Transcript Poverty Budgeting -- LAC, by Norman Hicks

Poverty Budgeting -- LAC
Norman Hicks
Sector Manager, Poverty, LAC-PREM
June 22, 2001
Social Programs
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Social programs, esp. safety nets,
should expand during a recession as
poverty is increasing.
Evidence from Argentina and Mexico
show just the opposite
Table 4: Targeted public spending per poor person, 1994-1996, Argentina and Mexico
Real per capita Share of
Poverty rate
GDP
targeted social
(%)
(1994 = 100) spending in
GDP (%)
Argentina
1994
1995
% change
Mexico
1994
1996
% change
Number of
poor people
(million)
Targeted
spending per
poor person
(1994 = 100)
100
94.7
-5.32%
1.24
1.21
21.6
27.2
7.5
9.6
100
63.1
-27.88%
100
95.1
-4.93%
1.36
1.23
46.9
60.9
42.0
56.5
100
67.3
-23.70%
Source: Wodon and Hicks (1999.)
Table 5: Estimated Elasticities of Expenditures with Respect to Changes in GDP
Total government spending
Social sectors spending
Social protection spending
Argentina (1980-97)
0.96
1.88
1.97
Mexico (1987-1997)
1.88
1.90
2.73
Incidence vs. Coverage
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We tend to concentrate on the targeting
efficiency of programs; e.g. what
percent goes to poor
Coverage is also important; e.g. what
percent of poor people receive the
program.
Argentina: Benefit Incidence of Government Social
Assistance by Income Quintiles (%)
Quintile Distribution of
Public Benefits
First
47.2
Second
29.0
Third
15.0
Fourth
6.4
Fifth
2.4
Total
100.0
Poor
64.6
Non-poor
35.4
Total
100.0
Households Receiving Assistance
Public
Public and Private
29.5
45.0
18.8
31.4
9.8
22.0
4.9
16.1
1.4
9.8
12.8
24.8
25.5
39.8
7.2
18.1
12.8
24.8
(a) Weighted by provincial government spending on social welfare
Source: SIEMPRO, Social Development Survey, 1997, Includes food, cash and other
forms of in kind assistance.
Distribution of Benefits
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Since the income share of the poor is very
low, even a government program which
provides proportional benefits, is pro-poor
(benefits are a greater share of the income of
the poor than the rich).
Thus, a program which provides more
benefits to the rich may not be regressive.
ARGENTINA:Total Social Expenditures and Taxes
by Quintiles, Urban Argentina 1996
(percent of total)
Quintile:
Expenditures:
Social Sectors
Social Insurance
Total Social
I
II
III
IV
V
total
29.8
9.9
21.8
18.8
20.6
19.5
21.7
19.5
20.8
16.8
23.6
19.5
13.0
26.5
18.4
100
100
100
Tax Distribution
Income Shares
7.1
4.0
10.7
8.4
14.9
13.2
20.1
21.2
47.2
53.2.
100
100
Clarification of Objectives
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Many social programs have a mix of
objectives, or objectives are not clearly
specified.
Example: a scheme to provide
payments to keep children in school is
seen as a safety net, but actually is an
education program.
Evaluation of Programs
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Social programs are often thought to be propoor but are often never evaluated
Many programs have dubious benefits for
poor (labor training), or do not fulfill stated
objectives (nutrition).
PRSPs: Define targets for poverty reduction,
including sub-targets in health nutrition,
education, infrastructure, etc.
PRSP --The Target Problem
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We want PRSPs to have targets concerning
outcomes, or at least outputs, not inputs.
We can control inputs (teachers, schools,
roads built, water connected, etc.), but not
outcomes.
We hold governments responsible for
reaching PRSP targets, but do not know the
relationships between inputs and outcomes.
IDG goals complicate the
problem….
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We encourage countries to strive to
reach IDG goals…but they may be
unrealistic in many countries..
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Halve extreme poverty by 2015
100% primary school enrollment
Eliminate gender gap in enrollment
Reduce child and infant mortality by 2/3rds
Reduce maternal mortality by 3/4ths
We need…
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More humility….we really don’t know
how to achieve PRSP/IDG goals, in
many cases, and…
More Research….evaluations of
programs and studies on input/output
relations… including optimum
strategies.