CHIP Report 7: Linking economic policy to childhood poverty - A review of the evidence on growth, trade reform and macroeconomic policy

Abstract

Children's wellbeing is closely linked to major aspects of economic policy. By specifically focusing on inequality, policies for pro-poor growth, trade policy and trade liberalisation, and issues relating to inflation and fiscal deficits, this paper reviews evidence concerning the impact of key macroeconomic and structural policies on poverty reduction in general and children's wellbeing in particular. Demonstrating that economic growth is not sufficient for poverty reduction, but must be accompanied by redistribution, the paper argues for a combination of growth-oriented and distributional measures. In particular, it calls for pro-child policies, such as such as promotion of women's status and increased public spending on basic services to improve health, nutrition and educational outcomes. International trade has the potential to generate great improvements in the wellbeing of poor people. However, trade liberalisation implemented on its own and too rapidly has not benefited the poorest countries. The paper therefore recommends that liberalisation be preceded by a formal system of social protection and pro-poor policies, particularly universal basic education, as well as equitable access to production assets. The paper similarly argues that macroeconomic adjustment of spiralling inflation and unsustainable public sector deficits should be undertaken with the objective of minimising fluctuations in employment, as well as interventions which target children and mothers in order to protect them from adverse effects. In contexts of scarce resources and many competing priorities, donor support will be essential to realise the potential of economic policies for poor families and children