A Systemic Assessment of MDG Achievement: The Case of Guatemala

Abstract

We propose a systemic approach to MDG assessment, which aims at exploiting the existence of interrelations and sinergies among indicators via the integration of a macro scenarios model and a set of probabilistic microeconometric models. Given this integrated system and an explicit loss function for the policymaker, it is possible to identify the most cost-effective combination of policy interventions aimed at simultaneously achieving all targets. We apply this model using survey data from Guatemala. Evidence suggests that under an optimistic GDP growth scenario, the annual cost of the specific policy interventions required to reach the targets would represent 0.6% of GDP. To estimate the potential bias that would be introduced if this same analysis is conducted on a sectorial basis and in the absence of policy coordination, we also simulate our model after shutting off all links between MDG indicators. Under this scenario, total budgetary needs would be more than 28% larger.

Keywords: Millennium Development Goals, Guatemala

JEL Classification: I12, I18, I21, I28, I32, I38, C25, C41, C61