53
Poverty and
Inequality Reduction
Strategy in Colombia.
¿How is it measured?
La noche de los pobres. Diego Rivera
Colombia is the most unequal
country in Latin America… and
its poverty level is also high
45.7
34.8
24.9
11.5
0
10
20
30
40
50
2009Colombia Perú Brasil Chile
Gini Index
Source: Eclac
Monetary Poverty
Comparison with countries in Latin America
0.554
0.572
0.562 0.560
0.574
0.567
0.546 0.534
0.53
0.54
0.55
0.56
0.57
0.58
1995 2000 2005 2009
Colombia América Latina
Source: SEDLAC
0.560.54
0.52
0.47
0.53
0.44
0.48
0.52
0.56
0.60
2009
Colombia Brasil Chile Perú A. Latina
Percentage of poor people for Multidimensional Poverty Index, Oxford (H)
Latin America
Fuente: Alkire, Sabina & Maria Emma Santos. 2010.
According to the Multidimensional Poverty Index, recently
published by the Oxford Poverty and Human Development
Initiative (OPHI), measured in a multidimensional way, 9,2 % of
the Colombian population was poor 2005.
0
10
20
30
40
50
60
1.7 3 4 8.5 9.2 11.1 13.3
19.8
25.9
32.6 36.3
40.7
57.3
% d
e p
ob
lac
ión
P
op
ula
tio
n (
%)
Source:
If the reduction of poverty and
inequality are a public policy
objective…
¿What is the strategy
to achieve it?
Jagdish Bhagwati
THE NATIONAL DEVELOPMENT PLAN
2010-2014 “Prosperity for all”
Growth and competitiveness
Equal opportunities
Peace consolidation
DEMOCRATIC PROSPERITY
More employment
Less poverty
More security
Democratic prosperity
Two channels for poverty
reduction
Indirect channel
Growth (Locomotive Sectors)
Increased income
Income poverty – Income extreme poverty- Gini
Direct channel
Ensuring basic services (Social Protection)
Health, education, housing, etc..
Multidimentional
Poverty Index -
Source: Bhagwati
Potential GDP growth Effects of Locomotive Sectors
Increased Income
Indirect Channel
¿How much does an average
growth of 4.5% reduce
poverty and inequality?
(Current scenario of potential GDP)
Indirect channel:
Economic growth
Indicator (income)
Impact of Potential GDP 2009-2014
Poverty -5,4 p.p
Ext. poverty -3,4 p.p
Gini -1.5 points
Indirect channel:
Economic growth
Microsimulation Analysis using the Colombian Quality Life Survey
¿How much does the locomotive sectors reduce poverty and inequality?
Indirect channel:
Economic growth
Agriculture (1, 5 million Ha. returned and securitized, restitution of land to 160.000 families, 15.100 families with comprehensive land grant)
Housing (1 million new homes, 2.8 million people benefited from new pipeline, 4.5 million people benefited from new sewage)
Infrastructure (2,000 km of dual carriageway, 4,000 km of roads in the rehabilitation program and comprehensive maintenance, 75,000 km of tertiary)
Mining and energy sector (oil production to 1.4 MMBOE *, and coal to 124 million tonnes)
Innovation-based sectors (from 37% to 50% coverage of higher education, from 0.16% to 0.5% GDP GDP investment in R & D / of 14,300 million to 21,000 million in value-added manufactured exports
*MMBOE (Million barrels of oil equivalent)- includes oil and gas
.
LOCOMOTIVE SECTORS FOR GROWTH
AND EMPLOYMENT
Indicator (income)
Cumulative locomotive effect
2009-2014
Poverty -1,4 p.p
Ext. poverty -0,9 p.p
Gini -0,1 points
Indirect channel:
Economic growth
Microsimulation Analysis using the Colombian Quality Life Survey
¿What is the total effect of the growth and competitiveness component of the NDP in poverty and inequality?
Indirect channel:
Economic growth
Impact of Potential
GDP 2010-2014
Locomotive Sectors
2009-2014
TOTAL effect
Indirect Channel
Additional effect
Needed Direct
Channel
NDP
Goal*
Poverty -5,4 p.p -1,4 p.p -6.8 p.p. -1.4 p.p -8.2 p.p.
Ext. poverty -3,4 p.p -0,9 p.p -4.3 p.p. -0.6 p.p -4.9 p.p.
Gini -1,5 -0,1 -1,6 points -0.1 points -1.7 points
* There are expected additional effects in poverty, extreme poverty and Gini
measurements that are not captured by the model, which is why goals are
taken as described in the last column of this table (-8.2, -4.9 and -1.7)
Indirect channel:
Economic growth
¿ How do we measured
poverty reduction due
to Indirect channel?
The Monetary Poverty Index
•In 2009 it was established a Commission of experts (MESEP) to define, among other issues, a new methodology for measuring monetary poverty.
•In 2011 the Government adopted the methodology proposed by the MESEP
•Poverty lines were updated as well as the estimation process of the household income
•The results were shared with the Colombian academy and policy makers
2.08
2.5 2.61
3.4 3.78 3.83
4.23 4.42
4.68
5.3
0
1
2
3
4
5
6
PP
P D
ollars
Per capita poverty line in
PPP dollars (Daily Value)
Source: DNP-DDS-SPSCV based on WB. Data: Colombia 2005. Most of the countries 2006.
¿ How many people fall
within the poor by income
category in Colombia and
how we hope to overcome
this situation by 2014?
Source: 2002-2010 MESEP. 2014 Projected data DNP
National Poverty Headcount Ratio (H)
2002-2014
INDICATOR (NM) 2009 2014 VARIATION (2014-2009)
Total population(A) 44,977,758 47,661,368 2,683,610
Poor population (B) 18,081,059 15,251,638 -2,829,421
Non poor population (A-B) 26,896,699 32,409,730 5,513,031 Notes: 1. The absolute values were calculated for the whole country including national territories
2. It assumes a rate of population growth of 1.2% annually until 2013 and 1.1% annually in 2014. Source: DANE
49.4 47.7 47.4
45.0 42.0
40.2 37.2
32.0 30
35
40
45
50
55
60
2002
2003
2004
2005
2006
2007
2008
2009
2010
2014
17.6
15.6 14.8
13.8
16.4
14.4
12.3
9.5
8
10
12
14
16
18
20
2002
2003
2004
2005
2006
2007
2008
2009
2010
2014
National Extreme Poverty Headcount
Ratio 2002-2014
INDICATOR (NM) 2009 2014 VARIATION (2014-2009)
Total population(A) 44,977,758 47,661,368 2,683,610
Poor population (B) 6,476,797 4,527,830 -1,948,967
Non poor population (A-B) 38,500,961 43,133,538 4,632,577 Notes: 1. The absolute values were calculated for the whole country including national territories
2. It assumes a rate of population growth of 1.2% annually until 2013 and 1.1% annually in 2014. Source: DANE
Source: 2002-2010 MESEP. 2014 Projected data DNP
Gini Index
0.573
0.554 0.558 0.557
0.566
0.557
0.560
0.540
0.520
0.540
0.560
0.580
0.600
2002
2003
2004
2005
2006
2007
2008
2009
2010
2014
Source: 2002-2010 MESEP. 2014 Projected data DNP
Direct Channel
Mutidimentional Poverty Index and Families
“promoted” from UNIDOS
I P M
Social Security
Access to assets
Human Capital
Formation
Crisis Risk Management
SOCIAL PROMOTION SYSTEM
Po
or
and
vu
lne
rab
le
pe
op
le
10
0%
of
the
po
pu
lati
on
Income generation, access financial services Social Mobility
Health
Pensions Credit
Securitization
Education/
Cer0 a
5iempre
Displaced
people
weather events
Direct channel
¿ How do we measured
poverty reduction due
to Direct channel?
Multidimensional Poverty Index
I P M
1
The MPI-Colombia:
•Is a poverty measure proposed by the National Planning Department based on the Alkire&Foster methodology
•Was developed as an instrument for design and monitoring public policy
•Complements the income poverty measure
•Was socialized with the Colombian academy and policy makers
Dimensions and Variables:
I P M
1. Political Constitution and current public policy
2. Frequent usage (national or international). Literature
review, discussion with experts and inclusion in other
indices – IPM-OPHI International, BNI, LCI y Sisbén III.
3. Variables sensitive to public policy implementation
4. Availability of data within the Living Standards
Measurement Surveys (LSMS)
Choosing dimensions and variables
Criteria for selecting variables
Dimensions and variables
Education Childhood & youth
Labor Health Public utilities &
housing conditions
Dimensions (5) & variables (15)
Education Childhood & youth
conditions Labor Health
Public utilities &
housing conditions
Educational
achievement
Literacy
School
attendance
No school
lag
Access to
child care
services
Absence of
child
employment
Absence of
long-term
unemployment
Health insurance
Access to health
care services
when needed
Access to
improved
drinking water
Adequate
flooring
No critical
overcrowding
Adequate
elimination of
sewer waste
Adequate
walls
Formal
employment
Weighting scheme
Nested weighting structure:
• Each dimension has the same weight (0.2)
• Each variable has the same weight within each dimension
Weighting scheme and
cut-off point k
Cut-off point k
• To determine the cut-off point it was used a methodology
that combines elements of measuring objective and
subjective poverty
Chosen cut-off k=5/15, that is 33% of deprivations
¿ How many people are in
multidimensional poverty
in Colombia and how we
hope to overcome this
situation by 2014?
MPI goal NDP
60.5
49.3
35.0 30.7
22.5
10
20
30
40
50
60
70
19
97
20
03
20
08
20
10
20
14
INDICATOR 1997 2003 2008 2010 2014 VARIATION
(2014-2010)
Total popultaion (A) 39,201,321 41,847,421 44,450,260 45,508,205 47,661,368 2,153,163
Poor population MPI (B) 23,697,489 20,619,329 15,539,429 13,957,039 10,723,808 -3,233,231
Non-poor population (A-B) 15,503,832 21,228,092 28,910,831 31,551,166 36,937,560 5,386,394
Source: DNP, DDS, SPSCV. 2010
Notes: 1. The absolute values were calculated for the whole country including national territories
2. It assumes a rate of population growth of 1.2% annually until 2013 and 1.1% annually in 2014. Source: DANE
Poverty headcount ratio (H)
41
Deprivation rates
Poor vs. non-poor. 2010
FUENTE: DNP-DDS-SPSCV
MPI proxy based on Census Data 2005
Municipal MPI Colombia
Headcount ratio, urban-rural areas, 2005
Municipal poverty headcount ratio for urban areas,
k=5/15, 2005
Municipal poverty headcount ratio for rural areas,
k=5/15, 2005
Headcount ratio (H) urban-rural
K=5/15
Poverty decreases notably, but
urban-rural differences increase
2
Families “promoted”
Direct channel
I P M
A family is “promoted” from if:
Sufficient condition:
Not in extreme income
poverty Not multidimensionally
poor
&
Indicator 2014
Promoted
from
350.000
Families
FAMILIES “PROMOTED” FROM
UNIDOS
Note: for the fulfillment of this goal are necessary 1) Targeting
of public spending, 2) design and integration of income
generation programs and 3) habitability policy for the extreme
poor.
Summary
Poverty Goals
Indirect and Direct Channel
The effect of the indirect channel is
summarized in:
Potential GDP Locomotive
Sectors
Employment
and
formalization
Income generation and
cash transfers
Poverty (PL)
Extreme
poverty
(EPL)
Gini
The Direct Channel Goals are summarized
as:
15 Goals I P M
20
Achievements
priority
(Habitability
and income)
Channel Indicator Baseline
(2009)
Goals NDP
(2014)
Indir
ect POVERTY 40,2% 32%
EXTREME POVERTY 14,4% 9,5%
GINI 0,56 0,54
Dir
ect MPI 35.0%* 22,5%
FAMILIES PROMOTED FROM UNIDOS 0 350.000
Fuentes: MESEP con base en datos GEIH DANE 2009, * DNP con base en ECV 2008.
Finally… ¿ Who will be in
charge of the follow up
and monitoring process to
ensure compliance with
the goals?
54
Poverty Committee: monitoring poverty reduction
▪ Leaders
– Counselor for the Presidency
– National Planning Department
▪ Permanent members
– Ministry of Health
– Ministry of Labor
– Ministry of Housing
– Ministry of Agriculture
– Ministry of Education
– Ministry of Finance
MANDATORY PRESENCE
The President of Colombia
55
Source: DNP-DDS-SPSCV
0%-10% progress 10%-25% progress >25% progress
One of the main responsibilities of the Committee will be make a
periodic review of poverty indicators
Monitoring Level 1
Poverty Baseline
2009 Data 2010 Analysis Goal 2014
Pobres por ingresos (% LP) 40.2% 37.2% 32%
Pobres extremos por ingresos
(%LI) 14.4% 12.3% 9.5%
IPM (Pobreza Multidim.)
Línea base 2008 34.6% 30.7% 22.5%
Familias Graduadas de Unidos 0 0 350.000
Gini 0.557 0.560 0.544
56
Poverty Indicator Baseline
NDP 2008 Data 2010 Analysis
Goal
2014
MPI (Multidimentional Pov.) 35.0% 30.7% 22.5%
Educational achievement
Literacy (≥15 años)
58.8% 55.4% 52.8%
14.2% 13.2% 12.0%
School attendance (6-16)
No school lag (7-17)
Access to child care services
Absence of child employment
12-17)
5.4% 4.6% 3.5%
33.4% 35.1% 33.1%
11.2% 10.8% 9.2%
8.2% 6.8% 5.6%
Absence of long-term unemployment
Formal employment
9.6% 9.9% 9.3%
80.6% 80.9% 74.7% Health insurance
Access to health care services
when needed
24.2% 21.0% 0.5%
8.9% 6.9% 2.4%
Access to improved drinking
water
Adequate elimination of sewer
waste
Adequate flooring
Adequate walls
No critical overcrowding
12.9% 11.6% 10.9%
14.1% 12.0% 11.3%
7.5% 6.3% 5.6%
3.1% 3.0% 2.1%
15.7% 15.1% 8.4%
Source: DNP-DDS-SPSCV
0%-10% progress 10%-25% progress >25% progress
(1) household educational status, (2) Terms of children and youth (3) Work (4) Health, (5) Access to public services and housing conditions
A(1)
D(4)
B(2)
C(3)
E(5)
Monitoring Level 2
If the Plan is accomplished, if
every ministry does its job and
spends the committed
resources, the MPI decreases to
22% (more than 3 million
people out of poverty).
CONCLUSIONS:
•Colombia adopts a concept of poverty from the monetary approach and multidimensional approach. (Monetary Index and MPI as complementary)
•Monetary Poverty Index – Indirect effects of economic growth
•MPI- Direct effects of the social public action
•Colombia adopts a formal mechanism of accountability and monitoring the poverty reduction strategy through the Committee
•There are others indicators as HDI, IOH and those from the administrative records that are used also to monitoring poverty reduction
Gracias www.dnp.gov.co
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