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Kyrgyz Republic Poverty and Inequality in 2009 Sarosh Sattar Europe and Central Asia Region The World Bank October 6, 2011. Outline of presentation. Motivation Objectives Developments in poverty and inequality over 2006-2009 Poverty profile: selected characteristics - PowerPoint PPT Presentation
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Kyrgyz Republic Poverty and Inequality
in 2009
Sarosh SattarEurope and Central Asia Region
The World BankOctober 6, 2011
2
Outline of presentation Motivation Objectives Developments in poverty and inequality
over 2006-2009 Poverty profile: selected characteristics Concluding remarks
3
Motivation
Opportunity to show the importance of micro data to really understand what is happening to the population in the Kyrgyz Republic
Economic growth does not benefit all groups equally therefore it is important to look at disaggregated data
4
Objectives To monitor development’s in the
population’s welfare – especially those who are the most vulnerable
A descriptive report which complements the National Statistical Committee’s publication on poverty indictors
Stimulate interest by raising more questions than are answered
5
Dynamics of Poverty
& Inequality,2006 - 2009
6
Economic ContextLarge movements in macroeconomic aggregates
2006 2007 2008 2009-40-30-20-10
0102030405060 GDP
real, growth, %Worker remi-tances, growth , %Total con-sump-tion, growth, %
perc
ent
7
Poverty was responsive to economic growth
2006 2007 2008 2009
-50.0-40.0-30.0-20.0-10.0
0.010.020.0
GDP No. of poor
8
Large decrease in poverty rates
Absolute Extreme0.0
10.0
20.0
30.0
40.0
50.0
60.0
70.0
61.0
17.1
31.7
3.0
2006 2009
in %
of p
opul
atio
n
9
Growth improved the livelihoods of lower income groups more….
Bottom 2 3 4 Top0
10
20
30
40
5046
41 4235
12
Change in Mean Consumption per capita, 2006-2009
population quintile by consumption per capita
in p
erce
nt
10
Mean consumption in 2006 & 2009
1 2 3 4 50
10,000
20,000
30,000
40,000
50,000
60,000
2006 2009
population quintile by consumption per capita
annu
al c
onsu
mpt
ion
per
year
in s
om
11
By 2009 share of salaries fell and pensions rose compared to the previous year
2007 2008 20090%10%20%30%40%50%60%70%80%90%
100%
78 83 80
10 8 118 7 6
Other
Material support from friends, relatives and local admin.
Pensions
Salaries
12
Inequality fell as measured by the Gini coefficient
2006 2007 2008 20090.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0 31.328.2
25.9 25.5
National
perc
ent
13
Also, the share of consumption increase for the bottom 80% of the population
Bottom
2
3
4
Top
0 5 10 15 20 25 30 35 40 45
9
13
16
21
42
10
14
17
22
36
20092006
popu
latio
n qu
intil
e by
co
nsum
ptio
n pe
r ca
pita
14
Macro and micro points What we know….
Before 2008 economic growth and remittances went hand in hand with falling poverty rates
In 2009 there were dramatic changes in growth, remittances, and public expenditures and poverty remained level
What we don’t know Why the bottom 40 percent of the population
benefited the most in 2006-2009. What economic developments occurred that were
“pro-poor” and are they a result of government policies?
15
Why using household level data raises interesting questions for policy makers… and example
A puzzle…..
16
Rural and urban changes in mean consumption differed somewhat
Bottom 2 3 4 Top05
101520253035404550
Urban Rural
17
Significant reduction in rural absolute poverty
2006 2007 2008 200901020304050607080
4738
23 22
69 64
37 37
Urban Rural
Perc
ent o
f pop
ulat
ion
18
But agriculture did poorly. So what led to poverty reduction in rural areas?
2006 2007 2008 2009100
105
110
115
120
125
130
135
Agriculture Non-Agriculture
19
What could be happening…. Farm income rose due to high food price
increases but volume didn’t change Non-farm income is rising Remittances could have increased
substantially …. Or something else
20
Large differences across regions and large changes over just a few years….
Another puzzle…..
21
Significant differences across mean consumption per capita by oblast
Bishkek Issykul Jalal-Abad Naryn Batken Osh Talas Chui
137
81 86 83 91 94 90
113
Mean per capita consumption
Inde
x of
con
sum
ptio
n pe
r ca
pita
, Mea
n =
100
22
Large declines in poverty but also big differences
Absolute Poverty
2009change
2006-09Bishkek 14 -8Issyk-kul 46 -18Jalal-Abad 37 -43Naryn 44 -30Batken 31 -42Osh 38 -37Talas 33 -27Chui 21 -20
23
Poverty rates and mean consumption are strongly correlated
70 80 90 100 110 120 130 140 15005
101520253035404550
Index of mean consumption per capita
pove
rty
inci
denc
e, in
per
cent Osh’s poverty
rate is relatively high
24
Obvious questions Why is there such high diversity among
mean consumption levels and poverty rates across oblasts?
What factors could explain this? Private sector development? Education and productivity of labor? Government spending?
Why are changes in poverty rates so dramatic but different across oblasts?
25
POVERTY PROFILE2009
26
Geography matters for povertya: Absolute Poverty b: Extreme Poverty
Bishkek Issykul Jalal-Abad Naryn Batken Osh Talas Chui01020304050
14
4637
44
3138
33
21
712
22
7 8
30
410
Absolute Poverty Rate
perc
ent
27
Larger households associated with higher risk of poverty
Poor Non poor
All Poor Non poor
All Poor Non poor
All
National Urban Rural
0.0
1.0
2.0
3.0
4.0
5.0
6.05.0
3.5 3.84.5
3.1 3.3
5.2
3.84.2
pers
on
28
Higher poverty in households with more children
Households without children
Households with 1 child
Households with 2-3 children
Households with more
than 3 children
0%10%20%30%40%50%60%
11%18%
52%
18%
31% 27%38%
4%
Poor Non poor
29
Distribution of poor by employment status
A: Absolute Poverty Distribution (HH head)
B
All Poor Nonpoor0%10%20%30%40%50%60%70%80%
33% 35% 32%
67% 65% 68%
Not employed Employed
30
Poverty rates among household heads by employment statusA: Absolute Poverty Distribution (HH head)
B: Absolute and Extreme Poverty Rates by Employment Status (HH head)
HH head not employed
HH head employed
HH head not employed
HH head employed
Absolute Poverty Extreme Poverty
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.033.7
30.8
5.02.0
perc
ent
31
Extreme poor more dependent on social assistance, but no significant difference between poor and nonpoor
Extreme Poor Poor Nonpoor
Income from work 66 80 80
Pensions 18 12 11Social benefits 5 1 0Material support: local admin, relatives or friends
9 5 6
Other income 2 2 3
Total 100 100 100
32
Poverty distribution and rates in terms of education (HH head): negative relationship
Higher
Secondary Prof.
General Secondary (complete)
Elementary
Illiterate
0 10 20 30 40 50 60 7015
3026
3339
3624
5963
81
1214
506
41
4Distribution of the Poor Poverty Headcount Rate
percent
33
Concluding Thoughts
34
Key Messages
Macroeconomic developments had a significant impact on the population’s living standards and the welfare of low income groups
Many interesting and unresolved issues of poverty and development
A large research agenda remains that could help policy makers pursue more thoughtful solutions