The Economists
by Sir Richard JollyEditor’s Note: The article is an excerpt from Chapter 10 of Sir Richard Jolly’s forthcoming book: Reasons for Hope
The Impact of Recession on Children
To draw the material together, a group of us -including Hans Singer -then spent three weeks in the summer of 1983 in Cornell University in Ithaca, reviewing the country studies and producing a consolidated report of the situation. Once again, Hans contributed the integrating idea. Children were being hit by a “reverse shock-absorber effect”: poorer countries were disproportionality hit by the global economic downturn, social services like education and health were being disproportionately hit by reductions in government spending and GNP and, thirdly, children were being disproportionately hit by reductions in income and social service spending.
As with the employment missions of a decade earlier, our group in Cornell was not all work and no play. In the evenings, after dinner we practiced New York stage dancing, shown the steps by one of the women-helpers in the kitchen, who was an accomplished stage performer. We had many a laugh to offset the seriousness of our study.
Our report The Impact of Recession on Children [1] was met with considerable interest and support within the UNICEF Board. This led us to explore bolder actions to challenge the narrowness of the structural adjustment policies promoted by the Bretton Woods Institutions. Three or four times a year, the UN Secretary-General would assemble heads of all the UN agencies for a “cabinet” meeting. The World Bank and the IMF would also attend, though usually for only the first hour or so, time for them to present their views on the world economy but leaving soon thereafter with courteous apologies. Before they left, Jim Grant, with me sitting behind him in support, would ask for the floor and draw attention to how children were being affected by the debt and recession, challenging the message that structural adjustment was working. “Working for whom?” Jim would ask, using our study to emphasize how children were suffering, with the cuts of adjustment on incomes and consumption reinforced by reductions in spending on education, health and nutrition.
M de Larosiere, Managing Director of the IMF, responded to the challenge and invited Jim Grant to Washington to discuss what might be done. Andrea and I accompanied Grant to Washington. As we entered the imposing IMF building, I said that I felt a bit like David going to meet Goliath, armed only with a small stone of child conscience. In fact, we were better prepared than that. Over the previous weekend, Gerry Helleiner, Andrea Cornia and I had drafted a seven-point action paper about what the IMF could do if they recognized the challenge of helping and not hurting children. Point one was simply to speak out about the issues and emphasize the need for action. Point seven, of greatest difficulty, would be to change the objectives and content of the IMF’s own adjustment programmes, fully to incorporate the needs of children and other human concerns. De Larosiere listened carefully and was sympathetic but said that with only 500 or so economists in the IMF, he didn’t have the capacity to do more. As Gerry, Andrea and I joked afterwards, we didn’t tell him that the three of us had drafted our proposals over the weekend, at a total cost of $150 for Gerry’s consultancy.
There was some country follow up in Sri Lanka and Ghana, where Frances Stewart joined a Bretton-Woods mission to make proposals including attention to the needs of children. Initially, the leader of the Ghana mission argued that Frances must confine herself to the education and health sectors but Frances rightly objected and did also write about the whole macro-strategy -though how much her ideas entered the final report is not clear.
Adjustment with A Human Face
In 1985, I was asked to give a keynote address to the Society of International Development’s major conference in Rome. In this, I outlined a bigger agenda of possible actions to protect people during economic adjustment. A major part of my presentation was the example of Britain, during the Second World War. In spite of all the urgent war-time military pressures, the UK incorporated human needs – the specific and separate needs of babies, children, women, pregnant women and older retired persons along with the needs of the workers directly supporting the war effort -into a comprehensive programme of support by government. I concluded that combining human concerns with the highest priorities for winning the war was both possible and successful. When the war ended, the nutritional status of the British population was higher than ever before! The moral: we needed to learn from this experience for an “Adjustment with a Human Face”. Children and human needs more generally should be an integral part of formulating economic policies of structural adjustment.
Over the next two years, Andrea Cornia and Frances Stewart, with some help from myself, worked on a detailed study for UNICEF. This two-volume study, Adjustment with a Human Face was translated into French and Spanish and had a big influence, along with a second volume of country case studies. For this work, UNICEF had received growing support from its Board. Initially, in 1984, only three governments agreed that work on economic adjustment was appropriate for UNICEF - the Norwegian, Dutch and Swedish delegations. The next year, 10 governments indicated support, the following year 27 and in 1987, all 41 delegates including the US. The important conclusion I draw is that UN agencies should never leave economic issues to the World Bank and the IMF or allow themselves to be over-influenced by these institutions, especially when there is evidence of impacts on people in their own areas of concern.
There are further lessons from this experience for all the UN. In the 1980s, UNICEF led the way against the narrow economic orthodoxies of structural adjustment, but we were not alone. We worked closely with ECA, whose Executive Director, the late Professor Adebayo Adedeji, known as Prof to his colleagues, passionately supported alternative approaches. In his case, the Prof was building on the vision for Africa and multi-sector elements of the Lagos Plan of Action [2], which had been developed and approved by all African Ministers of Planning in 1980. The ILO had also argued for alternatives to structural adjustment in the mid-1980s -but was warned by some industrial countries against holding a major conference on this. Collaboration among the UN agencies was and remains therefore important in resisting such pressures. Adedeji chaired a UN coordinating meeting on alternatives during the 1980s. for which I was co-chair.
Unfortunately, UNDP, over the whole of the 1980s, preferred to act as a little brother to the World Bank and the IMF, instead of being the big brother for the whole UN and leading creative opposition to orthodox adjustment. UNICEF experience is summarized in a special issue of World Development [3], which Rolph van der Hoeven and I wrote together to ensure the detailed lessons- political, administrative and economic- were available to all interested.
It took almost two decades before enough evidence became available to assess reliably the economic impact of structural adjustment. “Early studies consistently showed no statistically significant effect. Out of nine before-after studies from 1978 to 1995, covering different countries, regions and time spans, only one reported a significant positive effect. In their study, published in 2005, economists Robert Barro and Jong-Wha Lee “found that IMF programs have a negative effect in the short-run that is not statistically significant, and a strong statistically significant negative effect on economic growth in the long run.” “So the newly emerging consensus is that IMF programs hurt economic growth. [4]” This underlines the tragedy of orthodox adjustment policies for many countries of Sub-Saharan Africa and Latin America, which lead to the 1980s becoming a lost decade for development.
Economic statistics demonstrate this. In Latin America, per capita income over the 20-year period 1980-2000 grew in total by only 9%, compared with 80% growth in total from 1960-1980. For sub-Saharan Africa, the comparisons were worse. Per capita growth was 36% for the twenty-year period 1960-1980 compared to a decline of minus 15% from 1980-2000. From the perspective of children, one can only wonder how much better UNICEF’s efforts to reduce child mortality and improve child development might have been, had countries been saved from the disastrous impacts of structural adjustment.
The Rights of the Child
Orthodox economics has two approaches to human rights: either they are treated as one of the background elements of national institutions needed for a fully-functioning free-market system; or they are ignored, more commonly the latter. UNICEF and the UN sees them as an essential part of human society. In 1959, UNICEF passed the Declaration of The Rights of the Child, elaborating and reinforcing elements of the Universal Declaration of Human Rights of 1948. The Declaration of the Rights of the Child itself built on a declaration on child rights, adopted by the League of Nations in1925, and drafted by Eglantyne Jebb, founder of Save the Children.
Towards the end of the 1980s, UNICEF, pressed by its National Committees, mobilized support for a new document, broader, more specific and which would be binding, not just a declaration. This would become the Convention on the Rights of the Child. The CRC set out in 54 detailed articles children’s rights, along with an international process for reviewing implementation in all countries which had ratified it. In every matter, the Convention stated, “the best interests of the child shall be a primary consideration”. The CRC went on to spell out, article by article, what this should mean in national obligations and international support in such areas as child survival and development, birth registration and identity, family reunification, freedom of expression, education and health care, adoption and refugee status. It was and remains a pioneering and wide-ranging document, powerful in its obligations, while being sensitive to cultural differences in all parts of the world.
The CRC was adopted by the UN General Assembly on November 20th1989 and came into force on 2ndSeptember 1990, after 40 countries individually had ratified it, a more rapid transition from adoption to coming into legal force than for any other UN Convention. Since then, the CRC has also been ratified by more countries than any other convention, indeed, now by all countries except the US- which has signed its intention to ratify but without the necessary ratification by the US Senate.
With this widespread endorsement, I must now confess that both Jim Grant and I initially had doubts about its usefulness and practical impact. It was UNICEF’s National Committees which had originally pressed for action and helped its drafting. Jim and I had wondered what practical difference it would make. How wrong we were! Fortunately, by 1986 or so, both Jim and I had changed our minds and Jim led UNICEF to be strongly supportive. And so of course was I, visiting the last few lagging countries to encourage action.
Experience has now well demonstrated the many practical benefits which the CRC had brought to many countries and internationally. Every two years, the CRC committee reviews progress, country by country. Its work is substantive and creative, sharing experience across countries, praising success, noting difficulties, gently chiding countries on failures, usually also drawing attention to the ways in which other countries have met and overcome difficulties. Although some of the UN’s work on human rights draws criticisms for double standards and hypocrisy, the CRC has rarely been criticised, frequently been praised and produces, year by year, new evidence of effectiveness.
Conclusions
Economists have played an influential role in UNICEF from its earliest days. Interestingly, most of the involvements, especially the early ones, were less about what UNICEF could learn from economics and more about how UNICEF could use outstanding and distinguished economists to advise on how best to bring concerns for children into economic planning. The needs of children were the self-evident starting point. The issue was how these needs could be brought more strongly into national planning and policy-making, processes that so often neglect children or treat them as sufficiently covered by general support for education, health and other social sectors. The economists who helped UNICEF were all “free thinkers,” applying their imaginations and intellectual skills to policy issues concerning children, not abandoning economic principles but using them innovatively in areas often neglected by conventional economics.
Lest some readers, especially economists, think UNICEF is too cavalier in this approach to what economists like to call the “queen of the social sciences,” it is worth noting that the World Bank, the institution par excellence for economic-based decision making, ruled out support for primary education until the 1970s because of education’s image: “It wasn’t an economic thing … It was social or it was consumption,” not investment.37 Only during the 1970s when Robert McNamara became President, did the bank increase lending for education, especially primary education. The Bank’s first sector-wide Review of Bank Operations in the Education Sector was in 1978. This, together with several studies on social-sector expenditure as investment, resulted in the Bank’s doctrinal change to social lending.38
In the 1980s and 1990s, UNICEF documented and strongly argued against the harsh effects on children, the poor and people more generally, proposing Adjustment with a Human Face as the alternative. Gradually, the Bretton Woods Institutions accepted the case in principle, though changes in policy were mostly marginal. Within UNICEF, there was economic thinking behind the strategy of the child survival and development revolution and reducing child mortality. Actions for UNICEF during this period for reducing infant and child mortality were set in terms of going-to-scale with low-cost, readily available but greatly under-used approaches and technologies. Thought and some empirical analysis was also given to the definition of low-cost in this period -which essentially meant low cost in relation to per-capita income and the national budgets of the countries concerned. Defining which costs mattered was also taken into consideration, A key point was that it was not initial start-up costs or the costs to UNICEF that mattered but the long-run costs to the country after a programme had been established and was running under local resources.
Might UNICEF have done better if it had used conventional economic cost-benefit analysis to assess the economic returns on its expenditures on children? I find it difficult to think it would have made much difference. UNICEF did occasionally make or use such calculations for advocacy, but never seriously for decision-making. UNICEF’s programme decisions had mostly already been taken. Cost-effectiveness studies were used to decide between alternative ways to achieve an already accepted goal as actions to extend health services to young children and mothers or basic education for children or water supplies and sanitation for households. These were never questioned on economic grounds. Priorities drawn from the strategy of basic needs, basic services, and, later, of human rights were more compelling, both to UNICEF staff and to its Board, governments and public supporters.
Endnotes
[1] Richard Jolly and Giovanni Andrea Cornia, The Impact of World Recession on Children, World Development, Special Issue Volume 12, No 3, March 1984
[2] OAU-ECA, The Lagos Plan of Action for the Economic Development Africa 1980-2000, April 1980
[3] Richard Jolly and Rolph van der Hoeven, Adjustment with a Human Face, World Development Volume 19, pp 1801-1805, 1991
[4] Barro, Robert J. and Jong-Wha Lee. “IMF Programs: Who is Chosen and What are the Effects?” Journal of Monetary Economics 52(7) (October 2005): 1245–1269.
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