Transcript Document 7616768

Impact of Global
Crises on Social
Development
Faith Innerarity
Permanent Secretary Ministry of
Information, Culture, Youth and Sports
Jamaica
Outline of Presentation
1. Introduction – Importance of Enabling
Environment for Social Development
1. Implications of Global Crises
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Food, energy and financial crisis
Social dimensions of climate change
2. Policy Response
3. Conclusion and Recommendations
Importance of Enabling
Environment for Social
Development
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Economic and social policies are mutually
reinforcing.
The World Summit for Social Development
emphasized the importance of an enabling
macro-economic policy framework for social
development.
Globalization presents opportunities as well
challenges for economic and social progress.
Implications of Global Crises for
Social Development
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Vulnerable groups, especially in developing
countries, are being adversely impacted by
the global financial crisis, economic meltdown
and higher food and fuel prices
Impact of rising food prices has negative
consequences for poverty reduction and
jeopardizes gains made in many developing
countries.
Implications of Global Crises for
Social Development
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The FAO (2008) notes that the current hike in world
commodity prices is nearly for all the major food and
feed commodities and there is a strong possibility
that the prices may continue to remain high after the
effects of short-term shocks dissipate. The current
situation differs from the past in that the price
volatility has lasted longer, a feature that is as much a
result of supply tightness, as it is a reflection of everstronger relationships between agricultural
commodity markets and other markets.
Source: Food and Agricultural Organization 2008
Implications of Global Crises for
Social Development
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In 2007, climatic conditions played a major role in the supply
of cereal production in major grain producing countries.
Adverse weather conditions in Australia, for example,
devastated crops and led to reduced harvests in many
countries, particularly in Europe.
International Panel on Climate Change (IPCC) projects that
global food production could rise if local average
temperatures increase by between 1 and 3 degrees Celsius, but
could decrease above this range. However, this projection is
before extreme weather events are taken into account; and the
IPCC judges that extreme weather, rather than temperature, is
likely to make the biggest difference to food security
Implications of Global Crises for
Social Development
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Increases in fuel prices have also raised the costs not only of
producing agricultural commodities, but also of transporting
them.
Today’s global agricultural system is predicated on the
availability of cheap, readily available energy for use in every
part of the value chain, both directly (e.g. cultivation,
processing, refrigeration, shipping, distribution) and indirectly
(e.g. manufacture of fertilizers and pesticides).
The increase in energy prices have been very rapid and steep,
with the Reuters-CRB energy price index more than doubling
over a period of three years since the middle of 2004. Freight
rates have also doubled, mainly within a one-year period
beginning February 2006.
Implications of Global Crises
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A recent World Bank study estimates that there has been a 35% increase in the global poverty rate as a direct result of the
hike in food prices and that the number of poor has swelled by
more than 100 million.
The regions worst affected are those with the largest numbers
of persons living in extreme poverty.
The bulk of the income of the poor (up to 80% based on some
estimates) is spent on food, which makes them most
vulnerable to increases in food prices
Urban as well as rural poor are affected by increased food
prices.
Implications of Global Crises
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Nutrition and health of children in poor
households are put at risk as expenditure on
food is cut back in response to rising prices.
The number of malnourished persons
worldwide was projected to increase by an
additional 44 million to a total of 967 million
by the end of 2008, representing an increase
of 848 million over the 2003 figure.
Implications of Global Crises
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Other essential expenditure in poor
households such as school related costs are
affected by higher food and fuel prices, with
the attendant risk of children being withdrawn
from school or recording poor attendance.
Small and medium scale enterprises are
gravely affected by increasing lack of access
to affordable credit in light of the credit
squeeze.
Implications of Global Crises
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A significant impact of the global economic
slowdown including decreased consumer
demand in the developed economies and
reductions in foreign direct investments, is the
loss of jobs in the formal sector.
In the case of Jamaica, the bauxite and
tourism industries and remittances are among
the major areas where these factors are
expected to have the greatest impact.
Implications of Global Crises
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Small developing countries like Jamaica are
particularly vulnerable as their economies are very
dependent.
The three main sources of foreign exchange in
Jamaica are tourism, bauxite/alumina and
remittances.
The slow down in the construction of houses in the
United States has reduced the demand for aluminum.
The slow down in motor vehicle manufacturing
globally has also had an adverse effect on the
demand for aluminum. Global alumina stockpiles are
full, so much so, that ships laden with alumina have
no place to off load the commodity. Smelters have
been closed.
Implications of Global Crises
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As a consequence of lowered demand, two bauxite/alumina
plants in Jamaica are facing closure, (the hope is that this will
be temporary), with the prospect that a third plant may also be
affected. This will cause a loss of jobs and will have a
negative impact on the economies of the surrounding
communities.
Job losses in the industrialized countries of the North will
impact tourism in Jamaica and the wider Caribbean as well, as
holidays are not an option for the unemployed.
Remittances sent by overseas residents to their families in
Jamaica have been declining since late last year as those who
send the money have been experiencing the economic
pressures of their host countries, including job losses.
Implications of Global Crises
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Reduction in Government revenues as a result of
decline in economic activity has impact on
attainment of macro-economic and fiscal targets.
Reduced inflows to consolidated funds seriously
affects Government’s ability to finance critical areas
of social development such as health and education.
In Jamaica, for example, the free education policy up
to secondary level and removal of user fees from
public hospitals and other health facilities present
particular challenges in respect of sustainability
within context of current economic and financial
crisis.
Implications of Global Crises
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One positive development is that the price of
oil has declined significantly which reduces
the amount of money that has to be allocated
to provide this commodity. However, in the
case of Trinidad and Tobago, as an oil
producing country in the Caribbean, the
reduction in price has created a massive
shortfall in Government revenues.
Social Dimensions of Climate
Change
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The alarming frequency and intensity of severe
weather patterns and events such as hurricanes, is but
one of the debilitating effects of climate change.
Jamaica and other Small Island Developing States in
the Caribbean have in the last few years suffered
from multiple hurricanes which have impacted
adversely on the lifeblood of our economies – the
agricultural and tourism sectors
In these instances of natural disasters, it is the poor
and vulnerable who suffer the most.
Policy Responses
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Stimulus packages and ‘bail-outs’ in developed
economies
Government of Jamaica Initiatives
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Increasing local food production
Focus on training and increasing access to job
opportunities
Expansion of social assistance programme
Assessment of alternate energy sources
Tax incentives for productive sector
Special credit windows for small/medium scale enterprises
Focus on strategic priorities for national budget
Policy Responses
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Jamaica was appointed to the Board of the
Adaptation Fund and is one of ten countries in
which a community-based adaptation project
is will shortly be implemented under the
Global Environment Facility Small Grants
Programme to reduce vulnerability and
enhance the capacity of selected communities
to adapt to climate change.
Conclusion and
Recommendations
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More effective integration of economic and social
policies is urgently required.
Regulatory framework for financial institutions must
be strengthened and effectively managed at national
and international levels.
Democratic governance structures must be reinforced
through broader and deeper participatory approaches.
International cooperation must be intensified.
UN member states must ‘stay the course’ of the
internationally agreed social development goals of
Copenhagen and the Millennium Declaration.
Social investment is a productive factor and in
the context of the current global crises,
expenditure on essential human capital
development and protection of the vulnerable
should be enhanced and not compromised as
it is the key to future progress.
Thank You