3. Inequality B. Environmental sustainability of economic growth: the evidence

3. Inequality

EAEU member States enjoy a great advantage in the struggle against inequality: all EAEU countries have achieved considerably greater progress in this pillar of inclusive growth than the average developing country. Kazakhstan even outstrips the advanced economies’ average and each EAEU member State has its own strengths. To illustrate, Kyrgyzstan reports the world’s most equitable access to school education between girls and boys, while Kazakhstan is characterized by the world’s second most unbiased labour market for youth compared to adult workers. At the same time, Armenia and the Russian Federation are amongst the first quartile of world rankings with respect to the parity of male and female unemployment. Belarus, Kazakhstan and Kyrgyzstan are all characterized by low income concentration ratios (25.2, 27.5 and 27.7 points, respectively). The ranking of the least equitable EAEU country —Armenia (67th)— is higher than the previous two pillars’ worst positions (149th and 85th). One area for improvement in Armenia is the inequality between young and more mature job applicants (see table IV.4).

Table IV.4 Eurasian Economic Union and Latin America and the Caribbean: best and worst performers according to all indicators for inequality, 2018 (Ranking out of 90 observations)

Ratio of youth to adult employment rate Ratio of female to male employment rate Ratio of female to male labour force participation rate come In concentration ratio Poverty headcount ratio School enrolment, secondary nder gross), ge ( parity index Gender parity in the number of seats held by women and men in national parliaments Total, Inequality

Armenia Belarus Kazakhstan 86 22 57 46 63 59 21 76 34 12 15 23 2 53 25 16 40 17

Kyrgyzstan

55 73 71 39 71 1 Russian Federation 58 20 46 73 24 20 Argentina 74 69 70 55 37 53 Bolivia (Plur. State of) 24 52 63 71 52 43 Brazil 79 77 61 77 50 55

Colombia 63 83 59 88 54 63

Costa Rica 72 78 74 80 42 62

El Salvador 37 50 75 58 55 10

Guatemala Honduras Mexico 19 55 78 75 62 60 25 62 76 87 64 85 20 7 77 82 58 69

Panama 42 61 69 83 45 39

Paraguay 45 59 65 77 49 64 66 67 21 14 40 9 60 61 71 51 10 56 1 33 82 77 62 75 19 66 26 44 78 70 51 73 3 52 65 60 75 64

Source: Eurasian Economic Commission and United Nations Conference on Trade and Development (EEC/UNCTAD), “Inclusive growth of the Eurasian Economic Union Member States: assessments and opportunities”, 2019 [online] http://www.eurasiancommission.org/ru/act/integr_i_makroec/dep_makroec_pol/Documents/Inclusive_growth_in_ EAEU_Member.pdf. Note: Green and light green is used to reflect a better position in the overall ranking. Orange to red colour indicates a worst position among 90 observations.

The four countries ranked below the developing economy average provide another illustration of the heterogeneity of countries in the inclusiveness index: two of them (Guatemala and Honduras) are amongst the countries with the lowest quality of life, whereas the other two (Brazil and Columbia) are amongst those with the highest quality of life. In each

of these cases, the most blatant aspect of inequality is on the level of income as measured by the income Gini coefficient, with indices of 48.3, 52.1, 53.9 and 50.4 points, respectively. The LAC States characterized by the lowest inequality levels, the Plurinational State of Bolivia, El Salvador and Peru, do not rate outstanding scores on the other two pillars of the inclusive development index. However, the citizens of these countries are experiencing an economic environment that is closest to a level-playing. In the Plurinational State of Bolivia, the share of parliamentary seats held by women (53%) is the highest among all the world’s countries included in the index. For El Salvador and Peru, their strongest aspect of inclusive development is the equal access to education for boys and girls (11th and 5th positions worldwide, respectively). Furthermore, El Salvador is ranked 17th in the world with respect to its youth-to-adult unemployment ratio. Unless progress in quality of life and equality is ensured, economic progress cannot be characterized as sustainable. The concentration of the resources in the hands of small elites renders the whole economy more susceptible to the shocks. As long as the population lacks access to equal opportunities to basic or advanced socially-oriented services or is exposed to the deterioration of the natural environment, this does not constitute of an inclusive society. If improving the welfare of its citizens is the ultimate goal of a state, striving for the kind of harmonious and consistent development inherent in the notion of inclusive growth is consistent with that goal. Encouragingly, countries in both regions share a vision of inclusive growth and attach due importance to exploring ways to improve progress towards its attainment. Assessing inclusivity and in-depth analyses of its underlying determinants are prerequisites to achieving deliberately targeted and efficient policies. Achieving inclusive development also will require substantial changes in both EAEU and LAC. Few countries in either region outperformed (and in some cases, substantially underperformed) the developing country average. None of the countries even comes close to the level of inclusivity observed in advanced economies. Out of 86 countries under consideration, EAEU member States are ranked between 29th and 60th, while those LAC countries for which complete data was available are ranked between 38th and 67th. The highest level of inclusive development is found in Belarus and Kazakhstan amongst EAEU member States and Argentina and Panama in the LAC region. Kyrgyzstan and Guatemala are found at the other extreme, although this may be affected by data availability. Certain countries with more challenging development conditions might have been excluded from the aggregate index rankings (in particular, Haiti). Among the three pillars of inclusive growth – economic development, living conditions and inequality – economic development is generally the most challenging for both regions. In EAEU, Kazakhstan and Belarus are relatively equal as reflected by a respectable performance in the equality pillar, while this remains an important challenge for LAC countries. Both regions, however, have reasonable outcomes with respect to quality of life even as there is still room for improvement; the lowest rankings are 85th for EAEU and 93rd among LAC countries. To a certain degree, both regions need to address the same kinds of challenges and impediments to achieving inclusive development, and that creates cooperation opportunities. The commonalities include the concerns and challenges that demand responses for which an exchange of good practices can be useful. Cooperative potential is also to be found in spheres of unequal progress. To illustrate, as far as living conditions are concerned, all EAEU member States are surpassed by Uruguay, where environmental friendliness and a greater degree of universal