Tuesday, January 29, 2013

Understanding inclusive growth: High and sustainable growth

Inclusive growth is one of the most talked about issues in developing countries, especially those in transition, these days. It has been pretty much widely accepted that growth alone is not sufficient; it has to be followed by wider access to economic opportunities and provision of social protection for those left out of the growth process.

ADB has come up with a framework for inclusive growth, which has three main components:  (i) High and sustainable growth; (ii) Access to economic and social development opportunities; and (iii) Stronger social protection. 

It also has a list of 35 indicators to quantify (either directly or via proxies) inclusive growth. It is not yet clear what benchmark to use: either within country benchmark relative to earlier years or regional average or both. Anyway, any quantifiable indicators to measure inclusive growth is good to get thoughts straight on this hugely important yet not entirely clear (definition wise) issue.

The first pillar of inclusive growth emphasizes high and sustainable growth to create and expand economic opportunities. Its components include strengthened

    • Infrastructure
    • Technology
    • Human capital
    • Private sector
    • Finance sector
    • Public sector management
    • Regulatory regimes

The table below shows the quantifiable indicators for high and sustainable growth (first pillar of inclusive growth). The information and data in this blog comes from ADB’s FIGI 2012 and the related dataset (Nepal only; for other countries, see this one).

Growth and Expansion of Economic Opportunity 1990 or Nearest Year 2010 or Latest Year
Economic Growth and Employment
Annualized growth rate of GDP per capita at PPP (constant 2005 PPP$) 2.6 (1990–1995) 2.5 (2005–2010)
Annualized growth rate of average per capita income or consumption (2005 PPP$)        
Total 4.7 (1996–2003) 3.4 (2003–2010)
Lowest quintile 2.3 (1996–2003) 6.8 (2003–2010)
Highest quintile 6.7 (1996–2003) 0.4 (2003–2010)
Employment-to-population ratio         
Youth (Aged 15–24) 78.8 (1991) 73.1 (2011)
Male 81.0 (1991) 73.3 (2011)
Female 76.5 (1991) 72.8 (2011)
Aged 15 years and over 67.2 (1996) 91.6 (2003)
Male 71.0 (1996) 90.0 (2003)
Female 63.7 (1996) 93.0 (2003)
GDP per person engaged (constant 1990 PPP$) ...   ...  
Number of own-account and contributing family workers per 100 wage and salaried workers  ...   290.6 (2001)
by Sex        
Male ...   185.1 (2001)
Female ...   654.7 (2001)
Key Infrastructure Endowments
Electricity consumption  per capita kWh 35   91 (2009)
Paved roads  percent of total roads 37.5   53.9 (2008)
Number of cellular phone subscriptions per 100 people 0.0 (2000) 43.8 (2011)
Depositors with commercial banks per 1,000 adults  ...   ...  

In the next blog post, I will share information about the second pillar of inclusive growth (access to economic and social development opportunities).

Ginger and middlemen in Nepal

We have heard of cases where intermediaries (middlemen, syndicates, etc.), who do not add much value in production and processing processes, have raked in huge margin and inflated wholesale and retail prices in Nepal. More on this here and here.

Here is a new case of ginger production (Nepal is the third largest producer of ginger in the world) and role of middlemen, who take more than 50% of total retail value of ginger in the market. Per kg cost of ginger production is estimated at Rs 18 and is higly labor intensive.

Nepal has become the world’s third largest producer of ginger after India and China, according to the statistics of the Food and Agriculture Organization (FAO) of the United Nations. The country produced 216,289 tonnes of ginger in 2011 compared to the global output of 2.02 million tonnes.
Based on the average market price of Rs 62.29 per kg in 2010-11 at the Kalimati Fruit and Vegetable Market, Nepal’s ginger output was worth Rs 13.47 billion. Officials said that farmers only get Rs. 25-30 per kg out of this while the rest is gobbled up by middlemen.
Ginger production increased marginally by 2.6 percent in 2011 compared to 2010. However, output has jumped 146 percent in the last decade. In 2002, ginger production was recorded at 87,909 tonnes.

In FY2011, Ilam produced 44,310 tonnes of ginger, followed by Salyan with 23,500 tonnes, Nawalparasi 12,255 tonnes and Palpa 12,226 tonnes.