China

This overview summarizes the key findings of the eight chapters and one policy note. It is organized as follows. The first section provides a background of Guangdong,... Show More + while the second describes the current situation of inequality in the province. Next is a discussion of the potential impacts of the transfer of industrial activities ('industrial transfer') in mitigating regional disparity, followed by the recommendation of a three pillar strategy for Guangdong. The fifth section focuses on the elimination of absolute poverty through the minimum living allowance (Dibao) system, and the sixth turns to policy actions needed to increase opportunities for the rural population by moving them to jobs, increasing their access to finance, and ensuring that their land rights are better protected. The seventh section further assesses Guangdong's options for investing in people through more equitable service delivery in compulsory education, skill development, and health care, with the aim of enhancing the capacity of the poor to seize and utilize opportunities. The last section concludes this overview. Show Less -

Brazil, China and India have seen falling poverty in their reform periods, but to varying degrees and for different reasons. History left China with favorable initial... Show More + conditions for rapid poverty reduction through market-led economic growth; at the outset of the reform process there were ample distortions to remove and relatively low inequality in access to the opportunities so created, though inequality has risen markedly since. By concentrating such opportunities in the hands of the better off, prior inequalities in various dimensions handicapped poverty reduction in both Brazil and India. Brazil's recent success in complementing market-oriented reforms with progressive social policies has helped it achieve more rapid poverty reduction than India, although Brazil has been less successful in terms of economic growth. In the wake of its steep rise in inequality, China might learn from Brazil's success with such policies. India needs to do more to assure that poor people are able to participate in both the country's growth process and its social policies; here there are lessons from both China and Brazil. All three countries have learned how important macroeconomic stability is to poverty reduction. Show Less -

These guidelines have three sections. Section one provides food for thought, regarding poverty and environment, and how the two are linked. Section two provides practical... Show More + tools to incorporate the environment into a village-level action plan for the environment. Section three provides ideas for innovative activities relating to the environment in poverty reduction programs. Finally two practical checklists are provided: one for poverty reduction managers who wish to monitor progress in incorporating environment into staff work; and one for poverty reduction staff involved into village poverty reduction plans. The guidelines focus on Southwest China where poor areas are mostly mountainous areas. In other parts of China where poor areas are also arid areas, poverty reduction staff may use these guidelines as a reference but will need to adjust specific contents in section 2 to the different environmental issues of the region they work in. Show Less -

This paper examines the determinants of child nutritional status in seven provinces of China during the 1990s, focusing specifically on the role of two areas of public... Show More + policy, namely health system reforms and the one child policy. The empirical relationship between income and nutritional status, and the extent to which that relationship is mediated by access to quality healthcare and being an only-child, is investigated using ordinary least squares, random effects, fixed effects, and instrumental variables models. In the preferred model - a fixed effects model where income is instrumented - the author find that being an only-child increases height-for-age z-scores by 0.119 of a standard deviation. The magnitude of this effect is found to be largely gender and income neutral. By contrast, access to quality healthcare and income is not found to be significantly associated with improved nutritional status in the preferred model. Data are drawn from four waves of the China Health and Nutrition Survey. Show Less -

This paper discusses the causes of the middle-income trap in Latin America and the Caribbean, identifies the challenges and opportunities for Latin America that come... Show More + from China's rise, and draws lessons from New Structural Economics and the Growth Identification and Facilitation Framework to help Latin America escape the middle-income trap. Countries in Latin America and the Caribbean are caught in a middle-income trap due to their inability to structurally upgrade from low value-added to high value-added products. Governments in Latin America and the Caribbean should intervene in industries in which they have a comparative advantage, calibrating supporting policies in close collaboration with the private sector through public-private sector alliances. Through continuous structural upgrading in sectors intensive in factors such as natural resources, scientific knowledge, and unskilled labor, the region could achieve dynamic growth. This would require investments in education, research and development, and physical infrastructure. Therefore, industrial upgrading and diversification would be essential to avoid further de-industrialization arising from the competitive pressures of the rise of China, broaden the base for economic growth, and create the basis for further sustained reduction in unemployment, poverty and income inequality. Failure to do so would lead to a loss of competitiveness and risks of further de-industrialization. Show Less -

The objectives of China Watershed Management Project (CWMP) are to: 1) help evaluate the impact on poverty of the World Bank-supported Loess Plateau project interventions;... Show More + 2) develop best practice models for watershed management which emphasis poverty reduction and the participation of the poor; and 3) help relevant future Chinese and other donors' programs benefit from the experiences gained and adopt the models developed. As a result of the linked challenges confronting watershed management in China, namely, sedimentation and flooding, water scarcity and rural poverty, watershed management and poverty alleviation are urgent issues and high priorities for national and international support. These challenges are particularly severe along the upper and middle reaches of the Yellow River and typify the widening gap between the living standards and rate of development of western and eastern provinces. Despite entrenched tendencies to follow set guidelines and focus on achievement of hard physical outputs there is an apparent recognition across departments with responsibilities in watershed management and poverty alleviation that participatory approaches are required if rural communities are to be engaged and poverty alleviation efforts made more effective. This is the context in which CWMP is placed with its main objective being to influence thinking and learning on integrated watershed management with a specific focus on improving natural resource management and rural poverty. Show Less -

The most basic argument for insurance is that it reduces financial risk. But since insurance opens up new opportunities for consuming expensive high-technology care... Show More + which permits health improvements that are valued by the insured, and because in many settings the provider is able and has an incentive to exploit the informational advantage he has over the patient, it is not immediately obvious that insurance will in practice reduce financial risk. The authors analyze the effect of insurance on the probability of an individual incurring "high" annual health expenses using data from three household surveys-one a cross-section survey, the other two panel surveys. All come from China, a country where providers have until recently largely been paid fee-for-service (often according to a schedule that encourages the overprovision of high-technology care and the underprovision of basic care) and who are only lightly regulated. The authors define annual spending as "high" if it exceeds 5 percent of average income in the sample and as "catastrophic" if it exceeds 10 percent of the household's own per capita income. The estimates of the effect of insurance on financial risk allow for the possible endogeneity of health insurance in the panel datasets by allowing for a time-invariant fixed effect capturing unobserved risk that may be correlated with insurance status, and in the cross-section dataset by using instrumental variables, where availability of and eligibility for health insurance are used as instruments. The results suggest that during the 1990s China's government and labor insurance schemes increased financial risk associated with household health care spending, but that the rural cooperative medical scheme significantly reduced financial risk in some areas but increased it in others (though not significantly). From the results, it appears that China's new health insurance schemes (private schemes, including coverage of schoolchildren) have also increased the risk of high levels of out-of-pocket spending on health. Where the authors find evidence of health insurance increasing the risk of "high" out-of-pocket expenses, the marginal effect is of the order of 15-20 percent; in the case of "catastrophic" expenses, it is even larger. Show Less -

Over the reform period, the non-state sector has emerged as the fastest growing and most dynamic component of the Chinese economy. It has grown at 20 percent per annum... Show More + in the last 20 years, and has, since 1992, created 6 million jobs each year, or 75 percent of all jobs created. Despite the progress on reforms, a sizeable surplus of labor still exists in the rural sector and state-owned enterprises (SOEs). Private companies have been active in taking over and restructure failing SOEs, creating jobs in urban centers and better paying jobs in rural areas. The New Hope Group, one of China's leading industrial conglomerates, is playing an active role in the efforts to address some of these employment challenges, particularly in the interior provinces of China. Founded in the early 1980s by 4 brothers in the Liu family, the Group is mainly engaged in animal feed, food processing, banking, real estate, chemicals and dairy businesses. The case study illustrates the novel approach of this privately owned group to the establishment of supply chain links in the dairy industry and its contribution to raising the incomes of poor farmers in Sichuan province. Show Less -

The authors investigate recent rends in poverty, and inequality in China, decomposing data on poverty reduction to see who has benefited most from China's economic growth.... Show More + They find that, by several measures, poverty declined significantly in the 1990s, across a wide range of poverty lines, except that a slight slowdown in China's export, and economic growth in 1997-99 might have hurt the poor. There was a slight increase in the poverty headcount between 1997 and 1999, using lower poverty lines, and a worsening of the poverty gap index. Average per capita consumption declined for farmers, especially those living in poor regions such as Gans, Heilongjiang, Sanxi, and Xinjiang. It is unclear whether this decline was attributable to Asia's economic crisis. Economic growth contributed significantly to poverty reduction, but rising inequality worsened both rural, and urban income distributions - except during the Asian crisis, when the distribution remained relatively stable. The poor benefited far less than the rich from economic growth. Income growth reached, or exceeded the average growth rate only for the richest twenty percent of the population. The authors then examine the relationship between human capital, growth, and poverty. They find that the accumulation of human capital had slowed, and that there is a huge regional disparity in human capital stock. And the distribution of education is becoming increasingly skewed. China must address this problem if it is to succeed in attacking poverty, and inequality. Show Less -

This report build on the framework and vision laid out in the 1997 Country Economic Memorandum, "China 2020: Development Challenges in the New Century," and its companion... Show More + reports, which remain largely valid. This year's report focuses on the near term. The difficulty of dealing with China's main macroeconomic challenge-weakened domestic demand-has been compounded by the Asia crisis and the global economic slowdown. These challenges come at a critical juncture in China's structural reform program. Unemployment and demand for social protection has increased, and corporate debt pressures are building, in line with the transition to a more market-based economy. However, the country's large and partly insulated domestic economy has inoculated it to some degree against contagion from its less fortunate neighbors. Having weathered the storm so far, China can learn lessons from other countries that have experienced difficulties and, hence, mitigate against the risk of a crisis. The major policy issue for China is how to respond to near-term growth pressures in ways that reinforce structural reform and economic development. Policymakers have to focus on pro-growth reforms that support the development of the labor-absorbing service sector. Also, enterprise restructuring and corporate governance strengthening must remain high priorities. Finally, China needs to support structural measures that increase household demand by raising rural incomes and supporting safety net programs. Show Less -