Poverty in Black Sea Countries
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Poverty in Black Sea Countries
February, 2009Europe and Central Asia Region
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Key Messages (1) Economic growth with stable inequality (so
far!) have dramatically reduced poverty in Black Sea area since 2002 to 2006 - 16m fewer poor and 27m fewer vulnerable.
Note: Black Sea for this presentation includes: Armenia, Azerbaijan, Bulgaria, Georgia, Moldova, Romania, Turkey, Russian Federation, Ukraine
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Key Messages (2) BUT three major concerns loom:
One-third of the Region’s population was poor (27M) or vulnerable (87m)
Global crisis – financial commodities, food, etc have significant impact on poverty. Close to 6 million people are projected to remain in poverty in 2009-10.
Growing inequality within many countries threatens to slow down the pace of the future poverty reduction and social cohesion .
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Key Figures
Black Sea Countries
Total ECA Countries
Share Black Sea to Total
A B A/B
Number of Countries 9 28 32%
Total Population (millions) 313 477 66%
Poor Population less than $2.5 a day (millions) 27 48 56%
Vulnerable Population $2.5-$5 a day (millions) 87 135 65%
Non Poor Population $5 plus a day (millions) 198 294 67%
Poverty & Vulnerability Rates (Including Russian Federation)
Poverty Rates (less than $2.5 a day) 8.6 10.0 86%
Vulnerability Rates ($2.5-$5 a day) 27.9 28.3 99%
Poverty & Vulnerability Rates Excluding Russian Federation
Poverty Rates 12.2 10.0 121%
Vulnerability Rates 33.5 28.3 118%
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Between 2002 and 2006, poverty incidence in Black Sea fell by almost 16M and vulnerability by 27M comparable to the trend observed in ECA region
Source: Bank staff estimates based upon ECA Household Data Archives and 2005 ICPs.
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MICs and EU countries in Black Sea region show the biggest falls in poverty and vulnerability
Black Sea Regions Population by Poverty Status 2002 - 2006 (Millions and shares)
12.7
10.9
65.8
41.5
25.023.6
10.1
11.6
6.5
11.6
112.2
141.8
30.636.5
2.63.3
7.015.9
3.3
7.6
12.613.05.2
8.0
0%
20%
40%
60%
80%
100%
EU 2002 EU 2006 MIC-CIS 2002 MIC-CIS 2006 Turkey 2003 Turkey 2005 LIC-CIS 2002 LIC-CIS 2006
Poor: Below $ 2.50 a Day Vulnerable: Above $ 2.50 and Below $ 5.00 a Day Non-Poor: Above $ 5.00 a Day
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Ukraine, Romania, Azerbaijan and Russia have the highest reduction in Poverty and Vulnerability, Georgia and Turkey have the lowest
Percentage points of poverty reduction 2002-2006
-1.7
-3.6
-4.8
-5.1
-7.3
-14.4
-22.3
-25.8
-30.00 -25.00 -20.00 -15.00 -10.00 -5.00 0.00
Turkey
Russian Federation
Georgia
Azerbaijan
Ukraine
Romania
Moldova
Armenia
% change in $2.50 Poverty
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Russia and Turkey with two-thirds of the population also have two-thirds of the poor and the vulnerable
Poor and Vulnerable Population Population Distribution, 2005
Russian Federation
31%
Turkey32%
Ukraine11%
Romania10%
Azerbaijan6%
Georgia3%
Moldova3%
Armenia2%
Bulgaria2%
Poor and Vulnerable Population Population Distribution, 2002
Russian Federation
36%
Turkey24%
Ukraine17%
Romania10%
Azerbaijan4%
Georgia3%
Moldova2%
Bulgaria2%
Armenia2%
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But LIC-CIS have highest rates of poverty and
vulnerability
0%
20%
40%
60%
80%
100%
Armenia Azerbaijan Georgia Moldova Romania Turkey Ukraine RussianFederation
Bulgaria
Poor: Below $ 2.50 a Day Vulnerable: Above $ 2.50 and Below $ 5.00 a Day Non-Poor: Above $ 5.00 a Day
Poverty and Vulnerability Rates in Black Sea Countries 2006
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Poverty is increasingly rural in most countries , while gaps between rural and urban poverty differ significantly across countries
Source: Ravallion (2007)
Rural poverty is higher in most countries
2.7
33.6
1.34.3 2.61.5
7.6
35.3
46.6
1.8
6.5
47.2
8.8
21.7
35.6
29.5
10.47.8
0
5
10
15
20
25
30
35
40
45
50 Urban
Rural
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Within-country differences between regions are increasing in most countries
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Labor market gains are important for the poor
– primarily from the growth in real wages
Net monthly wages per capita
Romania
0
50
100
150
200
250
1 2 3 4 5 6 7 8 9 10
Consumption Deciles
$ W
ages
per
Mo
nth
2002 2005-6
Moldova
0
50
100
150
200
250
1 2 3 4 5 6 7 8 9 10
Consumption Deciles$
Wag
es p
er M
on
th
2002 2005-6
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...as net job creation was scarceEmployment rates by consumption deciles, %
Georgia
0.4
0.45
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.85
1 2 3 4 5 6 7 8 9 10
Decile
ER 2002 ER 2005/06
Romania
0.4
0.45
0.5
0.55
0.6
0.65
0.7
0.75
0.8
0.85
1 2 3 4 5 6 7 8 9 10
Dec ile
ER 2002 ER 2005/06
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Public transfers are higher in real terms and likely to have increased incomes of the poor
• pension benefits up
• number of pensioners is higher
• social assistance higher
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Other aspects of well-being have also improved
Access to education, health and essential infrastructure such as water, electricity and phones have improved substantially.
However there are two main concerns: Quality of services have not improved with expectations Lingering concerns over corruption and unequal
treatment
Example: Access to Justice
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Access to essential services
Access to selected services
0
20
40
60
80
100
120A
rmenia
Bulg
aria
Russia
Bulg
aria
Arm
enia
Mold
ova
Arm
enia
Rom
ania
Georg
ia
Arm
enia
Georg
ia
Ukra
ine
Arm
enia
Rom
ania
Mold
ova
Turk
ey
Arm
enia
Azerb
aijan
Georg
ia
SecondaryenrollmentAge 15-17
Morbidity rate Health CareUtilization
Access towater
Use of cleanheating
Housingovercrowding
Rate
s
Average( (all country) Bottom Quintile
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Reduction in prevalence of informal payments resulted in substantial increase in utilization rates (2001-2006)
Source: Sundaram, R. and S. Zaidi (forthcoming) Satisfaction with Publicly Provided Health Services in Eastern Europe and the former Soviet Union
-40 -30 -20 -10 0 10 20 30 40 50 60
Belarus
Russ ia
Kyrgyzs tan
Ukraine
Moldova
Armenia
Kazakhstan
Georgia
Increase: Access rates Decline: prev alence of unofficial pay ments
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Trust in institutions of justice
Trust in Courts
0% 20% 40% 60% 80% 100%
ArmeniaAzerbaijBulgariaGeorgiaMoldovaRomaniRussiaTurkey
Ukraine
complete distrust some distrust
neither trust nor distrust some trust
complete trust
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Trust in institutions of justice
Trust in the Police
0% 20% 40% 60% 80% 100%
ArmeniaAzerbaijBulgariaGeorgiaMoldovaRomaniRussiaTurkey
Ukraine
complete distrust some distrust
neither trust nor distrust some trust
complete trust
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Satisfaction with institutions of justice
Satisfaction with Court for a civil matter
0% 20% 40% 60% 80% 100%
Armenia
Azerbaijan
Bulgaria
Georgia
Moldova
Romania
Russia
Turkey
Ukraine
Very unsatisfied Unsatisfied Indifferent Satisfied Very satisfied
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A) However, there are significant risks to poverty reduction: current economic crisis – short to medium term
risk: Macro impacts
Growth slowdown –possibility of contractions in some countries Reduction in Exports, FDI flows and remittances Tighter liquidity concerns for governments (foreign service), firms (credit and
trade finance)
Micro (or Households impacts) Income/wages slowdown and/or losses of jobs Sectoral displacements – contraction in sectors where poor are largely
employed (e.g. construction, trade, commodities); Loss of remittances Difficulties in mortgage repayment compounded by currency depreciation Loss of pension assets invested in stock markets
All lead to substantial impact on productivity, poverty and vulnerability
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Poverty will remain stagnant in the region in 2009 and in 2010. Close to 6 million people in Black Sea region will not be
able to get out of poverty in 2009-10 following the crisis.
Poverty Projections Black Sea
3
3.5
4
4.5
5
5.5
6
6.5
7
2007 2008 2009 2010
BL
NOV
JAN
6M people
Poverty Projections ECA
3
4
5
6
7
8
9
2007 2008 2009 2010
BL
NOV
JAN
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B) Multiple impacts of climate change and entry points for policy response
Average temperature
Average precipitation
CO2 fertilizationeffect
Climate variability and extreme events
Change in surface water
availability
Crop yields, livestock productivity and
production variability
Food availability and prices
Economic impact and
food security
Technology and investment
in adaptation
Trade
Income and population growth, income distribution
P
P
P
P
P Autonomous adaptation
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Climate change profile for ECA
PRE - FINAL 070607 8
Top 25 « footprints »(WRI/Pew Center; data for 2000 )
Top 25 « footprints »(WRI/Pew Center; data for 2000 )
Saudi Arabia
Top 25 in Emissions(excl. LUCF)
Top 25 in GDP
USA, China, EU25, Russia, India, Japan, Germany, Brazil, UK, Italy, Mexico, France ,Indonesia, Iran, Turkey
Ukraine, Pakistan
Canada ,Rep. Korea,
Australia ,S. Africa ,Spain,
Poland,Argentina
Netherlands, (Taiwan)
Thailand
Bangladesh, Nigeria, Viet Nam, Philippines, Ethiopia,
Egypt, Congo
Top 25 in Population
In a global context, the EU-25, Russia, Turkey, Ukraine and Poland
rank among the top 25 countries for global carbon emissions,
population (except Poland) and GDP (except Ukraine).
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Climate change – systemic and longer term
Temperatures – expected to be hotter, with more extremes Means
Mean temperatures will increase everywhere (most rapidly in the north),
Precipitations will decrease in the south, and increase in the north
Extremes Weather extremes will be more frequent (droughts,
floods, wind storm, heat waves)
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Temperature changes in Europe around 2100 (A1B scenario)
Source: D. Jacob, Max Planck Institute; http://www.climate-water-adaptation-berlin2007.org/documents/jacob.pdfA1B scenario is the third worst socio-economic scenario of the six developed by the IPCC
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Likely geophysical impacts More difficult water resource management:
Glacier melting Flooding (especially Central Europe; central Russia?) Droughts (southern Europe) All of which will affect ability to provide sanitation and (drinking) water
Melting permafrost (Russia)
Vulnerable low lying coastal areas (from rising sea levels and coastal storm surges - Baltics, Romania, Turkey…)
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Precipitation changes in Europe around 2100 (A1B scenario)
Source: D. Jacob, Max Planck Institute; http://www.climate-water-adaptation-berlin2007.org/documents/jacob.pdfA1B scenario is the third worst socio-economic scenario of the six developed by the IPCC
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What needs to be done Enhance social protection
Continue strengthen social safety by increasing the efficiency and staying within available public resources
Targeted interventions by marginalized groups and minorities Ensure adequate minimum wages sensitive to labor market
conditions
Monitor progress Maintain affords to collect more comprehensive data Improve quality, coverage and address non-response Monitor trends in quality of public services Provide open access
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What needs to be done (2)
On climate change: Adaptation can significantly reduce economic losses and poverty impacts
Mitigation efforts reduce emissions or enhance the capture of emissions, thereby reducing escalation of impacts
Even the most ambitious global mitigation will not be sufficient, however, and adaptation programs are needed so that populations and critical ecosystems cope with residual impacts
Reforestation and investments in clean energy can provide mitigation and adaptation benefits