Presentation_of_the_PSIA_methodology

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How to apply PSIA?
10 Steps and some lessons learned
-------------------------------------------Renate Kirsch
Nairobi, December 2006
A 10 Step approach to PSIA
1. Selecting the Reform
2. Identifying stakeholders
3. Understanding transmission channels
4. Assessing institutions
5. Gathering data and information
6. Analyzing impacts
7. Enhancing design and compensatory schemes
8. Assessing risks
9. Establishing monitoring and evaluation systems
10. Fostering policy debate and feedback into
policy choice
1. Selecting the reform and mapping out
research questions
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Criteria for selection of reform
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Formulating the key questions
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Expected size and direction of impacts
Prominence of issue in the government’s policy
agenda
Timing and urgency of policy or reform
Level of national debate surrounding the reform
Identify key problems/constraints that policy will
address
Make development objectives explicit
Formulate causal hypotheses linking objectives to
actions to likely short-term and long-term impacts
Define the alternative (other option, status quo)
Operational lesson 1: identify reforms
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Need for PSIA should emerge from PRS
Identifying reforms for PSIA should be part of
national PRS process (no duplication)
 In practice, work in progress. Selection
should strengthen broader process, not
undermine/duplicate it
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Selectivity/prioritization essential
Costly and time consuming
 PSIA most meaningful and effective when
applied to specific reforms
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2. Identifying stakeholders
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Stakeholders affected by policy reform positively
and negatively
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Stakeholders affecting the reform
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Differentiated by ethnic, religious, age, spatial,
livelihood, or other criteria
Institutional stakeholders
Powerful interest groups within the public sector,
private sector, and civil society
Focus on
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key characteristics
interests in relation to the policy
importance to the reform, influence on the process
Analytical lesson 2: different groups
Traditionally, distributional impacts measured
on income/consumption groups
 Useful to understand overall effectiveness and
comparing aggregate impacts of alternatives
 But groups are artificial constructs and do not
allow analysis of behavioral responses
 Need also focus on spatial, social, occupational
groups that allow to understand behaviors
 Operational dimensions
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3. Understanding transmission channels
Impacts transmitted through multiple channels:
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Employment (Guyana sugar)
Prices – production, consumption, wages (utility prices)
Access to goods and services (credit, basic services)
Assets – physical, natural, financial, human, social (land,
education, health)
Transfers and Taxes (tariffs, subsidies, import tax, VAT)
Authority (power relations, legal regulations, institutional
capacity, political economy)
Analytical lesson 4: Multiple channels
Authority
Assets
Access
X
X
X
Ghana electricity
X
Ghana oil subsidies
X
Malawi agricultural markets
X
X
X
Mozambique education
X
X
Rwanda electricity
X
X
Tanzania crop boards
Transfers taxes
Burkina Faso macro reform
Employment
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Most reforms have multiple transmission channels
Impacts might change direction/size when considering them
Price & wages
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X
X
X
X
X
4. Assessing Institutions
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Institutions mediate the effect of policy changes on
the welfare of people
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Institutions may themselves be the objective of
policy reforms
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Analyze changes in incentives and rules
Policy changes depend on organizations for their
implementation
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Examine relevant social and market institutions
Incentives, performance and capacity are key
Transaction costs affect reform outcomes
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Markets, legal systems, public organizations
5. Gathering data and information
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Map out desirable data and information
Take stock of existing data and analysis
Adapt PSIA to data limitations:
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Adapt analytical approach
Collect further data (multiple types)
Postpone the reform
Build data basis and capacity for future poverty
and social impact analysis
6. Analyzing impacts
Expected direction & magnitude of impact
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Describe nature and size of principal impacts
• Income and non-income impacts
• Long-term and short-term impacts
• Direct and indirect impacts
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State underlying assumptions regarding
• Intended benefits
• Organizational capacity and institutional performance
• Stakeholder behavior, including behaviors of affected
persons, investors and regulators
Analytical lesson 1: negative and
positive impacts
Central concern is the poor
 But, PSIA is not only about mitigation measures
 Hence, needs to focus on all impacts, both
positive and negative on all groups
 Analysis of support and opposition to reform
 Allows for influence on design of the reform, not
only on mitigation
 Political economy critical
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Analytical lesson 3: short/long term
Reforms have short and long term impacts
 Often linked to direct versus indirect impacts
 A same group could have positive net impacts
in short term and negative ones in longer term
 Assessing short term impacts is relatively easy
 Longer term impacts require more complex and
challenging analysis
 Assess importance of short and long term,
direct and indirect impacts
Analyze all relevant ones to define net impacts
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7. Enhancing design
& compensatory schemes
In light of analysis of impacts:
 Consider an alternate design:
- Alternative design
- Different pace and sequence
- Triggers to invoke additional risk management
measures, reform modifications or an exit strategy
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Consider direct compensation measures
Consider delay or suspension of the reform
8. Assessing risks
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Types of risk:
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Institutional risks (reform complexity exceeds institutional
capacity, vested interests in agency)
Political economy risks (interest groups undermine reform or
capture benefits)
Exogenous risks (conflict, financial crisis, terms of trade shocks,
natural disaster)
Country risks (elections or political instability, ethnic conflict,
post-conflict environment)
Assess likelihood of occurrence and importance
to the policy
9. Monitoring & Evaluating Impacts
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M&E allows to:
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Validate policy analysis
Inform policy adjustment during implementation
Promote ownership of reforms (participatory monitoring)
Promote accountability
M&E should:
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Indicators defined before the reform is implemented:
 tied to transmission channels and assumptions
 correlated with reform
 that can be measured in time to suggest improvements
Build on existing systems to develop national monitoring
system and capacity
Operational lesson 5: Monitoring
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PSIA often ex-ante and based on assumptions
Assumptions, actual impacts must be monitored
during implementation to allow corrections if needed
PSIA indicators should be integrated in country
systems to ensure continued improvement
If PSIA elements too specific for country systems,
ensure they will be monitored after end of core PSIA:
 NGOs
 Development partners on the ground
 Research institutes and universities…
10. Fostering policy debate and
feedback into policy choice
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PSIA draws on public discussions:
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When identifying reform for analysis
When analyzing stakeholders,
When validating technical impact analysis,
When leveraging social accountability.
PSIA should inform policy discussions and
consideration of alternatives
PSIA needs an institutional home to incorporate
results into the policy process
Operational lesson 2: Analysis design
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Analysis typically includes participatory elements
(e.g. stakeholder analysis)
Does not mean analysis is designed in
participatory manner
One doesn’t analyze by consensus. Analysis a
scientific process, based on professional norms
and standards
But methodology must be transparent, in public
domain for informed decision-making process
Operational lesson 3: Analytical process
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No monopoly on who does the research:
Government, university, research institute, NGO,
private sector, development agency…
… as long as methodology transparent, rigorous
Rigor doesn’t mean ignoring stakeholders - their
views are essential inputs
But analysis independent, not an expression of
the views of a particular (vocal) group
Agencies responsible for reform must be part of
analytical process, to be able to utilize the results
Operational lesson 4: Policy dialogue
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PSIA contributes most when closely aligned with
ongoing policy dialogue:
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PSIA part of broader policy dialogue
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Research design based on options actually considered
Results relate to all stakeholders
Needs to be anchored in government policy cycle
(national PMS, policy research group)
Dissemination of PSIA results is key
Results produced early enough to influence dialogue
Policy processes w/o clear beginning or end
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Discrete action part of series of inter-related actions
PSIA one element to inform broader process
PSIA needs to be absorbed by main actors in
governments, civil society and within donor agencies
Ex ante, during, ex post
Analytical lesson 5: Choice of methods and team
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PSIA can use various techniques and tools
Depends on question, data, resources, time
Complementarity, triangulation:
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analytical techniques,
quantitative/qualitative data
Building teams: Skills for different aspects
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Economists: prices/quantity, equilibrium
Social development specialists: stakeholders,
institutions, risks
Sector specialists: policy issue and reform design
 Multi-disciplinary work provides best rigor, but
expensive and difficult
Mixed method approach
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Combining Social and Economic
Analysis
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Bringing a social, economic and
sectoral lens to the research questions
Combining quantitative and
qualitative methods
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Assess research questions with
different methods and tools
Analytical focus vs type of
data and analysis
Social
Quantitative analysis
Socio-cultural basis of
social exclusion
Access to assets and
services differentiated
by gender or ethnicity
Economic
Qualitative analysis
Institutional
economics
Impact of removal of
agricultural subsidies
on production
Complementarity of methods
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Qualitative
Methods
Identifies relationships and
patterns
can help to probe and
affirm those relationships
and explain contextual
differences in the quality
of those relationships
inductively throws up
interesting, often
surprising and sometimes
counterintuitive
relationships and patterns,
are applied to a specific
locality, case or social
setting are described as
contextual..
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Quantitative
Methods
produce data that can be
aggregated and analyzed to
describe and predict
relationships
able to ask “how much?”
and establish how confident
we can be in these
“working hypotheses”.
can be applied across the
entire population or a
section of the population,
e.g. a region. They are
referred to as noncontextual.
Combining tools from different
disciplines
Use qualitative methods to understand
context, relationships, patterns – informs
the design of a survey questionnaire
 Use quantitative methods to assess extent
to which phenomena occur (generalization,
representation)
 Use qualitative methods to unpack issues
which are hard to explain from survey
results
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Three ways to combine
methods
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Joint
conceptual
framework
In parallel
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In sequential
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Iterative
Basis for
identifying
results
and
developing
recommendations