorer populations. Some countries have also begun to incorporate gender concerns into the formulation of national budgets. In this regard, one challenge is to redesign fiscal, structural and social policies to include the participation and partnership of other actors such as the private sector and civil society.

B. SOCIAL EQUITY IS NECESSARY FOR POVERTY REDUCTION

Equitable distribution of income is an important component of sustainable growth and poverty reduction efforts. The degree to which economic growth leads to poverty reduction depends on both the rate of growth and its distribution. Skewed distribution dilutes the impact of economic growth alone and will place limits on growth. Equity may be related to the distribution of physical or financial capital, such as land, productive inputs, savings and credit. Equity is not limited to such economic assets, however. Income inequality usually reflects deeper inequalities in access to health, education and employment. Social equity refers to the creation of opportunities to gain an education, good health and access to production regardless of gender, geographical location, age, ethnicity or other attributes.

Countries that have been most successful in reducing poverty are those that emphasized universal primary education, primary health care and rural development. In some cases, as in China and Viet Nam, levels of poverty were greatly reduced while per capita incomes were low because of the provision of education, health care and employment opportunities. Conversely, in countries where illiteracy remained high and public health care was poor, poverty reduction efforts were less successful.

Although there are valuable lessons to learn from countries that successfully linked growth with equity and poverty reduction, there are still many weaknesses in social development policy. The slowdown in economic growth in East and South-East Asia since 1996 and the 1997 crisis have revealed the many weaknesses in economic and social policy in many countries in those subregions.

C. INVESTMENT IN HUMAN CAPITAL IS ESSENTIAL FOR SUSTAINED ECONOMIC GROWTH

Provision of education, health care and employment opportunities is not only a social equity issue, but also an essential component of long-term economic growth. The impressive economic progress of several economies in East and South-East Asia (namely, China, Indonesia, Malaysia, the Republic of Korea, Thailand and Viet Nam) was achieved because they had invested in human capital formation. Public investment in health and education at the early stages of development in these countries provided the necessary human capital for their rapid economic growth. For such human capital to be of value, employment opportunities and productive assets including credit, skills training, markets, etc. must be present. At early stages of development, these countries followed labour-intensive policies, but each has gradually climbed the ladder of comparative advantage to higher value added production, requiring greater capital investment and more advanced technology. In fact, progress has been so rapid in Indonesia and Thailand that their modest levels of secondary school enrolment may be obstacles to greater productivity.

Provision of adequate levels of health and education need not be a great burden on national budgets. It has been estimated that comprehensive primary health-care coverage in poor countries can be provided for about $34 per person per year. In the year 2000, the Republic of Korea, with an overall expectation of life at birth of nearly 75 years, spent about $18 per capita on the health sector. Thailand spent about $26 per person on health in 2000 (table II.6). Education requires considerably larger expenditures per capita, but all evidence suggests that such expenditures are essential investments towards achieving sustained economic and social development.

The volume of public expenditure on education and health services is not the only issue – the efficiency of such spending in improving social well-being is also important. The countries in East and South-East Asia that achieved the most rapid economic growth and rapid improvements in social indicators concentrated their social spending on primary and basic secondary education and on low-cost primary health interventions.

Because knowledge and good health are prerequisites for productive employment and the latter is necessary for national economic growth, education, health and productive employment must be considered essential components of any sustainable social development strategy.

As macroeconomic policy pays special attention to the development of both human and social capital, there are two elements that are gaining increasing importance: making new information technologies available to wider segments of the population and building productive assets especially for the poor – both men and women – at the household level.

D. RURAL DEVELOPMENT IS A PREREQUISITE FOR POVERTY ALLEVIATION AND SOCIAL DEVELOPMENT

About 60 per cent of the population in the ESCAP region live in rural areas and in most countries the incidence of poverty is greater in rural than in urban areas. As a consequence, high proportions of those living in poverty are rural dwellers. More than 40 per cent of the rural population in Bangladesh, Cambodia, Kyrgyzstan, the Philippines and Viet Nam live below the respective national poverty lines. Thus, any attempt to reduce poverty and promote social and economic development must address the situation in the rural areas.

Access to land, investment in infrastructure, access to credit and savings institutions and protection from unfair competition are all elements in the range of agricultural sector strategies that are known to have produced effective results in rural poverty alleviation. Highly unequal land distribution is economically inefficient and socially disruptive. Support for land redistribution as an element of a wider agrarian reform strategy should be made central to poverty reduction initiatives. A stronger focus is needed on economic and social rights and on their implementation: for example, issues of land reform and titling, and maintenance claims. Support mechanisms are needed to enable women to claim legal entitlements (awareness-raising, legal aid, resources for land registration, etc.).

Governments, the private sector and NGOs should create savings and credit institutions for the poor. Poor producers can save, and they are highly-efficient investors. Most, however, are denied access to savings and credit agencies, creating losses in terms of efficiency and equity. The development of institutions which are accessible to the poor and deal in small amounts at low transaction costs is a vital step in the right direction.

Governments should provide transport and marketing infrastructure. Because poor producers are often located in marginal areas poorly served by roads, they face difficulties in gaining access to markets and inputs.

Greater public investment in the rural sector is required. Economic growth cannot be stimulated by markets alone, especially in agriculture. A factor crucial for agricultural growth in most developing countries is public investment in irrigation, drainage and infrastructure. The evidence is overwhelming that private investment in the rural sector follows public investment.

Prospects for economic growth vary among Pacific island countries, but all countries face a strong challenge in generating sufficient employment. The main reason is demographic, namely, their fast-growing labour force. Other reasons are economic: the mostly small, undiversified economies of the subregion, the highly structured and rigid labour markets, the underdeveloped private and informal sectors and economic and environmental uncertainties that discourage investment.

Employment policies and programmes in the developing Pacific island countries have emphasized formal sector jobs. While there is potential in that, attention should also be given to other forms of livelihood in the large informal sector.

In view of the narrow range of economic resources in the developing Pacific island economies, a firm basis for growth is to promote sustainable resource use and increase the local value of local resources. Productivity and employment need to be expanded in such ways that natural resources are not used indiscriminately.

E. GOOD URBAN MANAGEMENT IS ESSENTIAL TO NATIONAL DEVELOPMENT

The theme study (ESCAP 2001d: 57) for the Commission at its fifty-seventh session observed: “Rural-urban migration and urbanization can make a positive contribution to economic growth because they bring labour to locations where it is most productive”. Migrants usually retain ties with their rural communities and can promote rural development through financial remittances or the transfer of knowledge and skills.

Managing rapidly growing urban agglomerations effectively is a daunting task, however. Urban government must provide, or facilitate the provision of, employment, housing, infrastructure and services. At the same time, it must maintain the competitiveness of the city in the global economy, because the development of the city will rely heavily on private sector investment. “These challenges call for good urban management, good governance, the efficient utilization of available urban resources, and the development of partnerships between the government and other urban stakeholders…” (ESCAP 2001d: 57).

Participatory urban planning and management has achieved some success in some cities in South-East Asia, among other places. However, the emergence of megacities, dependent on massive flows of resources that at some stage could become curtailed, raises possibilities of sudden and deeper privation. Development agencies in the coming years therefore need to address the issue of the sustainability of urban development in the context of local participatory planning and management initiatives and promote programmes to prevent or mitigate any adversities.

Since most urban and rural local governments in the region have insufficient resources and capacity to address effectively the range and magnitude of the problems facing them and to promote urban and rural linkages, it is urgent to enhance the institutional capacity of local authorities in terms of human, technical and financial resources. Measures to address these issues, including cooperation between local governments aimed at disseminating know-how to overcome these problems, should also be strengthened (Phnom Penh Regional Platform on Sustainable Development for Asia and the Pacific 2001).

F. GLOBALIZATION PROCESSES LED TO RAPID EMPLOYMENT EXPANSION IN SOME EAST AND SOUTH-EAST ASIAN ECONOMIES UP TO 1997

The crude activity rate in East Asia as a whole increased from 51 per cent in 1960 to nearly 59 per cent in 1995 as more and more people were absorbed into the workforce. The statistics for East Asia are heavily influenced by China, where the increase was from 53 per cent to 60 per cent, but the expansion of employment in that country resulted more from internal reforms than from globalization. Between 1960 and 1995, Hong Kong, Japan and the Republic of Korea also achieved massive gains in employment.

In South-East Asia as a whole, the male crude activity rate did not increase between 1960 and 1995, but the female rate increased from 32 to 41 per cent, as women were drawn to employment in light manufacturing, much of it for export. Indonesia, Malaysia and the Philippines each followed the pattern of attaining large increases in female participation rates but no increases in male rates. Employment of both men and women expanded greatly in Singapore and Thailand during the period 1960-1995.
While globalization helped to produce greatly increased employment in the economies mentioned, its effect was volatile so that when the financial crisis began in 1997, unemployment rates surged. In Hong Kong, China; the Republic of Korea; Singapore; and Thailand, the unemployment rate more than doubled between 1997 and 1998. Unemployment was significantly higher in 1998 than in 1997 in Indonesia, Malaysia and the Philippines.

G. MOST COUNTRIES IN THE REGION DID NOT EXPAND ACTIVITY RATES

While the achievements of the above-mentioned economies were impressive, in most countries in the region the crude activity rate was no higher in 1995 than it had been in 1960. This observation holds true for Viet Nam and for the South Asian, Central Asian and West Asian subregions. Within South Asia and Central Asia, both Kazakhstan and Sri Lanka made large gains in employment expansion during the period, but the large countries of Bangladesh, India, the Islamic Republic of Iran and Pakistan did not achieve increases in the overall activity rate. One reason could be that these countries experienced less of an impact from globalization during that period than East and South-East Asia. However, the employment elasticity of manufacturing production has been very low. As manufacturing processes become ever more productive, large expansions in output can be achieved without commensurate increases in employment.

The benefits of globalization for employment expansion tend to be limited geographically as well. The employment generated by manufacturing for export and related economic services is usually located in or near large cities, but in South Asia two thirds of the labour force reside in rural areas.
The economies that have expanded employment rapidly have also generally reduced the population growth rates so that labour shortages have become apparent in some sectors. The large wage differentials between countries of the region have induced large movements of labour within the region. Millions of persons in the region currently work in countries other than their own. International labour migration can benefit the migrants, the country of origin (through remittances and removing some surplus labour) and the country of destination (by solving labour shortages). Exploitation of the workers often occurs at each of the steps involved in recruitment, movement, employment and return, however, and workers outside of their own country may be particularly vulnerable to infringement of their rights. Much greater subregional and regional cooperation is required to smooth the process of international labour migration and ensure the rights and benefits to which the workers are entitled as well as to optimize the socio-economic benefits of such migration to concerned countries of origin and destination.
To assist the migration of unskilled workers, labour-sending countries can set up employment units in receiving countries to capture employment opportunities and protect workers’ well-being. Countries also need stronger legal frameworks and laws to stop human trafficking. NGOs and other civil society institutions can play an important partnership role in eliminating human trafficking.

H. LONG-RANGE PLANNING AND FLEXIBILITY ARE REQUIRED TO COPE WITH RAPID SHIFTS IN EMPLOYMENT VOLUME AND STRUCTURE

Countries cannot rely solely on globalization processes of trade liberalization and financial flows to ensure the productive employment of their workers. They must take into account such aspects of globalization as comparative advantage in production and international labour migration in mapping out their employment strategies.

In some labour-surplus countries, where large numbers of people live in poverty, food-for-work programmes can provide employment, improve the nutritional status of the population and contribute to building infrastructure. As long as unemployment, underemployment and unproductive employment affect large shares of the workforce, countries will attempt to pursue labour-intensive strategies.

There are also labour-market problems that are typically either urban or rural. Youth and female unemployment is usually prevalent in urban areas because in rural areas young people and women in need of a job occupy themselves with various types of agricultural or household duties, thus appearing in statistics as employed or economically inactive rather than unemployed. Seasonal labour is typically a rural phenomenon and policies designed to support seasonal workers have to be rural-based. Intrahousehold income distribution is also typically different in urban and rural areas. Offering training or public works to households in urban or rural areas can have very different repercussions on household income. Thus, when designing strategy, a proper way to start the planning is by separating policies for urban and rural areas.

All countries in the region are undergoing structural shifts in employment out of agriculture towards industry and services. Although the countries of South Asia and Central Asia, for the most part, did not improve their activity rates between 1960 and 1995, sectoral changes in employment were occurring as rapidly in those countries as in much of East and South-East Asia during the 1970s and 1980s.

As economies become more service- and knowledge-based, the education and continuous training of the labour force gain in importance. The rapid changes in the nature of the economy and of employment demand greater forward planning and flexibility in order to take advantage of such structural shifts.
Labour-market segmentation is a significant feature in the region. Workers have difficulty moving from one labour-market segment to another because of barriers such as distance from alternative markets, entry requirements, education and skills or discrimination based on gender, ethnicity or other factors. It is easier for workers to move from the formal to the informal sector or from wage employment to self-employment because neither the informal sector nor self-employment has significant entry barriers.
Poor or slow growth will also cause severe employment problems for the most vulnerable groups of workers, among them young workers, women, the long-term unemployed and persons with disabilities. Economies facing rapid globalization and competitive pressure need to invest in skills development and the training of their workforces. At the same time, globalization and changes in technology and work organization risk worsening the employment situation for some vulnerable groups as they are caught without the appropriate skills or training. For the entire workforce the continuous pace of change in job skills requirements increases the importance of training and lifelong learning to raise employability and improve access to employment.

Since the structure and composition of labour markets are changing rapidly, there are also pressures to be more flexible. Evidence suggests that making labour markets flexible by compromising on working conditions and standards does not help in dealing with changing labour markets and capturing global opportunities in trade and investment. The new vulnerabilities in labour markets call for the following:
(a) Employment expansion, especially of reasonably productive jobs;
(b) Regular upgrading of workers’ skills, through training, on-the-job dissemination of technical know-how and developing the technical skills needed to overcome the labour-market segmentation that is characteristic of developing countries;
(c) Having in place reasonable compensation, a minimum wage and accepted labour standards and rights;
(d) Increasing the productivity of the informal sector through tax holidays, duty exemptions, lower interest rates and access to credit.

Gender dimensions are critical in labour-policy interventions. The bias against women in education, employment and wages is a major issue in most of the region. Yet there is little evidence of the lower productivity of women in employment. Some policies that target women only have proved to be effective in improving labour markets and alleviating poverty. Policies that focus on the improvement of school attendance by girls and female literacy, for instance, have increased the chances of improved health and welfare of future households and poverty reduction.

A central issue here is how to encourage female participation and equal gender opportunities in the world of work without upsetting cultural values, family life and social stability. The route for the formal and urban sectors may be to alleviate the tasks connected with motherhood for working mothers by establishing proper support mechanisms at work and at home, such as childcare or maternity-leave legislation. In prevalently rural economies, labour-market policies may not be the best means to improve equal gender opportunities in the labour market. In some cases, improvements in water and sanitation infrastructures can do more for women than childcare since the former reduces the time they need to collect water where this is a traditional female task.

Other than the human rights argument for equal gender opportunities, there is also a valid economic argument. Bringing women into full employment at equal wages increases the potential for growth of any economy and at best enables the utilization of local labour as opposed to immigrant labour. Countries such as Singapore have been actively trying to encourage women to join the workforce so as to keep the internal labour supply up to the demand requirements and prevent massive immigration.

I. RAPID GLOBALIZATION HAS BOTH POSITIVE AND NEGATIVE EFFECTS ON SOCIAL INTEGRATION

Social integration and mobilization policies and programmes need to be geared differentially according to the diverse circumstances of target populations. For example, some population groups may be well positioned to take advantage of new opportunities afforded by globalization and the ICT revolution, while other groups will find it difficult to seize these opportunities and benefit from the rapidly changing patterns and demands of life and work because of gender, age, health, physical location or other socio-economic circumstances.

Globalization has contributed to the strengthening of civil society and people’s organizations or NGOs. Promoting self-mobilization of the poor and disadvantaged and their effective participation in community and national affairs through policy and programme support is necessary for sustainable social, economic and political integration. In that connection, the poor themselves must be enabled to select one or more tangible and achievable goals towards which they are willing to work. Such involvement in decision-making will be a key determinant and outcome of social mobilization and integration efforts.

NGOs should be partners in development. Evolving working partnerships between the government, NGO sectors and civil society through a coordination mechanism will promote non-confrontational communication and cooperation between them. It is necessary, however, to caution against compromising the role and functions of NGOs through co-optation.

The private sector contribution is also essential to tackle effectively the complex and deeply embedded problems of social exclusion of the poor and disadvantaged groups. Drawing the private sector particularly into disadvantaged areas would forge the important link which exists between the private sector and access to employment, and private sector services and people's capacity to improve their physical and social well-being. Difficult issues remain about engaging and sustaining the role of the private sector in the inclusion process. Some useful recommendations include developing a framework for good practices of private sector involvement, promoting more joint ventures between business, local authorities and community-based organizations in service provision and encouraging the private sector to take more of a lead role in attracting other business partners and their staff to initiate projects that enhance goals of social inclusion as a significant part of the “excellence model” in quality management.

Related to corporate responsibility but also in their own right, the media have an important role and contribution in promoting social development in general and social integration in particular. They have a powerful influence on people's attitudes and perceptions. Media attention needs to refocus on positive experiences in the region that constructively unify rather than divide peoples and nations and all available media technologies should be used for social mobilization towards that goal. The media can help people to understand that social and cultural diversity provides an enriching and additional resource for social development efforts. Media programming should eliminate stereotyping based on religion, culture, gender, race, class, nationality and ethnicity. It should help to demonstrate tangible successes with social integration, including best practices in promoting social integration. The media should also serve to inform the public of government, private sector and NGO policies, programmes and services and can help to increase their access to these services in times of need and crisis.

The cause of social integration and mobilization will be greatly enhanced through participatory processes in national and subnational decision-making. Encouraging civic and political participation is especially important to support opportunities for the disadvantaged and excluded groups to have their voices heard, make their situation and needs known and more effectively address issues in poverty reduction and social development. A key modality to address these needs is through the decentralization of development and administration processes working through local authorities, community-based groups and grass-roots people’s organizations to improve service delivery to large populations.
Studies in the region have shown that the following conditions are important for successful decentralization:
(a) The decentralization framework must link, at the margin, local financing and fiscal authority to the service provision responsibilities and functions of the local government, so that local politicians can bear the costs of their decisions and deliver on their promises;
(b) The local community must be informed about the costs of services and service delivery options involved and the resource envelope and its sources, so that the decisions they make will be meaningful. Participative budgeting is one effective way. See box IV.2 in chapter IV;
(c) There must be a mechanism by which the community can express its preferences in a way that is binding on politicians, so that there is a credible incentive for people to participate;
(d) There must be a system of accountability that relies on public and transparent information, which enables the community to monitor effectively the performance of the local government and react appropriately to that performance, so that politicians and local officials have an incentive to be responsive;
(e) The instruments of decentralization – the legal and institutional framework, the structure of service delivery responsibilities and the intergovernmental fiscal system – should be consonant with the overall national development objectives;
With rising inequality, the Social Summit goal of enhancing social integration will be further compromised. Thus, it becomes increasingly important to strengthen institutions and mechanisms promoting social integration. Such strengthening should include the participation of representative social actors, including the poor and other people’s organizations, structures that allow for consultation and the development of social targets of public sector policies and, most important, coordination between economic and social authorities and the development of guidelines to improve the social effects of economic policy.

J. THE 1997 FINANCIAL CRISIS DEMONSTRATED THAT SOCIAL PROTECTION SYSTEMS
WERE INADEQUATE

Social protection embodies a society’s responses to levels of risk or deprivation that are deemed unacceptable. Thus, a social consensus underpins a social protection system. Social protection concerns more than simple cash transfers to people in need; it encompasses the notion of secure access to livelihood, minimal income, health and education services, nutrition and shelter. There are two broad types of social protection: “social assistance” and “social insurance”. The former encompasses public actions that are designed to transfer public resources to groups deemed eligible owing to deprivation. Social insurance is a form of social security that is generally financed by contributions based on the insurance principle.

Governments may well consider some policy lessons from the 1997 Asian financial crisis:
(a) The social protection systems in the countries concerned were totally inadequate in coverage of people and scope of benefits. They caused millions to fall into poverty and deep socio-economic distress;
(b) Social protection systems should be permanent and sustainable. Research suggests that sustainable social protection systems should meet at least four criteria:
(i) The schemes should be financially sustainable, that is, receipts should exceed payments over the long term;
(ii) The incentives should be appropriate. The incentive for working must be considerably higher than that for not working;
(iii) Public resources should be targeted appropriately to focus on those who are vulnerable and most in need;
(iv) Assistance should be delivered efficiently. Efficient delivery involves the timely transfer of resources to the intended targets without undue administrative costs;
(c) Effective social protection systems should be country-specific and carefully coordinated to avoid inefficiency and waste. Globalization has partly contributed to various social risks and vulnerabilities among population groups seeking a decent livelihood. The demographic shift to much older populations will strain the financial sustainability of all social protection systems, especially as many of the elderly dependents will not have contributed to any formal retirement schemes.

The most viable systems have usually been based on individuals’ employment, with the employer often required to contribute a certain amount, to offer severance pay for retrenchment or to operate a private system. However, large segments of the workforce in many countries of the region are not in formal employment. Many work in the informal sector in urban areas, in casual employment or agricultural work in rural areas, where the overwhelming proportion of workers are self-employed or unpaid family workers, especially women. The challenge for Governments is to expand social protection schemes to cover such informal sector workers and to build on existing systems, including prevalent informal and traditional mechanisms based on family and community groups, cooperatives or cultural organizations.

It is recognized that the motivation for reform and priorities will differ from one country to another and so will the intervention approaches. In much of the region, the debate is dominated by concerns about reducing poverty, expanding coverage and identifying financing mechanisms to serve the vast majority of the population. Some countries need to adjust their programmes to reduced budgets under a market economy. In some countries, reforms are motivated by a desire to insulate social protection systems from political interference. The reform debate in some developed countries is focused on means of funding the high social protection costs of an ageing society.

The reform priorities and possible interventions (labour market, social insurance, social assistance, area-based schemes and informal social protection) set the strategy and parameters for prioritizing investments, based on the principles of reducing poverty and vulnerability; available resources and needs; enhancing strategic alliances and partnerships with development agencies, the private sector and civil society; and taking a long- and medium-term approach to the promotion of effective social protection systems.

The selection of interventions will require an evaluation of a particular country’s needs, available resources, institutional capacity and the political economy of reform. Once a set of specific social protection interventions has been chosen, project design should attend to the following principles: having adequate coverage; being targeted to the vulnerable population groups; being financially sustainable; being supported by good governance and optimal delivery mechanisms; and being well-integrated into national development processes.

K. ICT CAN ASSIST IN RURAL POVERTY REDUCTION

A rapidly expanding range of ICT applications are being employed to address poverty, especially in rural areas. Expanding ICT effectively to rural areas should be done in the context of an integrated development plan. An infrastructure of communication lines, satellites, computer networks, etc. must be established. The role of the Government in establishing this infrastructure is critical, especially to encourage private sector and market interventions. The content and services of a rural ICT programme must also be developed carefully to provide rural people with the types of information of value to them.

The successful use of ICT in rural areas also requires considerable skills development. Basic literacy and English language facility are vital for learning ICT skills and fully benefiting from the Internet at this time. ICT programmes should also be sustainable. While telecentres are an important option, since the poor are not able to afford the cost of Internet access they usually need to be supported by the Government. To be sustainable, telecentres must also provide information and services of value to the rural community; thus, the community must be involved in their establishment and operation. Partnership with local stakeholders such as community organizations or private enterprises is essential. ICT can facilitate the empowerment of women, people with disabilities and other disadvantaged groups.
Effective ICT policy should address the crucial problems of the digital divide, not only as they concern the gap between developed and developing countries, but also gender, age, ethnicity, language, physical location and physical ability. A policy fostering competitive telecommunication sectors can attract investments in expanding ICT infrastructure and bring down costs. More countries need to complement liberalization policies with technology policies, as have China, India and Malaysia, among others.
Market forces often ignore the poor and disadvantaged groups and cannot be relied upon to focus ICT on alleviating poverty. The poor require targeted products and services, which may not yield financial profit to the provider. Governments need to ensure that the rural poor obtain access to ICT through better coordination and the involvement of a broad range of stakeholders. This can take the form of formal task forces or more loosely connected public-private partnerships, including at the local level, to ensure that initiatives are demand-driven and implementation incorporates bottom-up approaches. While national strategies are critical, there are significant limitations to what a single country can accomplish on its own and there is also a need for coordination and partnerships at the regional and global levels among developed and developing countries, multilateral institutions, civil society and the private sector to assist developing countries – particularly the least developed – in using the potential of ICT to address development goals.

There is no single answer to finding the right ICT formula for a country given its varying resources, priorities and needs. Implementing a framework for action involves creating processes to build consensus on national priorities and addressing any barriers through advocacy, consultation, incentives and reforms. For developing countries, the challenge will be to align the interests and strengths of various constituents of society and find appropriate strategies to make ICT work for the poor.

L. INTERNATIONAL AND REGIONAL COOPERATION

The United Nations and other international organizations should strengthen their advocacy roles vis-à-vis disadvantaged and excluded groups in all pertinent development fields. In this regard, the value of regional cooperation to promote economic and social development on a sustainable basis is increasingly recognized. Indeed, this is reflected in the proliferation of regional organizations in Asia and the Pacific over past decades as a result of and response to globalization. There is a growing realization that with closer geographical proximity and socio-economic and political interdependence, greater regional cooperation is essential if countries are to develop adequately their capabilities and comparative advantages and to capture global opportunities. While development is ultimately the responsibility of national Governments and domestic policies, there is a clear need to strengthen socio-economic interaction and governance at the regional level. Indeed, without greater regional cooperation, the national and local levels may be overwhelmed by global processes.

Some of the principal potential benefits of such cooperation relate directly to economic activities, where it can help to provide enterprises with greater resources and opportunities, reduce vulnerability to local setbacks or instability and facilitate effective implementation of economic policy and business regulation. But there are also broader potential benefits, including cross-country assistance, in the form of resources, information and experience, protection of public revenue by combating excessive tax competition and avoidance, and protection of the physical and social environments from commercial exploitation which individual Governments could not effectively restrain.

In some circumstances, these benefits can be, or may only be, obtainable through global cooperation. However, regional cooperation will often be more quickly mobilized and more responsive to particular circumstances. With the advantage of common borders and physical proximity it may be easier to develop close, informal and frequent contact between key actors (both governmental and non-governmental) and to achieve sufficient mutual understanding for key transborder problems to be addressed effectively. It may facilitate the development of principles, rules and standards which are sufficiently specific to have practical impact and be mutually acceptable. The subregional groupings that have emerged or been strengthened in the last decade or so, e.g., the Economic Cooperation Organization and the South Asian Association for Regional Cooperation, reflect a recognition of these potential advantages.

As a regional arm of the United Nations, ESCAP is recognized as having a lead advocacy role for social development in the Asian and Pacific region. It has forged the landmark regional cooperation agreement among its members in the Agenda for Action on Social Development in the ESCAP Region, adopted by the Commission in 1995. It has also forged other regional plans of action for cooperation regarding women, human resources development, disabled persons and ageing. ESCAP has advocated specific collaboration agreements among Governments with common borders to prevent the spread of HIV/AIDS and drug abuse. It is such issues as combating human trafficking, HIV/AIDS prevention and mitigating any negative social impact of international labour migration that require transnational action and solutions that could best be addressed through regional cooperation.

Regional cooperation could assist in resource mobilization for social development. For example donor Governments have yet to meet the agreed target of 0.7 per cent of GNP for overall ODA called for in the Programme of Action of the World Summit for Social Development in 1995. There is also a need for stronger efforts to realize the recommended commitment to the 20:20 initiative, under which developed and developing country partners would allocate, on average, 20 per cent of ODA and 20 per cent of the national budget, respectively, to basic social programmes. Economic globalization and technological developments have exacerbated excessive tax competition between Governments, which has deprived them of revenue needed to promote both economic and social development and alleviate poverty. A policy lesson would be to provide support for corporate taxation and related policies that favour genuinely productive, job-creating domestic investment by foreign investors and promote sustainable economic and social development. Here again, greater regional cooperation can make a substantial contribution by, for example, enabling and encouraging domestic tax reform which would otherwise be avoided for fear of competition from other countries and by developing models which can then be adopted at the global level. In these areas, ESCAP could play a role in supporting the identification and exchange among countries of good practices for sustainable social development in the context of globalization.

The need for stronger regional cooperation is not limited, of course, to Governments. Regional interaction between CSOs, including NGOs, is generally less advanced, especially in developing countries, yet it is at least as important. Indeed, it is seen as an essential corollary of growing intergovernmental cooperation and a crucial element of appropriate systems of governance. As with Governments, it is also necessary to help to strengthen the representation, credibility and effectiveness of CSO structures and activities at the regional and global levels.
The time is propitious for initiatives in these directions. Many countries are recognizing the need to work more closely with each other in managing the globalization process, to reduce the threats to social stability and to seize the opportunities inherent in their increasing interdependence for sustainable social development.