Undp human development report 2013 pdf

Even more surprising in our findings is that even after a hypothetical AZN increase in individual income, the average household can still not afford to buy housing. Access to housing finance is virtually non-existent for these households. Mortgage plans do not seem to have successfully penetrated the market. Social mortgages have only made housing purchases more affordable for households with higher salaries.

This is just as much an issue in Baku as it is in London UK. A London School of Economics report showed that despite the government targeting poorer households with its low-cost homeownership opportunities, the average person to benefit from this type of help already earned 1. Instead of promoting homeownership for average-income households, these schemes made housing purchases more affordable for households that could have bought without governmental help.

It is worth noting that despite having poor access to housing finance, microfinance is well- established and offered by all banks. Although microfinancing was first introduced in the late s to alleviate poverty and promote social development via small loans, especially in parts of the world where the average person does not have access to banking, it has since become one of the main reasons for increased indebtedness in lower-income segments of the population.

This tool became so popular that its creator, Muhammad Yunus, received the Nobel Peace prize in Nevertheless, concerns around its negative consequences are not new. For instance, in one of the more extreme cases, the microfinance market in the Indian region of Andhra Pradesh completely collapsed in after a series of suicides by microfinance debtors Gallarati The impact of microfinancing on household debt in Azerbaijan has not been thoroughly investigated.

However, incidences of parallel borrowing from different institutions have been documented in earlier research Pytkowska Given the lack of access to standard banking solutions such as mortgage and credit, the average household turns increasingly towards microfinancing, making housing purchase unaffordable. In the lack of strategic targeting and redistribution in the form of, for example, housing capital taxation, the wealthier households continue buying more housing and continue receiving passive income from rents.

This situation perpetuates the already existing social inequalities as the average household continues struggling with high rents and, thus, unstable housing. The general consensus is that the lower the ownership rates, the higher the wealth inequalities. This is especially true for populations' poorer segments as the savings rate increases together with the homeownership rate, leading to higher wealth distribution and accumulation.

It is recommended that policymakers in ever-growing Baku prioritize reducing asset-based inequality by implementing housing affordability programs that target first-time buyer average and low-income households. To curb wealth inequalities, policymakers should also consider better-targeted mortgage plans that are accessible to lower-income families.

Such policies should also consider increasing the affordable housing supply for rent and sale to boost social mobility. The results from homeownership and rental policies will have spillover effects on the economic and social development of the population by, for example, increasing the ability of parents to support their children during their secondary and higher education, which in turn leads to higher wages. Such spillover effects might also be linked to petty corruption levels. Usually, when discussing corruption, I tend to focus on high-level corruption schemes, such as the Hajiyev scandal or the Panama Papers involving many Azerbaijani ruling elite members.

Nevertheless, low-level corruption is just as widespread. It must be stated that the wage increase targeting policies suggested here are not the only way of addressing housing affordability issues in Baku. As researched by the World Bank , the real estate market is heavily affected by the bureaucracy around construction permits. These fees in turn inflate housing prices. Wealth inequalities and petty corruption In , in just one year, Azerbaijan fell from nd to nd in terms of corruption levels, to then bounce back to th in out of the countries surveyed by Transparency International.

It is not surprising considering the links between wealth inequalities and corruption. As of now, the average income is so low that most households cannot afford their basic needs, and some must turn towards several microfinancing options to afford their expenditures.

As discussed before, this is not a sustainable solution as the risks of indebtedness for the most vulnerable households are increased. This is where petty corruption comes into play, from a bribe for a civil servant to do their job correctly, to making a deal with a kindergarten director or doctor. Our analysis contributes to a better understanding of the motivations to be corrupt for the Azerbaijani population's low- and average-income individuals. Given that most households do not earn enough to live comfortably, be it a public servant or a private sector worker, the working individual chooses to be corrupt to earn the fair wage they expect for their work.

This fair wage-effort hypothesis first theorized by Akerlof and Yellen can be very well applied in Baku's case. The income inequalities are so high that the average worker is motivated to accept corruption opportunities to achieve their desired income, which covers all their household expenditures. This does not mean that once the real wage equals the one expected by the worker corruption is wholly eradicated.

Instead, it is a matter of using wage-increasing policies to reduce the motivation to compensate for the lack of desired income with corruption. Corruption will not disappear even with very high incomes if the bribe is appropriately high and the penalties low. Increasing the current salaries to this fair wage would not eradicate corruption but reduce its opportunities Mahmood Once the fair wage is achieved, a civil servant would still be motivated to participate in corrupt acts as their income stays low, albeit sufficient to cover most life expenditures Van Rijckeghem and Weder In the case of housing, the bribery of government officials by developers for construction permits is a situation that could benefit from policies targeting the attainment of a fair wage.

By reducing the motivational incentives to act corruptly, one could decrease the transaction costs surrounding the acquisition of construction permits, which could in turn reduce the final sales price of real estate. Wage policies targeting underpaid workers could positively affect both the population's living standards and corruption levels.

It is not measurable at which level of income corruption would be eradicated, nor is it required. To some extent, ASAN did fulfill its promises as it promoted better transparency for state agencies and helped with the heavy bureaucracy by simplifying specific government procedures Oxford, Blavatnik School of Government However, ASAN did not reduce petty corruption, which is not surprising given the low wages.

It is worth noting that an increase in penalties for low-level corruption will not produce the expected results. A zero-tolerance policy, such as the one implemented in Singapore, would not address the underlying issue of low wages. Instead, a more proactive solution would be to increase social welfare in order to decrease the motivation of lower-income workers to be corrupt.

Furthermore, after a certain threshold, increased wages do not have the intended effects on petty corruption. Such was the case for the Ghanaian government in its attempts at decreasing low-level corruption on its roads by increasing the salaries of the police officers.

The level of corruption was not reduced despite the increase. The police officers put more effort into taking bribes, thus reducing the number of bribes but increasing the average amount of money taken per bribe Foltz and Opoku-Agyemang This does not invalidate other research that shows the negative relation between high-level political corruption and civil service salaries. The factors motivating the corruption differ, but as in the case of political corruption, those who offer bribes can adjust their offer to a higher price once they are notified of the salary increase of the public servant.

Lack of precise data and the informal economy Despite this study's findings, the results are difficult to generalize due to a lack of reliable data on household budgets, incomes, and expenditures. This coefficient measuring the income inequality among a country's individuals was the lowest in Azerbaijan, making it the country with the lowest income inequality. However, Azerbaijan's and overall human development index does not rank it even in the top twenty.

Our income and expenditure statistical research in this paper is inconsistent with the UNDP's analysis. Any research based on official statistics is thus limited by the data's low reliability. This is an important issue not only for research but also for policymakers to determine which issues to prioritize and which policies to implement.

More specifically, in the case of housing affordability, reliable and up-to-date statistics are required for measuring the income at which the average household can save and afford a housing purchase and the demand for social housing for which target populations.

Finally, improved statistical capacity for household budgets would enable policymakers to calculate the fair wage at which low corruption opportunities can be reduced. A second issue that is more difficult to tackle for any government is the informal economy and undeclared revenue.

The exact percentage of the Azerbaijani economy that is informal is not measured. Regardless of the informal economy scale, the real income that households dispose of every month is difficult to measure reliably. Pinpointing the true causes of a conflict is rarely straightforward. Most acts of aggression are deeply rooted in grievances and perceived injustices. The significance that This article originally appeared on Devex. Visit the Focus on: People and the Planet page for more. When it comes to measurements in any field, if you take the wrong indicator, you can have the wrong diagnosis of a situation and therefore take the wrong action, explained Marc Fleurbaey, researcher at the French National Centre for Scientific View the Occasional Papers.

Human Development Report New York. Skip to main content. English overview. French overview. Spanish overview. Russian overview. Chinese overview.