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[The 11th NSE International Development Forum] EBRD Focuses on Inequality and Economic Inclusion in its New Transition Report

2017-04-17

The 11th NSE International Development Forum

EBRD Focuses on Inequality and Economic Inclusion in its New Transition Report

 

(Prof. Sergei Guriev, Chief Economist of the EBRD)

 

Prof. Sergei Guriev, Chief Economist of the European Bank for Reconstruction and Development (EBRD), highlighted the EBRD’s focus on inequality and economic inclusion in its new Transition Report 2016-17, on the 11th New Structural Economics International Development Forum, organized by the Center for New Structural Economics (CNSE) and the Institute of South-South Cooperation and Development at Peking University (ISSCD) on March 21, 2017. Dr. Jiajun Xu, Executive Deputy Director of the CNSE, hosted the forum.

 

(Dr. Jiajun Xu, Executive Deputy Director of the CNSE)

 

The new Transition Report 2016-17, entitled Transition for All: Equal Opportunities in an Unequal World, is the first Transition Report since 1994 to take a close look beyond average growth and deal exclusively with economic inequality and inclusion in the EBRD region, or emerging Europe, Central Asia, North Africa and Jordan.

 

Prof. Guriev elaborated on the four key aspects of inclusive growth in his lecture: income convergence, the impact of transition on people’s well being, inequality of opportunity, and financial inclusion.

 

(EBRD Transition Report 2016-17: Transition for All: Equal Opportunities in an Unequal World)

The report indicates that though having gone through a tough transition from planned to market economies, the EBRD region has caught up with richer countries in terms of closed part of the income gap. However, not everybody has benefited equally. Wealth is strongly concentrated among the very rich who derive their fortune predominantly from commodity rents and related sectors, while only 44% of the population in the post-Communist countries have experienced income convergence.

 

The formerly socialist states have also been doing well in closing the “transition happiness gap”: residents in this region with much lower level of life satisfaction in the early years of transition are now just as happy as their counterparts in non-transition countries with similar income levels. Although more content with life at present, they still suffer from the severe hardships of the transition years—men and women born at the start of transition are nowadays one centimetre shorter than those born before or after.

 

The report also discusses ways to help distribute the benefits of growth more equally, where reducing the inequality of opportunity is the key. According to the report, parents’ level of education, followed by gender and place of birth, are the top three factors that harm equal opportunity, which in turn, leads to the unequal distribution of income. Therefore, enhanced access to financial services, among others, will effectively facilitate rural, female or poor population to participate more fully in the local economy.

 

Prof. Justin Yifu Lin, Director of the CNSE, and Prof. Yong Wang, Academic Deputy Director of the CNSE, commented on the lecture, linking the focus and findings of the report to broader critical topics, such as the impact of privatization on growth in transition countries, the role of governments in catching-up middle-income economies,  how income inequality feeds back to economic growth, the correlation between levels of happiness and income, and the mobility along the income ladder.

 

(Prof. Justin Yifu Lin, Director of the CNSE)

(Prof. Yong Wang, Academic Deputy Director of the CNSE)

 

 

About the European Bank for Reconstruction and Development

Founded in 1991 during the dissolution of the Soviet Union, EBRD’s initial mission was to “use investment as a tool to build market economies in the former Eastern Bloc”. The London-based multinational development bank has now expanded to support development in more than 30 countries from central Europe to central Asia. The EBRD is owned by 65 countries and two EU institutions, with the biggest shareholder being the United States. China was admitted a shareholder in December 2015.

As the EBRD’s Chief Economist, Prof. Guriev is responsible for, among others, advising the President and other senior members of the Bank’s management team on economic issues of strategic or operational relevance pertaining to the EBRD region. His office also is responsible for the content of the Transition Report, the first issue of which was published in 1994, with the intention of analyzing and understanding the process of transition, and to share it with partners.

 

 

About New Structural Economics International Development Forum

This is the 11th session of the New Structural Economics  International Development Forum, which is initiated in March 2016 and held once or twice a month. It aims to bridge the gap between research and practice by hosting open and equal conversations among scholars, professionals, policy makers and entrepreneurs in the field of international development. Speakers of previous sessions include senior scholars and officials from International Monetary Fund (IMF), the Organization for Economic Co-operation and Development (OECD), Development Research Center of the State Council (DRC), Human Development Report Office (HDRO) in the UN, and New Development Bank (NDB).