Editorial»
Reshaping the economy
JAN 13 - The deteriorating economy urgently needs some corrective measures for reshaping it at different levels. Despite ample opportunities in the past twelve years of democratic governance, decades of economic mismanagement continue mainly because of the lack of policymakers’ sincerity and good governance. The major thrust of economic strategies put forward recently by this government has been the anchoring of the Poverty Reduction Strategy Paper (PRSP) to the Tenth Five-year Plan. The concept of PRSP, in general, is based on the promise that the economic growth, social development and poverty alleviation should go hand in hand and, that the broad-based economic growth would generate income-earning opportunities for the poor, and the increased service delivery would help the poor to take advantage of these services.
The document ~ ~ however, relies on the general framework prescribed by the World Bank and the IMF rather than addressing the local politico-economic reality and the emerging issues the country is presently facing. Instead, the government has chosen an easy escape path of blaming the insurgency for the past economic failures and sees it as a major constraint in achieving the set out targets during the plan period.
Experiences from other countries have shown that PRSPs with the narrowed down focus on the plethora of macroeconomic stability and integration with the global markets without considerations of local politico-economy and ecological reality have resulted in the failure in poverty alleviation rather than the success.
Reshaping deteriorating economy requires addressing the root-causes of political-conflict rather than choosing an easy way out. The recent WB/IMF Joint Staff Assessment of PRSP also recognizes that the insurgency is, in part, a reflection of the rising disenchantment with inefficiency and corruption in the public sector, large persistent (income) inequalities, and poor delivery of the public services. Though the PRSP document ~ ~ claims to have adopted a number of new approaches (e.g., new modalities of implementation and service delivery, the emphasis on decentralization and partnership with NGOs and local communities, etc.), it follows the same tendency of addressing macroeconomic and some sectoral issues rather than properly addressing the ongoing economic crisis and adopting measures to prevent it from further happening.
The burning question towards reshaping the deteriorating economy, is thus: How to redress the economic policies and strategies at different levels that would facilitate a change and establish the peace process and ultimately help in reducing poverty and attaining sustainable economic growth?
Addressing the root-causes of insurgency and reshaping the present fragile economy basically demand a “bottom-up” approach. Among others, these include measures such as: i) addressing the local politico-ecological economy; ii) promoting inter-sectoral linkages as sources of pro-poor growth at different levels; iii) promoting investment in pro-poor public goods, and rewarding the rural poor for the public goods they generate as joint products from their activities; and iv) linking local level ‘constraints and opportunities’ to the national as well as to the opportunities/constraints that would result through integration with the global economy. This brief article (presented in two parts) attempts to highlight on some specific measures on these different dimensions.
Politico-ecological economy:
Most of the rural areas of Nepal are characterized by the powerlessness (eg, with legal structure available to only those with political and economic power, and exclude the poor), vulnerability (e.g., more than 85 percent of the rural population in Nepal are considered to fall in this category) and isolation (e.g., from mainstream politics, economic opportunities, and physical isolation). The local politico-ecological economy is thus fundamental to both the sources of economic growth and poverty alleviation at the local/regional levels. First, it demands concrete mechanisms that would help transfer financial resources and institutional measures to empower the local people and develop corporate management capability of local development/community organizations in order to manage these resources. Though the PRSP emphasizes on the people’s participation, including that of NGOs at the local level, it lacks both adequate financial means and institutional structures that would help to empower the local community and provide opportunities needed to create an enabling environment for addressing these concerns. In delivering the essential services through usual bureaucratic channels, often the government officials try to advance their own interests and such interests have contributed to the increased corruption and failure of targeted programs in the past. Creation of corporate managerial capability at the local development unit and community level is thus important so that informal conspiracy by the officials could be checked or avoided through collaboration from the local communities.
Second, in addition to giving emphasis to the fiscal and implementation constraints at the macroeconomic level, there is need for re-shaping these policies and mechanisms addressing the constraints and opportunities of local resource use. The local ecological-economy demands the adoption of “bottom-up” approach for working towards poverty alleviation. Specifically, this requires identification of: i) the existing and potential resource use capacity, labor productivity and market potential of the local products, ii) population carrying capacity (with basic needs as established threshold) of each rural locations with and without external support, iii) percentage of population in excess of the ecological carrying capacity in each poverty pockets and that need external support for meeting their basic needs on sustainable basis. These would help to address the resource constraints and opportunities, identify local sources of economic growth, and design targeted programs for
providing employment opportunities to the labor force in excess of local/regional ecological carrying capacity.
Third, the issue of equitable access to the means of productions in the rural areas appears to be another major cause of present insurgency. In this context, the issue of rural restructuring (agrarian and social reforms) emerges as another pressing politico-economic agenda. Without such reforms, income gains obtained from economic growth alone are often uncertain and unevenly distributed among the households, which would further increase income inequality and vulnerability. As a major step towards reshaping the deteriorating economy, it is both essential to address such a pressing issue with consideration of possible alterations in the rural property regimes that would help to increase the asset base and productivity of the rural poor. However, the traditional economic focus of agrarian reforms (eg, intersection of landed rights, agriculture and poverty) needs to be widened in order to address the location specific ecological constraints and opportunities. For example, distribution of lands in highly or moderately degraded mountain or hills, though politically attractive, may not prove beneficial because the incremental productivity consequences of such reforms might be negative and would further accelerate the degradation of natural resources. Next, such reforms should also address the growing importance (local and global) of conservation of biodiversity (agro-biodiversity and species diversity) with protection of rights of sustainable utilization to the local people.
(To be concluded)Posted on: 2004-01-13 02:20
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