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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 Voipio Ministry for Foreign Affairs of Finland (MFAF) Email: timo.voipio@formin.fi.

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Difficult and contested topics…  Presentation based on…

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  1. Pro-Poor Policies and Pro-Poor GrowthTraining elements for Joint Donor Staff Training on Poverty Reduction in PRSP-Contexts, Dar es Salaam, 17-19 June, 2002Timo VoipioMinistry for Foreign Affairs of Finland (MFAF)Email: timo.voipio@formin.fi

  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 Growth http://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) 2000/1http://www.worldbank.org/poverty/wdrpoverty Joint Donor PovRed Training Pilot, 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 Gap http://www.dfid.gov.uk/Pubs/files/poverty_bridgegap_guidance.pdf • Ashley and Maxwell (2001): Rethinking Rural Development http://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 and http://www.worldbank.org/ida/IDAPerfalJan02.pdf • WB: The Quality of Growth (2000)http://econ.worldbank.org/view.php?type=20&id=1556 Joint Donor PovRed Training Pilot, 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) Joint Donor PovRed Training Pilot, 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… Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  6. POVERTY IS MULTI-DIMENSIONALSource: DAC PovRed Guidelines (2001, p. 39) PROTECTIVESecurityVulnerability ECONOMICConsumptionIncomeAssets POLITICALRights Influence Freedom Voice GENDER ENVIRONMENT HUMAN Health Education Nutrition, Water SOCIO-CULTURAL Status Dignity

  7. WB: MULTI-DIMENSIONAL POVERTY Source: WB: World Development Report 2000/1 • OPPORTUNITY • Pro-Poor Growth • Inequality and Redistribution • Markets • Assets • Governance and Accountability • 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

  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) Challenge remains! But... Joint Donor PovRed Training Pilot, 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 Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  10. Summary 2: MULTI-DIMENSIONAL POVERTY CALLS FOR MULTI-DIMENSIONAL POLICY ACTION(DAC+WDR) 1. Pro-poor economic growth 2. Empowerment: rights and pro-poor governance 3. Basic social services for human development 4. Social Risk Management: Reducing vulnerability and managing shocks for human security 5. Mainstreaming gender and enhancing gender equality 6. Environmental sustainability and Sustainable Livelihood Approaches 7. International Action: Global Policies and Global Public Goods & Donor Policy Coherence

  11. But in this presentation… …to be discussed in a changed order: 1. Empowerment 2. Basic social services 3. Social Risk Management 4. 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)

  12. EMPOWERMENT ”Poverty often means powerlessness, injustice and exclusion from social participation as a result of discrimination and lack of human/civic/political rights” (DAC)

  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? Joint Donor PovRed Training Pilot, 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… Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  15. Good Governance forPoverty 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. Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  16. 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)

  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? Joint Donor PovRed Training Pilot, 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!! Joint Donor PovRed Training Pilot, 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… Joint Donor PovRed Training Pilot, 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? Joint Donor PovRed Training Pilot, 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?) Joint Donor PovRed Training Pilot, 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?) Joint Donor PovRed Training Pilot, 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? Joint Donor PovRed Training Pilot, 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. Joint Donor PovRed Training Pilot, 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? Joint Donor PovRed Training Pilot, 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? Joint Donor PovRed Training Pilot, 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: Joint Donor PovRed Training Pilot, 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!) Joint Donor PovRed Training Pilot, 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?) Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  30. 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.”

  31. SOCIAL RISK MANAGEMENT (1) • The livelihood risks facing the poor include: • Individual/family risks: illness, injury, disability, old age, crime, domestic violence • Group/community risks: local natural calamities, food shortages, epidemics, terrorism, riots, pollution, soil degradation, deforestation, unemployment, occupational hazards, ethnic conflict • 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.) Joint Donor PovRed Training Pilot, 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 Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  33. Understanding the poor as ’portfolio managers’: Balancing their portfolio of capabilities and assetsto secure a Sustainable Livelihood(Chambers 1992, 1995) • (People) • Livelihood Capabilities • A LIVELIHOOD • Stores and Claims and • Resources Access • (Tangible Assets) (Intangible • Assets) Joint Donor PovRed Training Pilot, 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. Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  35. MATRIX OF SOCIAL RISK MNGT Joint Donor PovRed Training Pilot, 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’) Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  37. 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 ?

  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? Joint Donor PovRed Training Pilot, 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? Joint Donor PovRed Training Pilot, 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. Joint Donor PovRed Training Pilot, 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.” Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  42. Pro-growth policies ?(whether pro-poor, anti-poor, or ’neutral’)

  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: Rapidpopulation 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 Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  44. What drives economic growth? (2)(WDR-2000/1, p. 49, 57) • Pro-growtheconomic 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.) Joint Donor PovRed Training Pilot, 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 Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  46. Pro-poor growth policies ?

  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: • Direct way: Pattern of growth that immediately raises the incomes of the poor • Indirect way: Public redistributive policies, e.g. progressive taxation and targeted public expenditures. Joint Donor PovRed Training Pilot, 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. Joint Donor PovRed Training Pilot, 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) Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

  50. Which kinds of policiescould 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... Joint Donor PovRed Training Pilot, DSM 17-19 June, 2002

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