Social Protection for Inclusive Growth
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Social Protection for Inclusive Growth

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Marie Ruel, IFPRI

Marie Ruel, IFPRI
14th May 2008, Royal museum for Central Africa in Tervuren, Belgium

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    Social Protection for Inclusive Growth Social Protection for Inclusive Growth Presentation Transcript

    • INTERNATIONAL FOOD POLICY RESEARCH INSTITUTE sustainable solutions for ending hunger and poverty Social Protection for Inclusive Growth Marie Ruel International Food Policy Research Institute May 15, 2008 Brussels
    • Economic Growth vs. Social Protection Economic growth alone is not enough to cut poverty/hunger rapidly and with equity Particularly true where: High inequality Bad governance What is needed: Pro-poor growth + More investment in social protection M i t ti i l t ti Implemented earlier Implemented at larger scale
    • What is the Role of Social Protection? Protective Preventative Promotional Transformational Secure basic Reduce Enable people to Build, diversify, and Transform consumption fluctuations in save, invest, and enhance use of institutions and consumption accumulate assets relationships and avert through • Reduce access • Economic asset reduction in risk constraints • Political reduction and income • Directly provide or • Social variation i ti loan assets • Build linkages with institutions • P bli works Public k •Food or cash • Insurance (health, asset) transfers • Direct feeding Conditional cash • Livelihoods programs • Subsidies transfers • Credit and savings • Home-based care for the ill • Maternal and Child Health and Nutrition • Child and adult education/skills • Early childhood development
    • Social Protection & the Life Cycle Pension Elderly Public Works Adults Income generation School fee waivers & vouchers SP School age Food/Cash for schooling Programs & Policies Early Childhood Development Pre-school Matl & Child Health & Nutrition 0-2 y old Food, Food Cash Transfers Prenatal
    • Conditional Cash Transfer Programs g (CCTs) Target cash transfers to poor households, often to woman within HH f i hi Conditional on: Enrolling children in school Attending health services g Some also fund supply side strengthening
    • Examples of Programs Progresa/Oportunidades (Mexico) Bolsa Alimentação (Brazil) PRAF (Honduras) Red de Protección S i l (Nicaragua) R dd P tProtecció Social (Ni ió i ) Familias en Acción (Colombia) Acció Red Solidaria (El Salvador) Bono Solidario (Equator) Turkey
    • Mexico (PROGRESA/Oportunidades) As of 2004, 5 million families, 25 million individuals Budget of US$ 2.5 billion or 0.3% of GDP Average benefit received by beneficiary households: 20% of the value of consumption expenditure before program
    • Impacts on Poverty Reduction In Mexico, PROGRESA reduced: Poverty by 8.2% y y Poverty gap by 23.6% Se e ty o po e ty Severity of poverty by 3 5% 34.5%. In Nicaragua, the Red increased: Average per capita expenditures by 18% and Average per capita expenditures of the poorest households by 30%
    • Impacts on Education (Enrollment) 30 ollment 25 ercentage points) 20 0 nge in enro p Primary School 15 Secondary School 10 Chan (pe 5 0 ey rls ua ys as a h di s bo rk r de gi ag bo du Tu la ar co o m on ng ic ic i Ca ex H ex N Ba M M (Sources: Schultz 2001; Skoufias 2005; IFPRI 2003; Maluccio and Flores 2005; Filmer and Schady 2006; Ahmed 2006; Khandker, Pitt, and Fuwa 2003; Ahmed et al. 2007)
    • Impacts on Health and Nutrition p 70 60 nge (percentage 50 Honduras 40 points Mexico 30 Nicaragua Colombia 20 Chan 10 0 -10 -20 Health visits Illness Growth monitoring Stunting (Sources: Skoufias 2005; Gertler 2000; Hoddinott forthcoming; IFPRI 2003; Maluccio and Flores 2005)
    • Conclusions on CCTs C l i CCT Programs have played important role in: Reducing poverty, improving quality of diets Improving health and education outcomes Empowering women Human capital formation Effectiveness depends on: Design, implementation, supply side response Contextual factors (institutional, political, sociocultural i l l
    • Social Safety Nets Can Promote G C P t Growthth
    • 1) Creating Assets Conditional Cash Transfers: human assets By promoting schooling and health of children Public Works: physical assets By improving infrastructure (e.g. roads, irrigation, schools, health clinics, etc ) schools clinics etc.) Private Savings: financial assets E.g. Mexico: l E M i low i income HH use 10% of tf transfers f for small investments, which leads to sustained ↑ in consumption/capita in following 5 years E.g. Bangladesh: compulsory savings imbedded in program
    • 2) Protecting Assets Prevent loss of assets following shocks P tl f t f ll i h k (floods, drought, civil strife): Shocks can directly destroy assets (e g loss of (e.g. livestock) Shocks may lead to asset sales to smooth y consumption Income shocks can lead to lower investment in schooling or health of children with long-lasting children, ith long- consequences E.g. E g drought in Zimbabwe led to childhood stunting and reduced schooling (impact:14% loss of lifetime earnings)
    • 3) Allowing more effective use of ) g resources + risk taking Threat of shocks leads to: Low risk livelihood strategies o s e ood st ateg es Avoidance of new technologies or credit Resulting in lower productivity (e.g. India and (e g Tanzania, this ↓ farm profits by 25-50%) 25- SSN act as form of insurance: Motivates poor HH to take risks Allows q icker reco er from shocks Allo s quicker recovery Reduces permanent consequences
    • 4) Facilitating structural policy ) g y reforms Economic reforms that promote overall growth often incur costs of adjustment for some population segments Safety nets can promote political acceptance of new policies by offsetting some of these costs p y g (compensation) E.g. Mexico introduced transfers to small farms when adopting freer trade. The program also led to increased production by l l dt i d d ti b serving as a source of cash for inputs and as a form of insurance
    • 5) Reducing Inequality Effective targeting helps get the transfers to the poor: Community targeting Household targeting using income proxies or other targeting approaches This helps reduce inequality. By reducing inequality social protection policies can y create conditions for growth to occur
    • Key Issues i Program Choice K I in P Ch i Levels of specific human capital disadvantage Desired outcomes, where, for whom? Reasons for these deficiencies Administrative capacities Capacity of supply side to deliver with quality Capacity to monitor compliance Costs and resources available over time Political support pp
    • Conclusions C l i SPP can improve livelihoods of the poor, allow i li lih d f th ll their productive participation in economy Other components of development strategies: good governance, functional infrastructure, schools & health, etc. Effective SSN programs have: Clear objective and sound design Feasible and effective targeting mechanism Effective and reliable implementation Strong M&E Transparency in operations good communication operations, Strong political commitment
    • Role of SP during Current Food g Price “Crisis” Real R l need f i d for increasing attention and i tt ti d investment in social protection: Protective approaches (short-term mitigation) (short- Preventative approaches (long-term prevention) (long- In countries with no SP: Introduce food or cash transfers In countries with existing programs: Scale up Focus on: CCT, pension schemes, employment, microfinance Continue to invest in human capital creation