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INTERNATIONAL FOODPOLICY RESEARCH INSTITUTEsustainable solutions for ending hunger and poverty
Social Protection for Inclusive Growthfor Inclusive Growth
Marie Ruel Marie Ruel International Food Policy Research Institute International Food Policy Research Institute
May 15, 2008May 15, 2008BrusselsBrussels
Economic Growth vs. Social Protection
Economic growth alone is not enough to cut poverty/hunger rapidly and with equityParticularly true where:
High inequalityBad governance
What is needed: Pro-poor growth + M i t t i i l t tiMore investment in social protectionImplemented earlierImplemented at larger scaleImplemented at larger scale
What is the Role of Social Protection?Protective Preventative Promotional Transformational
Secure basic consumption
Reduce fluctuations in consumption
Enable people to save, invest, and accumulate
Build, diversify, and enhance use of assets
Transform institutions and relationships
Protective Preventative Promotional Transformational
consumption and avert asset reduction
accumulate throughreduction in risk and income
i ti
assets• Reduce access constraints
• Directly provide orloan assets
relationships• Economic• Political• Social
variation loan assets• Build linkages with institutions
P bli k
• Direct feeding
• Public works• Insurance (health, asset)
• Livelihoods programsConditional cash
•Food or cash transfers
Direct feeding• Subsidies
Livelihoods programs• Credit and savings
• Maternal and Child Health and Nutrition• Home-based care
for the ill
Conditional cash transfers
• Child and adult education/skills• Early childhood development
Social Protection & the Life Cycle
PensionElderly
Public WorksIncome generationAdults
School fee waivers & vouchersFood/Cash for schoolingSchool age
SPPrograms& Policies
Early Childhood DevelopmentPre-school
& Policies
Matl & Child Health & Nutrition
Food Cash Transfers
0-2 y old
Food, Cash TransfersPrenatal
Conditional Cash Transfer Programs g(CCTs)
Target cash transfers to poor households, Target cash transfers to poor households, f i hi HHf i hi HHoften to woman within HH often to woman within HH
Conditional on: Conditional on: Enrolling children in school Enrolling children in school Attending health services Attending health services gg
Some also fund supply side strengtheningSome also fund supply side strengthening
Examples of ProgramsExamples of Programs
Progresa/OportunidadesProgresa/Oportunidades (Mexico)(Mexico)BolsaBolsa AlimentaçãoAlimentação (Brazil)(Brazil)Bolsa Bolsa AlimentaçãoAlimentação (Brazil)(Brazil)PRAF PRAF (Honduras)(Honduras)R d d P t iR d d P t ióó S i lS i l (Ni )(Ni )Red de ProtecciRed de Proteccióón Social n Social (Nicaragua)(Nicaragua)Familias en AcciFamilias en Accióónn (Colombia)(Colombia)Red SolidariaRed Solidaria (El Salvador) (El Salvador) Bono SolidarioBono Solidario (Equator)(Equator)Bono Solidario Bono Solidario (Equator)(Equator)TurkeyTurkey
Mexico (PROGRESA/Oportunidades)Mexico (PROGRESA/Oportunidades)
As of 2004, 5 million families, 25 million As of 2004, 5 million families, 25 million individualsindividuals
Budget of US$ 2.5 billion or 0.3% of GDPBudget of US$ 2.5 billion or 0.3% of GDP
Average benefit received by beneficiary Average benefit received by beneficiary households: 20% of the value ofhouseholds: 20% of the value ofhouseholds: 20% of the value of households: 20% of the value of consumption expenditure before programconsumption expenditure before program
Impacts on Poverty ReductionImpacts on Poverty Reduction
In Mexico, In Mexico, PROGRESA PROGRESA reduced:reduced:Poverty by 8.2% Poverty by 8.2% y yy yPoverty gap by 23.6%Poverty gap by 23.6%Severity of poverty by 34.5%.Severity of poverty by 34.5%.Se e ty o po e ty by 3 5%Se e ty o po e ty by 3 5%
In Nicaragua, theIn Nicaragua, the RedRed increased:increased:In Nicaragua, the In Nicaragua, the Red Red increased:increased:Average per capita expenditures by 18% andAverage per capita expenditures by 18% andAverage per capita expenditures of theAverage per capita expenditures of theAverage per capita expenditures of the Average per capita expenditures of the poorest households by 30%poorest households by 30%
Impacts on Education (Enrollment)Impacts on Education (Enrollment)
30
20
25
30
oll
men
t p
oin
ts)
10
15
0
ng
e i
n e
nro
erc
en
tag
e p
Primary School
Secondary School
0
5Ch
an
(pe
Mexico
girl
sMex
ico b
oys
Hondu
ras
Nicara
gua
Cam
bodi
aBa
ngla
desh
Turk
ey
(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 NutritionImpacts on Health and Nutritionpp
70
50
60
70
tag
e
20
30
40
ng
e (
perc
en
po
ints
Honduras
Mexico
Nicaragua
Colombia
0
10
20
Ch
an
-20
-10
Health visits Illness Growth monitoring Stunting
(Sources: Skoufias 2005; Gertler 2000; Hoddinott forthcoming; IFPRI 2003; Maluccio and Flores 2005)
C l i CCTConclusions on CCTs
Programs have played important role in:Programs have played important role in:Reducing poverty, improving quality of dietsReducing poverty, improving quality of dietsImproving health and education outcomesImproving health and education outcomesEmpowering womenEmpowering womenHuman capital formationHuman capital formation
Effectiveness depends on:Effectiveness depends on:Design, implementation, supply side responseDesign, implementation, supply side responseContextual factors (institutional, political, Contextual factors (institutional, political,
i l li l lsocioculturalsociocultural
Social Safety Nets C P t G thCan Promote Growth
1) Creating Assets1) Creating Assets
Conditional Cash Transfers: human assetsConditional Cash Transfers: human assetsBy promoting schooling and health of childrenBy promoting schooling and health of children
Public Works: physical assetsPublic Works: physical assetsBy improving infrastructure (e.g. roads, irrigation, By improving infrastructure (e.g. roads, irrigation, schools health clinics etc )schools health clinics etc )schools, health clinics, etc.)schools, health clinics, etc.)
Private Savings: financial assetsPrivate Savings: financial assetsE M i l i HH 10% f t fE M i l i HH 10% f t fE.g. Mexico: low income HH use 10% of transfers E.g. Mexico: low income HH use 10% of transfers for small investments, which leads to sustained for small investments, which leads to sustained ↑↑ in in consumption/capita in following 5 yearsconsumption/capita in following 5 yearsE.g. Bangladesh: compulsory savings imbedded in E.g. Bangladesh: compulsory savings imbedded in programprogram
2) Protecting Assets2) Protecting Assets
P t l f t f ll i h kP t l f t f ll i h kPrevent loss of assets following shocks Prevent loss of assets following shocks (floods, drought, civil strife):(floods, drought, civil strife):
Shocks can directly destroy assets (e g loss ofShocks can directly destroy assets (e g loss ofShocks can directly destroy assets (e.g. loss of Shocks can directly destroy assets (e.g. loss of livestock) livestock) Shocks may lead to asset sales to smooth Shocks may lead to asset sales to smooth yyconsumption consumption Income shocks can lead to lower investment in Income shocks can lead to lower investment in schooling or health of children ith longschooling or health of children ith long lastinglastingschooling or health of children, with longschooling or health of children, with long--lasting lasting consequences consequences
E g drought in Zimbabwe led to childhoodE g drought in Zimbabwe led to childhoodE.g. drought in Zimbabwe led to childhood E.g. drought in Zimbabwe led to childhood stunting and reduced schooling stunting and reduced schooling
(impact:14% loss of lifetime earnings)(impact:14% loss of lifetime earnings)
3) Allowing more effective use of ) gresources + risk taking
Threat of shocks leads to:Threat of shocks leads to:Low risk livelihood strategiesLow risk livelihood strategieso s e ood st ateg eso s e ood st ateg es
Avoidance of new technologies or creditAvoidance of new technologies or credit
Resulting in lower productivity (e g India andResulting in lower productivity (e g India andResulting in lower productivity (e.g. India and Resulting in lower productivity (e.g. India and Tanzania, this Tanzania, this ↓↓ farm profits by 25farm profits by 25--50%)50%)
SSN act as form of insurance:SSN act as form of insurance:SSN act as form of insurance:SSN act as form of insurance:Motivates poor HH to take risksMotivates poor HH to take risks
Allo s q icker reco er from shocksAllo s q icker reco er from shocksAllows quicker recovery from shocksAllows quicker recovery from shocks
Reduces permanent consequencesReduces permanent consequences
4) Facilitating structural policy ) g yreforms
Economic reforms that promote overall growth Economic reforms that promote overall growth often incur costs of adjustment for some often incur costs of adjustment for some population segmentspopulation segmentspopulation segmentspopulation segmentsSafety nets can promote political acceptance of Safety nets can promote political acceptance of new policies by offsetting some of these costs new policies by offsetting some of these costs p y gp y g(compensation)(compensation)
E.g. Mexico introduced transfers to small E.g. Mexico introduced transfers to small farms when adopting freer trade. The farms when adopting freer trade. The
l l d t i d d ti bl l d t i d d ti bprogram also led to increased production by program also led to increased production by serving as a source of cash for inputs and serving as a source of cash for inputs and
as a form of insuranceas a form of insurance
5) Reducing Inequality5) Reducing Inequality
Effective targeting helps get the transfers to Effective targeting helps get the transfers to the poor:the poor:
Community targetingCommunity targeting
Household targeting using income proxies or other Household targeting using income proxies or other targeting approachestargeting approaches
This helps reduce inequality. By reducing This helps reduce inequality. By reducing inequality social protection policies can inequality social protection policies can yycreate conditions for growth to occurcreate conditions for growth to occur
K I i P Ch iKey Issues in Program Choice
Levels of specific human capital disadvantageLevels of specific human capital disadvantageDesired outcomes, where, for whom? Desired outcomes, where, for whom? Reasons for these deficienciesReasons for these deficienciesAdministrative capacities Administrative capacities Capacity of supply side to deliver with qualityCapacity of supply side to deliver with qualityCapacity to monitor complianceCapacity to monitor complianceCosts and resources available over timeCosts and resources available over timePolitical supportPolitical supportpppp
C l iConclusions
SPP i li lih d f th llSPP i li lih d f th llSPP can improve livelihoods of the poor, allow SPP can improve livelihoods of the poor, allow their productive participation in economytheir productive participation in economyOther components of development strategies:Other components of development strategies:Other components of development strategies: Other components of development strategies: good governance, functional infrastructure, good governance, functional infrastructure, schools & health, etc. schools & health, etc. Effective SSN programs have:Effective SSN programs have:
Clear objective and sound designClear objective and sound designFeasible and effective targeting mechanismFeasible and effective targeting mechanismFeasible and effective targeting mechanismFeasible and effective targeting mechanismEffective and reliable implementationEffective and reliable implementationStrong M&EStrong M&ETransparency in operations good communicationTransparency in operations good communicationTransparency in operations, good communicationTransparency in operations, good communicationStrong political commitmentStrong political commitment
Role of SP during Current Food gPrice “Crisis”
R l d f i i tt ti dR l d f i i tt ti dReal need for increasing attention and Real need for increasing attention and investment in social protection:investment in social protection:
Protective approaches (shortProtective approaches (short--term mitigation)term mitigation)Protective approaches (shortProtective approaches (short term mitigation)term mitigation)Preventative approaches (longPreventative approaches (long--term prevention)term prevention)
In countries with no SP:In countries with no SP:Introduce food or cash transfersIntroduce food or cash transfers
In countries with existing programs:In countries with existing programs:Scale upScale up
Focus on: CCT, pension schemes, employment, Focus on: CCT, pension schemes, employment, microfinancemicrofinancemicrofinancemicrofinanceContinue to invest in human capital creationContinue to invest in human capital creation