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Types of Crises

WORLD FAMILY SUMMIT +7 The impact of the crisis: How the international economic and financial crisis has impacted families at the local level Wanda Engel December 6, 2011. Types of Crises. Idiosyncratic: within the family environment, the level of vulnerability increases due to: Diseases

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Types of Crises

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  1. WORLD FAMILY SUMMIT +7The impact of the crisis: How the international economic and financial crisis has impacted families at the local levelWandaEngelDecember 6, 2011

  2. Types of Crises • Idiosyncratic:within the family environment, • the level of vulnerability increases due to: • Diseases • Natural catastrophes • Unemployment of adults • Systemic: caused by economic shocks • 1930: Great Depression • 1994/95: Mexico • 1997/98: Asian crisis • 2008/9: Global Financial Crisis

  3. The crisis as a multidimensional phenomenon Economic Development

  4. Areas Affected: Economic Development • Poverty and extreme poverty • Informal economy (without Social Security coverage) • Youth unemployment • Infant labor • Increase in food and energy prices • Reduction in remittances Affect the conditions needed for sustainable development Source: Harper,C. and Jones, N. Impact of Economic Crises on Child Well-Being

  5. Increase in underemployment and unemployment Drop in the net creation of jobs - 2009 * Report “The Brazilian Economy in Perspective” - May/July 2011 edition

  6. Increase in underemployment and unemployment Behavior in the balance of jobs – 2007-2009 Source: Global Financial Crisis: social impacts and impacts on the labor market, 2009.

  7. The crisis as a multidimensional phenomenon Economic Development Human Development

  8. Areas Affected: Human Development • Education: • Movement from private schools to public schools • School Exodus: boys drop out to work and girls drop out to take care of brothers • Health: • Hunger/malnutrition • Suicide • Heart diseases • Alcohol consumption and hepatic cirrhosis • Mental diseases Source: Harper, C. and Jones, N. Impact of Economic Crises on Child Well-Being

  9. Human Development Impacts – a few signals(WB/IMF 2010) 2008 – 2010 Period Human indicators drop more rapidly during crises but improve in subsequent growth periods.

  10. The crisis as a multidimensional phenomenon Economic Development Human Development Social Development

  11. Areas Affected: Social Development • Family • Family stress • Divorces • Migration to work • Infant exploitation • Violence against women and children • Society • Violence and crimes • Social fragmentation • Political instability • Xenophobia • Terrorism Halt social progress Reduce social cohesion

  12. Decline of Social Capital Stagnation of the GINI Index 2008–2009 * Report “The Brazilian Economy in Perspective” - May/July 2011 edition

  13. The crisis as a multidimensional phenomenon Economic Development Human Development Social Development Social Protection

  14. Social Protection Concept Public intervention with the objective of helping individuals, families and communities manage crisis situations (structural or idiosyncratic) and offer basic conditions to those submitted to extreme poverty.

  15. Social Protection Poverty Line

  16. Social Protection Networks: Objectives Prevent the loss of: • Human capital • Social capital • Economic assets • Mitigate: • Social Security • Emergency aid • Overcome: • Subsidies • Transfers

  17. Types of Intervention

  18. Key Challenges Dilemma: crisis vs. social investment Double challenge: mitigate impacts and protect against future human and social capital losses Lack of fiscal sustainability risk Need for a universal and permanent Social Protection Network • The efficiency, efficacy and effectiveness and integration challenge: • Partnership: civil society (volunteering) • Social control against fraud, error and corruption

  19. The crisis as a multidimensional phenomenon Economic Development Human Development Social Development Social Protection Network Conditions

  20. Human Development Documentation Housing Land ownership regularization Credit Urban and living improvements Education Access to different levels of regular education Adult literacy Supplementary education Complementary activities Healthcare Sanitation / water Family health Improvement of environmental conditions Culture Access to cultural assets Support to different forms of expression Sports Access to sporting equipment Sports schools Sports for youngsters

  21. The crisis as a multidimensional phenomenon Economic Development Human Development Social Development Capabilities Social Protection Network Conditions

  22. The main economic development proposals • Flexibilize the labor market • Encourage the domestic (family and country) production of food and offer technical support for boosting productivity (EMBRAPA) • Unemployment aid • Public employment (workfare) • Subsidy and/or control over food prices • Changes in the energy grid • Support towards micro-businesses

  23. The crisis as a multidimensional phenomenon Economic Development Opportunities Human Development Social Development Capabilities Social Protection Conditions In order to manage a crisis (multidimensional), an intervention that utilizes an integral strategy is necessary.

  24. A new proposal for facing crises: Cash Transfer Programs Challenge: How to make them a more integral strategy?

  25. Cash Transfer Programs(Fiszbein, Ringold and Srinivasan, 2011) Origin: Beneficiaries: families with children A long-term poverty reduction goal; not an answer to crises Types:CCT and UTC Debates regarding the effectiveness of conditions. Monitoring of conditions could scare away the most vulnerable. Impacts: Inject monetary funds in areas of extreme poverty, creating a consumer market and leveraging the economy. Help reduce the impacts of idiosyncratic and systemic shocks, including the potential effects on the human capital accumulation process in children.

  26. Summary of selected cash-transfers programmes and responses, 2008-09 Familias en Acción (Colombia); Programa de Asignación Familiar - PRAF (Honduras); Programa de Avance hacia la Educación y la Salud (Jamaica); Plan Familias (Argentina); Chile Solidario (Chile)

  27. Cash Transfer Programs(Fiszbein, Ringold and Srinivasan, 2011) Prerequisites: - Administrative capacity - Information system (Census data, household data, indexes) - Mechanisms for payments Focus Strategies: - Self- targeted: inexpensive and the easiest to expand (Brazil) - Geographic targeting - Target methodology: requires household visits, possesses quick-expansion difficulties in the crisis and removal of beneficiaries in the after crisis Lessons Learned: - Countries that implemented CT programs as pilot projects had greater ease expanding them during the crisis Limits: - These programs are an economic answer while the consequences of crisis are multidimensional - They should be one of the components within an integral human, social and economic development strategy

  28. Four Generations of Cash Transfer Programs

  29. Economic crises serve to remind us that it is essential that people be healthy, educated, have adequate housing, be well fed and live in a positive family and social environment in order to be more productive and qualified to contribute to society.

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