Difficult and contested topics… Presentation based on…

Pro-Poor Policies and Pro-Poor Growth

Training elements for Joint Donor Staff Training on Poverty

Reduction in PRSP-Contexts, Dar es Salaam, 17-19 June, 2002

Timo VoipioMinistry for Foreign Affairs of Finland (MFAF)

Email: [email protected]

22.04.23Joint Donor PovRed Training Pilot,

DSM 17-19 June, 2002 2

Difficult and contested topics… Presentation based on…

• DAC PovRed Guidelines, p. 37-49; http://www.oecd.org/pdf/M00022000/M00022693.pdf

• Stephan Klasen (SPA-2001): In Search for the Holy Grail: How to Achieve Pro-Poor Growthhttp://www.spa-psa.org/confidential/docs/

tgm1101/In_search_of_the_Holy_Grail.pdf • Cornia and Court (2001): Inequality, Growth and

Poverty http://www.wider.unu.edu/publications/pb4.pdf • WB: World Development Report (WDR)

2000/1 http://www.worldbank.org/poverty/wdrpoverty


DSM 17-19 June, 2002 3

…and on…• Klugman (2001): ”Overview to PRSP Sourcebook”

http://worldbank.org/poverty/strategies/chapters/overview/over0427.pdf

• DFID (2001): Poverty: Bridging the Gaphttp://www.dfid.gov.uk/Pubs/files/poverty_bridgegap_guidance.pdf

• Ashley and Maxwell (2001): Rethinking Rural Developmenthttp://www.odi.org.uk/briefing/rural_develp.pdf

• Dollar-Kraay: Growth Is Good for the Poor http://www.worldbank.org/research/growth/pdfiles/GIGFTP3.pdf

• WB Country Policy and Institutional Assessment (CPIA) Questionnaire

http://www.worldbank.org/ida/cpiaq2001.pdf andhttp://www.worldbank.org/ida/IDAPerfalJan02.pdf

• WB: The Quality of Growth (2000) http://econ.worldbank.org/view.php?type=20&id=1556


DSM 17-19 June, 2002 4

WHAT DO DONOR STAFF NEED TO KNOW ?

(a) Multi-dimensional Poverty (Consensus?)

---> requires multi-dimensional Policy Action (b) Pro-poor growth

- Weakest area in our PovRed Agenda (Debate?)

- What is it ? How to promote it ? (Debate?)

(c) How to Analyse the Quality (’pro-poorness’) of Policies?- The Democratic Principle: role of those elected.- Tools for donors, e.g. IDA’s CPIA (Debate)


DSM 17-19 June, 2002 5

Diverse expectations: macro/sectoral policies

Not everything can be discussed in detail today…

Heavy dose of info to be expected in the first half of the training element, more time for discussion during ”Case Tanzania”… Questions and comments during blue slides…

but if one slide is the maximum you can absorb today, remember this, at least:

THE ULTIMATE ONE-PAGE SUMMARY FOLLOWS…

POVERTY IS MULTI-DIMENSIONAL Source: DAC PovRed Guidelines (2001, p. 39)

PROTECTIVESecurity

Vulnerability

POLITICALRights

InfluenceFreedom

Voice

SOCIO-CULTURAL Status

Dignity

ECONOMICConsumption

IncomeAssets

HUMAN Health

Education Nutrition, Water

GENDER

ENVIRONMENT

WB: MULTI-DIMENSIONAL POVERTYSource: WB: World Development Report 2000/1

EMPOWERMENT• Responsive

Public Administration

• Rule of Law

• Decentralization

• Eliminating Gender

Discrimination

• Social Fragmentation and

Conflict

• Building Social Capital

SECURITY

• Social Risk Management- Household Responses

- Policy Responses

Reducing Vulnerability

to- Economic

Crises

- Natural Disasters

INTERNATIONAL ACTIONS

• Market Access in Rich Countries

• Reducing Global Volatility

• Pro-Poor International Public

Goods

• Voice for the Poor in Global Forums

• Making Aid Effective in

Reducing Poverty

• Relieving the Debt Burden

OPPORTUNITY

• Pro-Poor Growth

• Inequality and Redistribution

• Markets

• Assets• Governance

and Accountability


DSM 17-19 June, 2002 8

DAC PovRed Guidelines AND WDR-2000/1: Recognize the SHIFT in the CONSENSUS (1-4)1. From single-dimensional (money-metric) to

multi-dimensional concept of poverty:- From GNP/cap to .....???? - From USD 1/day to .....????

2. From ”one-size-fits-all” to context-specificity in poverty and policy analysis

- Uniqueness of each historical and spatial (global,national, local, household, individual) context. (DAC p. 43, WDR p. 45-46)


DSM 17-19 June, 2002 9

DAC PovRed Guidelines AND WDR-2000/1: Recognize the SHIFT in the CONSENSUS (1-4)

3. From focus only on individual national economies to interlinkages between the household, local, national, regional and global levels.

4. From conditionality to ownership and partnership

Summary 2:MULTI-DIMENSIONAL POVERTY CALLS

FOR MULTI-DIMENSIONAL POLICY ACTION (DAC+WDR)

1. Pro-poor economic growth 2. Empowerment: rights and pro-poor governance3. Basic social services for human development4. Social Risk Management: Reducing vulnerability and managing shocks for human security5. Mainstreaming gender and enhancing gender equality6. Environmental sustainability and Sustainable Livelihood Approaches7. International Action: Global Policies and Global Public Goods & Donor Policy Coherence

But in this presentation……to be discussed in a changed order:

1. Empowerment2. Basic social services3. Social Risk Management4. Mainstreaming gender Module 5. (Crosscutting…)5. Environmental sustainability Module 5. (Crosscutt.)6. International Action

Module 6. (Partnership/Coherence) 7. Pro-poor economic growth

To be discussed later in this module, after (1-3)

EMPOWERMENT”Poverty often means powerlessness,

injustice and exclusion from social participation as a result of discrimination and lack of

human/civic/political rights”(DAC)


DSM 17-19 June, 2002 13

EMPOWERMENT, RIGHTS AND PRO-POOR GOVERNANCE (1) (DAC + Klugman) • Empowering poor women and men requires

– democratic and good governance at all levels– popular participation in policy making,

programme design and implementation– a civil society with representative community

organisations– human rights and the rule of law– Accountability, incl. independent media

--> Consensus on all these?


DSM 17-19 June, 2002 14

EMPOWERMENT, RIGHTS AND PRO-POOR GOVERNANCE (2) (DAC + Klugman)

• Rights-based approaches to poverty reduction are increasingly in focus (Debate?)– linking empowerment and rights of poor

women,men, children, workers to international agreements on human rights (Debate?)

– Formal rights and day-to-day experiences of fairness, e.g. access to services, justice, information.

– Civic education needed to learn and to be aware of how to claim rights, at intra-household, community, workplace, local gov’nt, national and global levels…


DSM 17-19 June, 2002 15

Good Governance for Poverty Reduction (DAC)

• Civil Service Reforms to improve governance and to reduce corruption by strengthening accountability and service orientation in the public sector are crucial. Pay reforms may be a necessary part of CSRs in many countries.

• Decentralization has potential to bring decision-making closer to poor people. But in highly inegalitarian societies, fiscal decentralization may serve to aggravate misrule by unchecked local elites. Civic education, publication of state allocations and Public Expenditure Tracking Surveys (PETS) may help.

Questions or comments on EMPOWERMENT ?

------------------------------------------------------------

BASIC SOCIAL SERVICES•”Human development is the process of

expanding human capabilities and choices – what people do and can do with their

lives.”• ”Human development includes the

expansion of income, wealth, adequate nutrition, safe water, medical services,

schools and transportation, decent shelter, employment and secure livelihoods.”

(DAC)


DSM 17-19 June, 2002 17

BASIC SOCIAL SERVICES (DAC-1)• To live long, healthy and gratifying lives requires

access to public social services of good quality.• Access to quality social services also increases

people’s productive capabilities• Individual rights of access based on citizenship or

residence (e.g. for women not only via husband)• NOTE: Constraints may exist not only on the supply

side of services, but also on the demand side: Special efforts and incentives may be needed to encourage outreach, active demand and better access for the poorest, isolated and marginalized. Sectoral technocratic vs. participatory community planning?


DSM 17-19 June, 2002 18

BASIC SOCIAL SERVICES (DAC-2)• Pro-poor methods of financing public services with

taxes, and in some cases with user fees must be studied and monitored to ensure access, affordability and quality.

• It is important to monitor and improve the pro-poor allocation of social sector spending and pro-poor incidence of the benefits in the context of broad sector policies.

• Address trade-offs: e.g. between:– basic vs. higher education– primary health care vs. hospitals– preventive vs. curative health

WB: Benefit incidence analysis of public spending!!


DSM 17-19 June, 2002 19

Questions and comments on basic social services, in general ?

--- PRO-POOR SECTOR POLICIES

?E.g.• Education…• Health…• Infra

– Water and sanitation…– Transport and communication…


DSM 17-19 June, 2002 20

Pro-Poor Education Policies (1)• ACCESS: (= Education for All)

– Free (or ’affordable’ ?) basic education is a human right. (Primary? Secondary?)

– School mapping? Rehabilitation? Mainstreaming the disabled & minorities?

• EQUITY: – Gender equality (MDG) --> Fathers’ attitudes?

Female teachers? Schools near home? Girls’ toilets? School meals? School calendars suited to local agricultural calendars? etc.?

– Other disadvantaged groups (rural, isolated, minority languages, disabled) – Incentives?

– Inter-regional equalization mechanisms?


DSM 17-19 June, 2002 21

Pro-Poor Education Policies (2)• QUALITY: School infra? Learning materials? Teacher

education? Teacher-pupil ratios? Curriculum reform (Vocational & locality-specific life-skills? Nutrition education? Health education?)

• EFFICIENCY: Decentralized mngt? Mngt training? Participatory planning? Integrated village-planning, PTAs? Inter-sectoral linkages at local gov’nt level?

• ENVIRONMENTAL AWARENESS: Hygiene? Erosion-control? Sustainable consumption and production models?

• SWAPS: Trend from individual projects to Sector-wide programmes co-ordinated by the Government and supported by many donors (via basket-funding or budgetary assistance?)


DSM 17-19 June, 2002 22

Pro-Poor Health Policies (1)• ACCESS to care is a basic social right (C. or D.?)

--> ’Health for All--> Especially remote, poor areas.--> Decentralization, participatory planning, referral

system, infra upgrading, materials, focus and incentives to needy groups

• Emphasis on preventive/primary health care– most budgets spent on curative/tertiary?

• Inter-sectoral approach (with safe water, hygiene, nutrition, roads);

• Public health orientation, incl. immunization• Reproductive health and rights essential (Debate?)


DSM 17-19 June, 2002 23

Pro-Poor Health Policies (2)• QUALITY OF CARE: Infra? Staff training?

Information? Essential drugs?• EQUITY AND EFFICIENCY:

– Secure and equalizing financing methods;– Collective risk-pooling (health insurance?)– Care to be provided according to need and paid

according to ability? – Vs. user fees?`(Debate?)– Vulnerable groups: children, mothers, disabled,

hungry, remote, AIDS victims: Special support?– Inter-regional equalization grants (Debate?)– Accountability of service providers to

communities? to local councils? to ministries?


DSM 17-19 June, 2002 24

Pro-Poor Health Policies (3)• ENVIRONMENTAL HEALTH through awareness

raising and participatory planning is cost-efficient, effective and pro-poor. E.g. – Prevention and control of malaria and TB– Pollution control and waste management

• OCCUPATIONAL HEALTH, JOB SAFETY– can provide opportunities for pro-poor

cooperation with the private sector (employers)?– government role in awareness raising,

incentives, training and regulation.


DSM 17-19 June, 2002 25

Pro-Poor Infra Policies - Water and Sanitation (1)

• Access to safe water is a basic social right. Water is a social as well as an economic good.

• Priority to safe domestic water and sanitation?• Irrigation - neglegted opportunity in Africa (D?)• Access: integrated watershed mngt, demand-

orientation, consumer-initiatives?• Quality: realistic standards, guidelines, training?


DSM 17-19 June, 2002 26

Water and Sanitation (2)• EQUITY AND EFFICIENCY:

– Decentralized mngt at lowest appropriate levels? – Empowerment of consumer associations?– Private sector involvement (PPP/OBA?)?– Focus on rural and peri-urban communities?– Full participation of men and women &

all groups, castes, ethnic groups, etc.?– Safe access to water = ’a basic security’ for the

disadvantaged and vulnerable groups?– SIA necessary in all large water schemes?


DSM 17-19 June, 2002 27

Pro-Poor Infra Policies - Transport and communication (1)• Priority to providing rural poor people access to

social services, markets and to information?• Roads, cars and internet are not always key:

Conduct first participatory assessments of the genuine transport, mobility and communication needs of the rural poor? (Debate?)

• Establish realistic affordability estimates for the options, including maintenance costs.

• Study the interlinkages between infra construction and rural livelihoods:


DSM 17-19 June, 2002 28

Transport and communication (2)• Use local contractors to support the local economy?• Use labour-intensive approaches and phase

activities so that they provide extra incomes (social protection) for rural poor during difficult times, e.g. food-for-work, etc.?

• Disaggregate findings by gender and age-group• Consider subsidies for public transport (to

customers or to providers) as an alternative to high-cost roads and unsustainable/unaffordable private vehicle transport? (Debate? – Note major differences among donors’ domestic transport cultures and policies!)


DSM 17-19 June, 2002 29

Transport and communication (3)• Tax private transport to raise funds for public

transport, road maintenance, railways? (D?)• Intermediate technology (bicycles, pathways, small

bridges, billboards, radiocall, bushmail) (D?)• Radio most likely media to reach the poor? Support

local interactive radio? Newsletters? Posters? Local council minutes and CG allocations to be published on village billboards? Video as a monitoring and lobbying tool – to give a ’voice’ for the remote poor?

• Cellular phones more likely to work than line phones. • Reliable post office (paper mail) system would be a

great improvement (and could gradually grow into a network of rural communications centres) (D?)

Questions and comments on pro-poor sector policies ?

--- SOCIAL RISK MANAGEMENTReducing vulnerability and managing shocks

(New Consensus: WDR, DAC, DFID, etc.)

”Poor women and men see insecurity as a major dimension and cause of poverty. I.e. many

lead decent lives normally, but are highly vulnerable to falling into

poverty.”


DSM 17-19 June, 2002 31

SOCIAL RISK MANAGEMENT (1) The livelihood risks facing the poor include:

a) Individual/family risks: illness, injury, disability, old age, crime, domestic violence

b) Group/community risks: local natural calamities, food shortages, epidemics, terrorism, riots, pollution, soil degradation, deforestation, unemployment, occupational hazards, ethnic conflict

c) Regional/national risks: Nation-wide natural calamities, civil strife, war, economic shocks (e.g. growth collapse, hyperinflation, balance or payments/currency crisis, terms of trade shock, transition costs of economic reforms.)


DSM 17-19 June, 2002 32

SOCIAL RISK MANAGEMENT (2)- KEY CONCEPTS OF SOCIAL POLICY

• Formal and informal mechanisms can be used:– Social inclusion

• Fighting discrimination and social exclusion• E.g. women, the old, ethnic minorities, disabled

– Social protection• Social insurance: e.g. health insurance, crop i.,

unemployment i., accident & disability i., old age i.• Social assistance: e.g. food subsidies, exemptions from

user charges for social services, micro-finance, public works, land/tenancy reform (D?)

– Social capital • The benefits of trust, cooperation and networks


DSM 17-19 June, 2002 33

Understanding the poor as ’portfolio managers’: Balancing their portfolio of capabilities and assets

to secure a Sustainable Livelihood (Chambers 1992, 1995)

(People)Livelihood Capabilities

A LIVELIHOOD

Stores and Claims and Resources Access(Tangible Assets) (Intangible

Assets)


DSM 17-19 June, 2002 34

SOCIAL RISK MANAGEMENT (3) • Anti-poverty strategies should help the poor

protect themselves from social risks/shocks.• Social risks call for Social Risk Management by

(a) risk reduction, (b) risk mitigation

• by diversification• by insurance

(c) coping with shocks.• ’Pooling of risk’ helps the poor manage the risks.

Pooling requires large populations - therefore public systems (or large market-based systems) have advantages.


DSM 17-19 June, 2002 35

MATRIX OF SOCIAL RISK MNGT Informal Formal

Individual Group based

Marketbased

Publiclyprovided

Reducingrisk

Preventivehealth, migration

Collective resource mngt and works (e.g. dykes)

Sound macro policy, health & education, environmental policy, infra investment, labour market policies

Mitigating risk- diversi-fication

Crop and income sources

Occupational and saving associations

Savings, micro-finance

Extension, trade liberalisation, protecting property rights

Mitigating- insurance

Marriage and extended family, sharecropping, buffer stocks

Social capital, e.g. providing labour to a patron against protection

Pensions, insurance against illness, etc.

Pension systems, mandatory insurance, or: public regulation with market-based provision

Coping with shocks

Sale of assets, borrowing, reducing consumption, child labour, temporary migration

Transfers e.g. from migrant family members

Sell financial assets, loans

Social assistance, subsidies, social funds, cash transfers-----------------------------------------SOURCE: WDR-2000/1, p. 141, DFID (2001), p. 90, Klugman,p.19


DSM 17-19 June, 2002 36

Questions and comments on Social Risk Management?

--- Mainstreaming Gender and Environmental Sustainability

--> We’ll skip them here because they will be discussed in Training Module 5 on ’Cross-cutting issues’

International Pro-Poor Policy Action--> We’ll skip it here because it will be discussed in

Training Module 6 on ’Partnership skills’ (’Donor Policy Coherence’)

Back to the basic dilemma:PRO-POOR GROWTH ? - More easily said than done...

Main sources: DAC PovRed Guideline, Klasen (SPA 2001), Cornia & Court (WIDER 2001), WDR-2000/1, Dollar & Kraay (2000).

•Is it...growth of mean incomes ?•Reduction of inequality ?

•Enhancement of the income share accruing to the poor?

•High elasticity of the poverty rate to economic growth ?


DSM 17-19 June, 2002 38

PRO-POOR GROWTH Growth that benefits the poor disproportionately (Klasen, 2001)

• e.g. the proportional income growth of the poor (e.g. lowest quintile, or those below the national poverty line) must exceed the average income growth rate.

• Multi-dimensional poverty --> Is it OK to look at money-metric growth alone?


DSM 17-19 June, 2002 39

Seraggeldin, WB:Growth = capital accumulation.

- What forms of capital can/should we try to accumulate in sustainable pro-poor growth ?

Man-made C. Human C Human C. Man-made C.

Natural C. Natural C. Social C. Social C.

• We know that there are limits to Man-made and Natural capital.• But: Do we know the limits of Human and Social Capital ? DEBATE?


DSM 17-19 June, 2002 40

Consensus: UN, DAC, WDR, DFID, Finland, etc.

Growth would be good for the poor but what are the precise policy measures

under control of government? - A government cannot decide: ”We want /

don’t want growth.” - Everyone wants growth, but a government

can decide only on laws, policies, budgets and taxes.

- Growth could be a consequence of pro-growth policies

- PovRed could be a consequence of pro-poor policies, including pro-poor growth policies.


DSM 17-19 June, 2002 41

WDR-2000/1, p. 45:• ”Countries do not choose to have slow growth

or to undergo painful crises. • Nor do they simply choose how equitable growth

will be. • Instead, the patterns of growth, the changes in the

distribution of income and opportunities, and the rates of poverty reduction reflect a complex set of interactions among the policies, institutions, history, and geography of countries.

• Understanding the forces underlying countries’ disparate growth experiences, and the mechanisms through which this growth has reached poor people, is essential for formulating poverty reduction strategies.”

Pro-growth policies ?(whether pro-poor, anti-poor, or

’neutral’)


DSM 17-19 June, 2002 43

What drives economic growth? (1)(WDR-2000/1, p. 49)

• Growth depends on education and life expectancy, particularly at lower incomes

• Female literacy and girls’ education are good for overall economic growth

• Absence of: Rapid population growth, wars, civil unrest and natural disasters, macro-economic volatility, terms of trade shocks, slow growth among trading partners, poorly sequenced and badly implemented reforms, ethnic fragmentation and conflict, initial inequality, environmental degradation


DSM 17-19 June, 2002 44

What drives economic growth? (2)(WDR-2000/1, p. 49, 57)

• Pro-growth economic policies: (Wide consensus, but debate on the optimal degree of…)– Openness to international trade– Moderate budget deficits– Absence of high inflation (>30-40% ?)– Well-developed financial system– Moderately sized government– Land reform – Infrastructure to poor areas– Universal policies (e.g. pricing of educ.)


DSM 17-19 June, 2002 45

What drives economic growth? (3)(WDR-2000/1, p. 49, Klugman, p. 10)

• Pro-growth institutions: – Prudent macro-economic management– Strong rule of law– Absence of corruption– Predictable environment for private sector– Institutions to protect minority rights– Conflict resolution institutions– Environmental protection institutions

Pro-poor growth policies ?


DSM 17-19 June, 2002 47

What we know about pro-poor growth policies?

1) Pro-growth policies help the poor in the long-run, but may hurt them in the short-run (D?)

2) Specific pro-poor growth policies help the poor more than ”neutral” pro-growth policies.

3) Two ways in which growth can be pro-poor:a) Direct way: Pattern of growth that

immediately raises the incomes of the poorb) Indirect way: Public redistributive policies,

e.g. progressive taxation and targeted public expenditures.


DSM 17-19 June, 2002 48

Direct way of pro-poor growth (1)

Requires policies that enable poor people to use their assets and capabilities to generate enhanced and sustainable livelihoods.


DSM 17-19 June, 2002 49

For a poor person, ”GROWTH” means a strengthening of his/her ”portfolio” for sustainable

livelihoods, along any of its dimensions (Chambers 1992, 1995)(People)

Livelihood Capabilities

A LIVING

Stores and Claims and Resources Access(Tangible Assets) (Intangible

Assets)


DSM 17-19 June, 2002 50

Which kinds of policies could enable poor people to use

their capabilities and assets ?• LIVELIHOOD CAPABILITIES ?

– E.g. Health? Education? Extension? ...• STORES AND RESOURCES ?

– E.g. Micro-finance programs? Soil conservation? Land/tenancy reform? (But note: poor & common property)

• CLAIMS AND ACCESS ?– E.g. Good governance? Civic rights

education? Accountability? Rule of law? Co-operatives? Networks? etc. Social capital...


DSM 17-19 June, 2002 51

Direct way of pro-poor growth (2) The poor are not spread evenly throughout the

economy: Pro-poor growth policies must… favour the regions/sectors where the poor

are e.g. Rural / Agriculture / Non-farm / Informal

stimulate the ’supply side’ in the disadvantaged areas/sectors (’poverty traps’) or encourage outmigration.Reliance on private sector often unlikely to succeed -

govn’t involvement required (Debate?)use the factors of production the poor

possess, or are able to acquire e.g. Labour (predominantly unskilled); sometimes land

and human capital (skilled labour)


DSM 17-19 June, 2002 52

Direct way of pro-poor growth (3)(DAC, p.45)

• Global economy offers potential for PovRed• But also great risks of economic disruption• Hence integration requires prudent

management to ensure that the poor benefit from trade-led/FDI-led growth

• This involves building capacity and exploring opportunities...

• ...while taking policy action to mitigate increased risks, e.g. capital outflows, environmental degradation, unemployment or the undermining of core labour standards.


DSM 17-19 June, 2002 53

Indirect way of pro-poor growth (1)

Via taxes, transfers, pro-poor infra, basic services and other government spending;

High growth of any sorts could, in principle, be made pro-poor via progressive taxation (etc. revenue policies) and government spending targeted on the poor, in order to...provide transfer payments (’safety nets’)to include the poor in the growing economy

(’springboards’)


DSM 17-19 June, 2002 54

Indirect way of pro-poor growth (2)

Static redistributions (safety nets) unlikely to reduce poverty unless they provide pro-growth opportunities and incentives for the poor (springboards).

Growth is highly contingent on the quality of human capital -->Investment in education and extension will increase growth and make it more pro-poor.

Especially education and extension for women and girls

Reduction of inequalities ?


DSM 17-19 June, 2002 56

Consensus: UN, DAC, WDR, DFID, Finland, etc.

Reduction of inequalities would be good for the poor. & It would also be good for

growth. • Sectoral / regional / gender / ethnic

inequality ?• Disability, ”unregistered” citizens,

HIV/AIDS victim or other form of disadvantage ?


DSM 17-19 June, 2002 57

PRO-POOR GROWTH (DAC, p.45)• Governments need to tackle the

inequalities of assets and income (Consensus: DAC, WDR, DFID)

• Inequalities give a double negative impetus to poverty by...

•lowering the pace of growth•lowering the poverty reducing

impact of growth


DSM 17-19 June, 2002 58

INITIAL INEQUALITY MATTERS (Consensus: DAC, p. 45-46, WDR, DFID)

• To reduce income poverty by half, high-inequality countries will, on average, need to grow twice as fast as low-inequality countries.

• This is not feasible. Thus more equitable growth is a necessary condition for achieving the international development goal for Poverty Reduction. (DAC, p. 45-46.)


DSM 17-19 June, 2002 59

PRO-POOR GROWTH (DAC, p. 46)• Most poor people still live in rural areas• Hence, pro-poor rural (on- and off-farm)

development is a key priority for PovRed• The proportion of urban poverty is increasing• Policies need to support the rural-urban

interlinkages:– RURAL: Land rights, water, technology,

markets, extension, irrigation, micro-finance, roads, information, public works

– URBAN: Land-use planning, social protection, environmental and labour standards, social services


DSM 17-19 June, 2002 60

PRO-POOR GROWTH (DAC, p. 45)• In addition: inequalities increase risks of

conflict and violence,and reduce the voice of the poor

• Public policies aimed at reducing inequalities require tactful building of political alliances to overcome vested interests. Development agencies can facilitate this.

• But note: In no nation is inequality as grave as in the world between nations (E.g. UNDP/HDR and WDR-2000/1 p. 51.) Coherence of global policies

Policies the international

community might consider ?


DSM 17-19 June, 2002 62

Policies the international community might consider (1)

(Cornia & Court)

• Include distribution issues in policy advice and PRSPs– Stabilization, structural adjustment and

external openness are often helpful– But the extreme nature and speed of the

liberalization approach, often in the absence of...• adequate macroeconomic balance,

regulatory capacity and safety nets……has often had a negative impact on

distribution and poverty. (D?, widening C?)


DSM 17-19 June, 2002 63


(Cornia & Court, Klugman, p. 18)

• Active regional policy– Evidence points to the value of active and

direct policies for the benefit of marginalized, particularly rural, regions.

• Gender equality is good for growth and for poverty reduction

• Environmental sustainability is pro-poor


DSM 17-19 June, 2002 64


(Cornia & Court, Klugman, p. 18)• Equitable labour market policies

- Minimum wages, rules of hiring and firing, labour standards, occupational health and safety, (re-)training, regulations against gender and minority discrimination.

• Increase external budgetary support• Speeding up debt relief...• Reversing the decline of real aid flows...• Targeting ODA more effectively...

--> would help protect vital pro-poor social expenditures.


DSM 17-19 June, 2002 65

Policies the international community might consider (4) (Ashley & Maxwell, ODI)

• Rethinking Rural Development– Multi-sectoral approaches are necessary– But (unlike IRDPs of 1970s) plans need to

be linked with capacity – Rural development does not always sit

happily with new aid modalities, e.g. SWAPs by line ministries or centrally-driven PRSPs

CHALLENGE: Strategic approaches are needed to raise the profile of rural issues in PRSPs and SWAPs !


DSM 17-19 June, 2002 66

THANK YOU !

Practical tools for analyzing the pro-poor

quality of policiesCould the CPIA used as a common approach by all

donors ?


DSM 17-19 June, 2002 68

Practical tools for analyzing the pro-poor quality of policies (1)

• If donors want to work in partnership, and harmonize their approaches to policy analysis, what approaches could we use together ?

• We can use, e.g.: – PSIA

= Poverty and Social Impact Assessment= A variety of tools for assessing the

poverty and social impacts of each individual reform (--> Training module3)


DSM 17-19 June, 2002 69


– PER = Public Expenditure Review= to assess the allocation and benefit

incidence of public budgetary resources (--> Module 4)

– CFAA = Country Financial and Accountability Assessment= to assess how responsibly the public

authorities manage public funds and what is the quality of their systems and capacity for internal and external auditing. (--> Training module 4.)


DSM 17-19 June, 2002 70


– CPIA = Country Policy and Institutional Assessment= This is the tool WB uses every year for

deciding the allocation of IDA credits to LICs (with Portfolio Performance Assessment)

= Main purpose: ”To assess the quality of a country’s present policy and institutional framework”

= ”Quality” means how conducive that framework is to fostering poverty reduction.


DSM 17-19 June, 2002 71

The Democratic Principle (1)- Who should assess whether

a government is ”on track” or not ?

• If the elected Parliaments and the elected Local Councils are not involved, the PRSPs lose in credibility as ”Economic Constitutions” (?) – Risk that they are viewed as donors’, or

government’s, and not ”national” documents and thus subject to changes in government;

– Therefore important to involve not just governments and civil society but also Parliaments, Local Councils.


DSM 17-19 June, 2002 72

The Democratic Principle (2)

– If PRSP-process too heavily controlled by the Min.of Finance/Planning, there’s the risk that other ministries (e.g. of Social Affairs, Education, Health, Agriculture) feel lack of ownership and commitment.

– Make sure that you know the status of PRSP, e.g. compared to leading Party/Government documents.


DSM 17-19 June, 2002 73

CPIA (1)= Country Policy and Institutional

Assessment ( See: http://www.worldbank.org/ida/IDAPerfalJan02.pdf )• 20 aspects of policy assessed, each with

a 5 % weight.• ”Each aspect of policy should be

considered in light of its impact on poverty reduction.”

• Based on WB Country Team’s subjective assessments, scrutinized by WB-HQ.

• Clear definitions and presentational tools


DSM 17-19 June, 2002 74

CPIA (2)= Country Policy and Institutional

Assessment

• Could this assessment (CPIA) gain in credibility if it were done by the wider donor community?

• At the moment country ratings are still not disclosed by the WB but country rankings are published in quintile groups.


DSM 17-19 June, 2002 75

CPIA: 20 policy aspects, grouped into 4 categories

A. ECONOMIC MANAGEMENT1. Management of Inflation and Macroeconomic Imbalances2. Fiscal Policy3. Management of External Debt4. Management and Sustainability of the Development ProgrammeB. STRUCTURAL POLICIES5. Trade Policy and Foreign Exchange Regime6. Financial Stability and Depth7. Banking Sector Efficiency and Resource Mobilization8. Competitive Environment for the Private Sector9. Factor and Product Markets10. Policies and Institutions for Environmental SustainabilityC. POLICIES FOR SOCIAL INCLUSION / EQUITY11. Gender12. Equity of Public Resource Use13. Building Human Resources14. Social Protection and Labour15. Poverty Monitoring and Analysis of Poverty Outcomes and ImpactsD. PUBLIC SECTOR MANAGEMENT AND INSTITUTIONS16. Property Rights and Rule-based Governance17. Quality of Budgetary and Financial Management 18. Efficiency of Revenue Mobilization19. Quality of Public Administration20. Transparency, Accountability and Corruption in the Public Sector.


DSM 17-19 June, 2002 76

E.g. Tanzania’s ranking among the 76 IDA-countries along the 4 CPIA

categories (+ IDA Portfolio Performance)

• Economic mngt: Quintile 1 (Top)• Structural policies: Quintile 2• Policies for Social Inclusion and Equity: 2 • Public Sector Mngt and Institutions: 1• IDA Portfolio Performance: Quintile 3----------------------------------------------------• OVERALL CPIA RANKING: Quintile 1


DSM 17-19 June, 2002 77

CPIA• Ratings Scale: 1 (low) through 6 (high)

1. Unsatisfactory for an extended period2. Unsatisfactory3. Moderately Unsatisfactory4. Moderately Satisfactory5. Good6. Good for an extended period


DSM 17-19 June, 2002 78

E.g. the criteria for CPIA-dimension nr 12:

Equity of Public Resource UseINTRO:

”This item assesses the extent to which the overall development strategy and the pattern of public expenditures and revenues favours the poor. National and sub-national levels of government should be appropriately weighted.”


DSM 17-19 June, 2002 79

CPIA: Equity of Public Resource Use2 = UNSATISFACTORY: ”The Overall development strategy and the

incidence of public expenditures benefits the better-off more than the poor, or the incidence is unknown. There are few or no policies and programs to address disparities among individuals, groups or geographic areas in their access to public services or outcomes. The overall incidence of public revenues is regressive.”


DSM 17-19 June, 2002 80

CPIA: Equity of Public Resource Use5 = GOOD: ”Public expenditures for social services

benefit the poor more than the better-off. The government has identified individuals, groups or localities that are poor, vulnerable or have unequal access to services and opportunities, and is designing, with their participation, appropriate targeted programs. The overall incidence of revenues is progressive.”


DSM 17-19 June, 2002 81

CPIA: 20 policy aspects, grouped into 4 categories

A. ECONOMIC MANAGEMENT

B. STRUCTURAL POLICIES

C. POLICIES FOR SOCIAL INCLUSION / EQUITY

D. PUBLIC SECTOR MANAGEMENT AND INSTITUTIONS


DSM 17-19 June, 2002 82

A. ECONOMIC MANAGEMENT

1. Management of Inflation and Macroeconomic Imbalances

2. Fiscal Policy

3. Management of External Debt

4. Management and Sustainability of the Development Programme


DSM 17-19 June, 2002 83

B. STRUCTURAL POLICIES5. Trade Policy and Foreign Exchange

Regime6. Financial Stability and Depth7. Banking Sector Efficiency and Resource

Mobilization8. Competitive Environment for the Private

Sector9. Factor and Product Markets10. Policies and Institutions for

Environmental Sustainability


DSM 17-19 June, 2002 84

C. POLICIES FOR SOCIAL INCLUSION / EQUITY

11. Gender12. Equity of Public Resource Use13. Building Human Resources14. Social Protection and Labour15. Poverty Monitoring and Analysis of

Poverty Outcomes and Impacts


DSM 17-19 June, 2002 85

D. PUBLIC SECTOR MNGT AND INSTITUTIONS

16. Property Rights and Rule-based Governance

17. Quality of Budgetary and Financial Management

18. Efficiency of Revenue Mobilization19. Quality of Public Administration20. Transparency, Accountability and

Corruption in the Public Sector.


DSM 17-19 June, 2002 86

Buzz-group excercise: Assessing the relevance of the CPIA-Criteria

• 20 buzz-groups - 20 CPIA policy aspects• 2-3 members per group

– just turn to your neighbour on the spot• Each group to read and assess the relevance of the

criteria for 1 dimension.• 5 min. for work in buzz-groups• 20 x 1 min for a very brief feedback to plenary:

– Relevance of the policy aspect for PovRed ?– Relevance of the CPIA-criteria for the policy aspect ?

• Total 25-35 min• Objectives: Group dynamics + becoming familiar with

the CPIA. No serious assessment of the quality of CPIA.


DSM 17-19 June, 2002 87

THANK YOU !

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