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

Download or read book Challenges to Mdg Achievement in Low Income Countries: Lessons from Ghana and Honduras written by Maurizio Bussolo and published by World Bank Publications. This book was released on 2007 with total page 22 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.