Notes for the Opening Speech Stefan Priesner, UNDP Resident Representative

13 Jun 2014

Dear participants of the young economist forum,

Ladies and gentlemen

  • At the outset I would like to extend my warm greetings – assalamu aleikum, доброе утро, a very good morning to all of you!
  • I congratulate the organisers – the Institute for Forecasting and Macroeconomic Research, a longstanding partner of UNDP, for making this Forum an annual highlight of debate and exchange of knowledge. This year this is done for the first time in partnership with Westminster University, which I am sure will further strengthen the outcome of the Forum.

Ladies and Gentlemen,

  • I recently on youtube came across a short clip of an address of one of the most successful businessmen of our times, Bill Gates, to a congregation of his old university Harvard. He acknowledged that he was always stimulated, encouraged and challenged during his (limited) university time, that he learnt the tools of the trade; but he also said that sadly he was not given awareness about the importance of values in implementing his skills. In this context he referred specifically to the centrality of equitable development, and reaching out to the vulnerable that he only began to understand later in life.
  • This clip was a powerful reminder to keep the ‘means’ and the ‘ends’ (objectives) clear, and I think it also applies to economics as one of the most advanced social sciences.
  • In my opinion few concepts have articulated this relationship between means and ends better than the Human Development paradigm, which in 1990 challenged the primacy of economic growth and associated structural adjustment policies.

Economics and Human Development Paradigm

  • At the core of Human Development is a simply stated premise that “People are the real wealth of a nation.”
  • Human development is concerned with a basic development idea: namely, advancing the richness, the opportunities of human lives, rather than the richness of the economy in which human beings live, which is only a means of it. This simple idea was powerfully articulated among others by Amartya Sen, who became a Nobel Laureate in 1999.
  • The Human Development paradigm has had a profound impact on policies around the world that deliberately were designed to expand people’s choices – through health policies, increasing life expectancy, through quality education, economic wellbeing, and through expanded choices in selecting leaders and influencing public decisions.
  • And we have indicators – the Human Development Indicator – that is a meaningful alternative to measuring development by GDP.
  • Human development is an evolving idea. As the world changes, analytical tools and concepts continue to evolve. Yet the core insight at the centre of the HD approach remains constant and is as valid today as it was two decades ago: Development is ultimately best measured by its impact on individual lives; it is about expanding choices for people.

The Middle-income Trap          

Ladies and Gentlemen,

  • Uzbekistan has attained middle income status in a short time and has succeeded in improving social and economic indicators on multiple fronts. Now it has ambitions to become an upper middle-income country.
  • The experience of other countries shows that there is no standard recipe for achieving this next step. Many countries have fallen into the MIC trap, meaning that they have gotten stuck at a certain level of income and development.  Many countries have also found that the policies and institutions that lifted them out of low-income country status do not necessarily promote continued rapid growth once lower middle-income country status is attained.  To help Uzbekistan successfully address the next steps on the development ladder, it will be important that the government can rely on a corps of trained economists with skills and knowledge to evaluate current policies, to participate in analytical debate, and to provide the expert knowledge needed to develop new ones...and I believe events like this are very important in this regard.
  • As I mentioned, we in UNDP view economic growth as a means to an end. As the concept of Human Development has evolved, we have emphasized more and more the aspects of equity and sustainability, which requires even greater coordination, balance and synergies between economic, social and environmental policies. This will likely be the core of the post-2015 development paradigm.
  • First, social sustainability concerns are particularly important in middle income countries.  Poverty in the past has been associated with low-income countries, but it is striking now that globally 70 per cent of the world’s poor live in middle income countries. Economists have a role to play in advising how growth can be made as inclusive as possible. This requires participation – through productive employment – of its adult population. However, many middle income countries have found that employment growth can decouple from increases in GDP, resulting in ‘jobless growth’, which is expressed in inequalities, poverty and ultimately threats to social cohesion.  Or there can be concentrations of growth in capital cities or a few urban centres, which contribute to geographical and other disparities.
  • Second, to be sustainable, growth needs to be inclusive and broad-based. As the country develops, it can afford stronger social protection.  But there may also be a need for economists to review the efficiency and impact of the tools used to provide social protection, as the country moves into its middle income status. Social assistance which was previously targeted narrowly to the extreme poor, may require expansion to capture those vulnerable of falling into poverty. Apart from growth policies which promote participation through productive employment, it will also be important that active labor market policies are developed to promote participation of those at risk of being ‘left behind’.
  • Finally taking into account ecological constraints are vital for the longer term sustainability of human life on the planet.  – resources are finite, and climate change affects livelihoods, biodiversity and ecosystems. Throughout the world, economic growth policies which are based on or actively promote unsustainable patterns of production and consumption are taking an increasing toll on domestic energy supplies and other non-renewable resources.  Natural resources are depleted 40 per cent faster than they can be regenerating. Here again it is important that young economists are able to go beyond GDP and economic growth figures, and that they don’t see environment as an externality but rather as an integral part of economic development paradigms.
  • Overall middle-income countries with rapid economic growth agendas must manage social and environmental risks, as well as macroeconomic ones.  I believe that economists must be able to show that these risks are often interlinked and inter-active.

Dear participants, dear friends,

  • UNDP supports governments and nations around the world in transitioning to a sustainable development path, which stresses the importance of incorporating social and environmental concerns into short-, medium-, and long-term planning for economic growth and development.
  • As a proud partner of the government and the people of Uzbekistan, on behalf of UNDP I wish the Forum all the success and hope solutions will be found through vibrant debates on some of these critical issues that are at the core of the 21st century development agenda.

Thank you.