The Future of India in the World Economy

Comments by Johannes Jtting OECD Development Centre Paris, 22 June, 2007

Focus on two points:

I. Human capital challenge:
Urgent need to improve gender equality

II. Employment challenge:

Moving beyond the conventional agenda

I) Gender equality - the status quo

India: low ranking in cross-country comparisons
UNDP Gender-related Development Index: World Economic Forum - Gender Gap Index: OECD - Social Institutions and Gender Index: 96 (out of 136) 98 (out of 115) 106 (out of 117)

Poor performance in key areas: Health Education - Political participation - Employment

1 0.8 0.6 0.4 0.2 0

Ratio of female to male adult literacy (>15 years)

600 500 400 300 200 100 0

Maternal Mortality Ratio (per 100,000 live births)

Viet Nam

Malaysia

Thailand

Indonesia

China

India

Philippines

India

China

Viet Nam

Indonesia

60 50 40 30 20 10 0

Share of women in wage employment in the non-agricultural sector (in % of total)

30 25 20 15 10 5 0

Women in Parliament (as % of total)

China

Malaysia

I ndia

Philippines

Thailand

Philippines

Indonesia

Viet Nam

China

Philippines

Source: Gender, Institutions and Development Data Base (2007), OECD

Indonesia

Viet Nam

Thailand

Malaysia

India

Malaysia

Thailand

What are the causes for persisting gender inequality?

Is there a lack of funds? Maybe, but Unequal distribution of funds between men and women Better progress in some states regardless of income level

Is there a lack of political pressure? - Maybe, but Big improvements (ex. quotas at local level for women) Active civil society as watch-dog for womens rights

So what about social norms and traditions?

35 30 25 20 15 10 5 0

Early Marriage (% of girls between 15 and 19 years of age who are currently married, divorced or widowed)

Inheritance Practices (male heirs are favoured = 1)

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0 India Malaysia Viet Nam China Indonesia Philippines Thailand
Thailand

India

Viet Nam

Indonesia

0.8 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0

Violence Against Women (absence of any legislation on violence against women = 1)

Philippines

Malaysia

Thailand

China

0.6 0.5 0.4 0.3 0.2 0.1 0

Womens Access to Land (land ownership is not possible for women = 1)

India

China

India

Viet Nam

Malaysia

Viet Nam

China

Indonesia

Philippines

Indonesia

Malaysia

Thailand

Source: Gender, Institutions and Development Data Base (2007), OECD

Philippines

Implications
Social institutions matter more discussion needed how to change them If gender inequality persists, then:
Low probability of achieving the MDGs Shortage of skilled labour Slow down of economic growth

II) Conventional employment agenda

1) Growth creates jobs poverty reduction 2) Growth will reduce the size of informal employment 3) All informal employment is bad (formal employment is good) 4) Agricultural sector not an engine for creating jobs

1) Growth and poverty reduction?

Impressive growth rates, but not very pro-poor Poverty impact limited
From 1987 to 2000:
Increase of GDP p.c. from 1.400 to 2.400 (constant 2000 prices) Decrease headcount poverty ratio (1$ a day) from 43% to 36%

Low employment elasticity of growth

2) Informal employment on decline?

High share of informal employment has persisted Informal sector contributes relatively little Source: Unni 2002 to GDP

3) Informal bad, formal good?

Informal employment always bad?
Informal workers rarely covered by social security systems Often low productivity But, very large differences within the sector: rural urban; self-employed wage employed, migrant those who stay etc.

Formal employment always good?

Casualisation of working conditions Benefits often do not materialize

4) Agriculture and jobs

Agriculture no engine for jobs:
Low absorption capacity of labour; creating employment possibilities elsewhere e.g. manufacturing; adapting legal framework and create conducive business environment

Agriculture employment creating potential

Main sector for poverty reduction; improving productivity and off-farm employment opportunities (linkages); public policies needed like recently enacted employment guarantee scheme and heavy infrastructure investments