Challenges to MDG achievement in low income countries : lessons from Ghana and Honduras, Vol. 1 of 1

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Challenges to MDG achievement in low income countries : lessons from Ghana and Honduras

Author:	Bussolo, Maurizio ; Medvedev, Denis ;	Collection Title:	Policy Research working paper ; no. WPS 4383
Country:	Ghana; Honduras;	Date Stored:	2007/11/09
Document Date:	2007/11/01	Document Type:	Policy Research Working Paper
Language:	English	Region:	Africa; Latin America & Caribbean
Report Number:	WPS4383	SubTopics:	Achieving Shared Growth; Public Sector Expenditure Policy; ; Population Policies; Public Sector Economics
Volume No:	1 of 1

Summary: This paper summarizes the policy lessons from applications of the Maquette for MDG Simulations (MAMS) model to two low income countries: Ghana and Honduras. Results show that costs of MDGs achievement could reach 10-13 percent of GDP by 2015, although, given the observed low productivity in the provision of social services, significant savings may be realized by improving efficiency. Sources of financing also matter: foreign aid inflows can reduce international competitiveness through real exchange appreciation, while domestic financing can crowd out the private sector and slow poverty reduction. Spending a large share of a fixed budget on growth-enhancing infrastructure may mean sacrificing some human development, even if higher growth is usually associated with lower costs of social services. The pursuit of MDGs increases demand for skills: while this encourages higher educational attainments, in the short term this could lead to increased income inequality and a lower poverty elasticity of growth.


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