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Complementarities in Development
Published: 02 November 2011 by MDPI in The 1st World Sustainability Forum session Social Sustainability
Abstract: 1. Objective Two thirds of the time span to achieve the Millennium Development Goals (MDGs) have passed and only very few Sub-Saharan African countries seem to be on track in reaching the targets set in 2000 by the UN General Assembly. This paper takes a quantitative data-based approach to analyze whether the different development targets that are set in the MDGs are compatible with each other. The literature on the mutual relations between development indicators is inconclusive. A simple correlation analysis does not seem to be sufficient. 2. Methodology This paper applies econometric complementarity analysis to a panel of 42 Sub-Saharan African countries. Complementarity analysis is a method to identify relations between variables that are mutually reinforcing. In this paper three dimensions of sustainable social development are identified: standard of living, education and health. Standard of living is represented by GDP, household consumption expenditures and primary energy consumption per capita, education by the literacy rate and the primary school completion rate and health by life expectancy at birth and the reciprocal value of the under-5 mortality rate (the number of children surviving until the age of 5). From a development objective function, the corresponding first order conditions are calculated and extended using a partial adjustment model. The resulting system of structural equations is estimated using an instrumental variable approach. The instruments include indicators concerning the economic and population structure, but also some development indicators from the set of MDG targets, such as access to improved water sources, employment, immunization against measles or diphtheria, HIV infections, and school enrolment rates. 3. Results There exist significant complementarities between some of the development objectives, whereas there seems to be no significant relation for others. The literacy rate is an example of the latter. The most significant relations were found between the under-5 survival rate and the primary school completion rate. Further, the under-5 survival rate is complementary to household consumption expenditures and primary energy consumption per head. The primary school completion rate is complementary to GDP per capita. Using these results it is possible to identify mutually reinforcing and conflicting policy targets. In short, health and living conditions as well as education and production (GDP) are mutually reinforcing.
Keywords: Complementarity analysis, Millennium Development Goals