UN Department of Economic and Social Affairs (DESA) Working Papers

Analyses of redistributive policies often focus on income flows to examine the nexus between redistribution and economic growth. With strengthening signs of growing economic inequality in many countries, an increasing number of economists investigated the existence and nature of a hypothetical trade-off between economic growth and equity. As signs of unsustainable development are strengthening more generally, this paper proposes to look at the broader nexus between redistribution, equity and sustainable development, emphasizing its social and environmental dimensions. It does so by first proposing an analytical framework defining the role of redistributive policies in shaping the private income cycle as well as the public revenue-expenditure cycle. This framework distinguishes between the stock of income-generating assets (such as human capital and wealth, including land and industrial and financial capital) and deriving income flows in order to clarify the difference between the two sides of in-equity (i.e. in-equality of opportunity and in-equality of outcome), which remain intertwined in the growth-equity trade-off debate. This stock-flow approach is then used to outline key linkages between redistributive policies, in-equity and un-sustainable development. Contrasting the potential scope of redistributive policies with the more narrow set of policies that have been implemented in most countries/regions over the last 30 years, the paper discusses 14 avenues for redistributive policies to promote greater equity, economic empowerment and sustainable development.

The paper discusses the progress of Indian economy and its policies since the broad-based structural reforms initiated in 1991 with a special focus on the recent downturn following the global financial crisis. The paper is structured into two parts: first part discusses the major economic and social achievements of India since 1991, it identifies the causes of the recent downturn, and the policy responses to revive the economy. In the second part, the paper outlines the major challenges India is facing and the policies and reforms that need to be implement to achieve sustainable development.

The new role that middle-income countries (MICs) play in the global landscape obliges international community to review the configuration of the development cooperation system. On the one hand, MICs still face considerable structural deficits that affect their process of development; on the other, international community needs MICs to participate more intensively in the international agenda. Development cooperation can support both purposes, although for that to happen, substantial changes are required in traditional approaches and procedures of current international aid. This paper analyses these subjects with the objective of helping decision-makers come to good decisions.

This article evaluates and compares the forecasting performance of three international organizations: the United Nations, the International Monetary Fund and the World Bank. The annual forecasts made by the United Nations in the period of 1981-2011 are found to be fairly robust, in terms of bias and efficiency. In comparison, the forecasting performance of the United Nations is found to be marginally better than the other two organizations during the period of 2000-2012. However, the forecasts of all these organizations missed the Great Recession of 2009 by a large margin.

From around 2000 onward, donors and recipient governments embarked upon a new aid paradigm. The most important elements include increased selectivity in the aid allocation, more ownership of recipient countries based on nationally elaborated PRSPs, and more donor alignment and harmonization via program-based approaches such as budget support. The paper assesses the theoretical merits of this new paradigm, identifying some contradictions and limitations, and then examines its implementation over the past decade and its results. The empirical results largely confirm the earlier identified weaknesses and limitations. The paper concludes with some suggestions for improving aid practices.

This paper argues that the technical and political difficulties of using SDRs for development can be overcome. This requires an SDR-based reserve system and a fully SDR-funded IMF. The IMF would allocate SDRs counter-cyclically and treat them as deposits of countries, which could be used in lending to them. A substitution account is needed for a smooth transition from major reserve currencies to SDRs. To avoid the deficiency payments, a counterpart account – which would be credited when the substitution account is in surplus and debited when in deficit – is required. Alternatively, politically-feasible cost-sharing mechanisms could be designed.

This paper examines the distributional effects of fiscal austerity. Using episodes of fiscal consolidation measures for a sample of 17 OECD countries over the period 1978-2009, we find that fiscal consolidation episodes have typically led to a significant and long-lasting increase in inequality. Tax-based consolidation episodes tend to have a larger and more persistent effect on inequality than spendingbased consolidations. The evidence also shows that while fiscal consolidations have typically led to a fall in wage income, they have not had a significant effect on profit and rent income.

The international community has advanced in reforming the international aid system. Such reform comes at a time when there is a renewed skepticism about aid effectiveness and when the crisis sheds new doubts about the sustainability of donors’ commitments. At the same time, the international reality has changed as a consequence of the growing heterogeneity of the developing world, the new geography of global poverty, the emergence of new powers from the developing world, the presence of new aid players and, finally, the enlargement of the sphere of international public goods. Such changes demand a deeper reform in the development cooperation system.

This paper assesses the scope and impact of innovative development finance (IDF) in the Latin America and the Caribbean (LAC) countries in the 2000s. It also reports the views from the region’s relevant actors regarding IDF. The paper finds that very little IDF flowed to LAC in the 2000s, though it was significant for a few, poorer, and smaller countries, such as Haiti and Nicaragua. The views from the region suggest that LAC should fight for greater share of existing and prospective IDF, but also make better use of other available resources, such as remittances and flows through South-South cooperation.

The Millennium Development Goals (MDGs) were introduced to monitor implementation of the United Nations Millennium Declaration which set out a vision for inclusive and sustainable globalization based on human rights principles. This paper critically assesses the MDG experience including their policy purpose, ethical commitments, political origins, and consequences. It proposes that post-2015 goals should be based on principles of equity, sustainability and human security and address key contemporary challenges such as climate change, unemployment, inequality and global market instability.