Challenges to MDG Achievement in Low Income Countries: Lessons from Ghana and Honduras

22 Pages Posted: 20 Apr 2016

See all articles by Maurizio Bussolo

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia

Denis Medvedev

World Bank; American University

Date Written: November 1, 2007

Abstract

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.

Keywords: Population Policies, Achieving Shared Growth, Public Sector Economics & Finance, Public Sector Expenditure Analysis & Management

JEL Classification: D58, O57, O15, E61

Suggested Citation

Bussolo, Maurizio and Medvedev, Denis, Challenges to MDG Achievement in Low Income Countries: Lessons from Ghana and Honduras (November 1, 2007). World Bank Policy Research Working Paper Series, Vol. , pp. -, 2007. Available at SSRN: https://ssrn.com/abstract=1029498

Maurizio Bussolo

World Bank - Chief Economist Office for Europe and Central Asia ( email )

1818 H Street, N.W.
Washington, DC 20433
United States

HOME PAGE: http://https://blogs.worldbank.org/team/maurizio-bussolo

Denis Medvedev (Contact Author)

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

American University

4400 Massachusetts Avenue N.W.
Washington, DC 20016-8029
United States

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