Economic policy must recognise children

Macroeconomic policies have powerful effects on children. They shape public spending on basic services such as education and health and influence how households respond to changing economic conditions, often in ways that are not good for children. Yet policy making on the whole does not recognise child well-being as an objective or an outcome. Pro-child interventions relating to economic growth, trade and macroeconomic policy are critical to overcoming poverty.

A literature review from the Childhood Poverty Research and Policy Centre suggests there are strong links between human development and economic growth and that it is difficult to sustain poverty reduction without growth and vice versa. While some countries, particularly in East and South Asia, experienced fast growth from the 1980s, economic policies achieved poor growth in large parts of Africa and Latin America. Together with the neglect of income redistribution, this led to slower global progress in improving living standards for children, particularly in nutrition; in Africa child malnutrition worsened. More redistribution is necessary to fight poverty in highly unequal societies where growth is less effective. Redistribution also helps to overcome chronic poverty - an elderly woman caring for orphaned grandchildren, for example, cannot benefit from economic growth other than through state or private cash support.

Increased international trade can reduce poverty by generating income growth, enabling families and states to spend more on children. The key issue is how to achieve this since the link between trade policy and growth is disputed. Blanket trade restrictions increase production costs and undermine growth and poverty reduction. However, rapid trade liberalisation harms poor countries if it is not preceded by public investments, especially in education. Moreover, competitiveness in international trade has in many cases been achieved in ways that are potentially detrimental to children: exploiting child labour is one example.

High levels of inflation slow down growth. But there is no evidence that reducing inflation below ten percent - as required by International Monetary Fund adjustment programmes - is needed for growth. Excessive inflation control, on the other hand, can cause economic decline, unemployment and poverty. Similarly, high national debt leads to macroeconomic crisis and destroys national incomes, employment and child well-being, as seen in East Asia and Latin America. Cutting public expenditure is standard practice in adjustment programmes, however. As a result, declining incomes combine with reduced public services to harm children's well-being. Subsequent growth often cannot reverse the damage done by such policies - for example, children who cannot attend school as a result may have missed their only chance of education.

Policies beneficial for children are also good for long-term economic development, although there are areas of conflict in the shorter term. For example, educating children is costly and does not generate immediate income benefits; increasing carers' participation in the labour force may be damaging to child nutrition. Donor support can help here.

Reforms to improve the well-being of children in poor families include:

• helping families to improve their potential to earn and develop by providing basic services such as education (particularly for girls), health, water and sanitation
• enabling poor farmers to increase production and benefit from trade through improved access to assets such as land and agricultural inputs and through higher public investment in staple food technologies, irrigation and infrastructure
• avoiding adverse effects of policies on children: for example, through appropriate labour-saving
• technologies for women to free up time for child care
• enhancing access to developed country markets and allowing poorer countries greater flexibility in trade policy choices: selective and temporary trade protection can help overcome low income traps
• establishing competent and independent local institutions in poorer countries to manage trade policy
• protecting key programmes for mothers and children in areas where public spending has to be cut.

Hugh Waddington
13 Victoria Road
Harborne
Birmingham B17 0AG
UK
T +44 (0) 7779 261108
hugh_wadd@yahoo.com

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