Eight Ways to Create Fiscal Space for Social Protection in the Poorest Countries

This post was originally published on The Povertist.

International Labour Organisation (ILO) argues that the poorest countries can afford to finance social protection, and there are eight options to create fiscal space.

Eight Ways to Create Fiscal Space for Social Protection in the Poorest Countries

This post was originally published on The Povertist.

International Labour Organisation (ILO) argues that the poorest countries can afford to finance social protection, and there are eight options to create fiscal space.

Does Africa Need Innovation or KAIZEN?

This post was originally published on The Povertist.

How Different are Innovation and KAIZEN? Innovation is Like a Lottery. KAIZEN is Invention Without Innovation.

Africa Needs to Do Innovation or KAIZEN?

This post was originally published on The Povertist.

How Different are Innovation and KAIZEN? Innovation is Like a Lottery. KAIZEN is Invention Without Innovation.

Social Policy and the Elimination of Extreme Poverty

This post was originally published on The Povertist.

“In middle-income countries, it may be that growth has lifted all the poor out of poverty who can be lifted; for the rest, social policy will be needed (Raj M. Desai 2015).” Thinking about approaches towards the goal of poverty elimination by 2030, this may be a sentence that we can cite to convince people who believe economic policies alone are enough. Here is some summary of my weekend readings as follows.

In The Last Mile in Ending Extreme Poverty, Desai wrote one chapter Social Policy and the Elimination of Extreme Poverty. He emphasises that social policy will play an essential role to end poverty, and political economy of social policy will be a key in developing countries.

Between 1990 and 2010, developing countries halved poverty headcounts to 22 percent, mostly thanks to improvements of labour-based income. However, this may not be the case for the next decades. According to evidence, the labour income effect on consumption diminishes in middle-income countries because the poorest people remain vulnerable.

Even so, he argues that the elimination of extreme poverty is technically possible with a combination of adequate social policies, but political economy will be a critical issue. Social protection systems with strict targeting mechanisms cannot gain critical support from nonpoor populations. It leads to the slow expansion of social protection. Instead, a comprehensive universal social protection system will most likely be sustainable with nonpoor supporters.

Desai concluded the chapter by addressing three points regarding the role of social protection in eliminating extreme poverty.

Inclusive Growth: A good mix of income growth and inequality reduction has an effect to reduce extreme poverty. Some literatures show increases in labour income are responsible for poverty reduction to 15 percent. Beyond this, social protection becomes a key player.

Institution Development: The development trajectories of institutional development for social protection were varied between welfare-state countries that industrialised before the twentieth century and low- and middle-income countries in this century even at the same level of income. The latter made a slower progress due to different conditions such as increased global competition, larger shares of workers in informal economies. It results in budget constraints and targeted programmes of social protection.

Lacking Universality: The exclusion of middle-income could lead to the political unsustainability. Historically, the group played a key role in scaling up social protection. The central obstacle is the domestic politics that affect the scale and duration of redistributive programmes because it potentially results in increasing or decreasing reputation of politicians and public officials.

Cross-class Solidarity: Towards the completion of the last mile, the social protection systems need to rebuild cross-class solidarity between the poor and the nonpoor, in order to build up well-functioning states in managing social protection. The donor community tends to prefer targeted programmes to reduce poverty. However, if the goal is to end poverty, developing countries need to have a more comprehensive system to manage risks and vulnerabilities.

Author: Ippei Tsuruga is the Editor-in-Chief and the founder of The Povertist. He has extensive experience and knowledge in poverty and social protection in Asia and Africa.

Social Policy and the Elimination of Extreme Poverty

This post was originally published on The Povertist.

“In middle-income countries, it may be that growth has lifted all the poor out of poverty who can be lifted; for the rest, social policy will be needed (Raj M. Desai 2015).”

Book Review: The Last Mile in Ending Extreme Poverty

This post was originally published on The Povertist.

If The End of Poverty by Jeffery Sachs and The Bottom Billion by Paul Collier are classics for development studies during the era of Millennium Development Goals (MDGs), The Last Mile in Ending Extreme Poverty will be a classic book for the era of Sustainable Development Goals (SDGs) towards 2030. As SDGs aim, the book explores approaches towards the eradication of extreme poverty. Here, I review some of the key elements that its introductory chapter emphasises.

From a Billion to Zero: Three Key Ingredients to End Extreme Poverty

Ending poverty is different between countries. How long they travelled so far defines how long to the last mile. China greatly reduced poverty while Côte d’Ivoire experienced an adverse development progress. Albeit MDGs’ Goal 1, halving poverty, was achieved seven years ahead, individual countries have different situations. That is because the achievement of MDGs was measured by an average of developing countries.

The last mile requires no one left behind. China contributed to halving global poverty. In particular, the rapid growth of coastal regions raised an average income while the hinterland remains poor. Likewise, the northern regions of Côte d’Ivoire became impoverished.

Economic growth is certainly an engine of poverty reduction. However economic policy alone is not enough to end poverty, where growth is intermittent and benefits are unequally shared.

In order to end poverty, key ingredients are peace, job and resilience.

Peace

There are a wide range of studies that shows poverty triggers conflict, and conflict results in poverty. In fact, poverty remains large in fragile states. Cessation of conflict is however not a start of immediate economic growth. Recovering process takes time and countries need a long term expectation of peace.

It is obvious that there are several countries that have low poverty rates and internal conflicts such as India and the Philippines. However, households in the affected regions are potential groups left behind development and remain in poverty.

Jobs

Lack of productive jobs leads to poverty. Poverty is also a hindrance to productive employment. A study of countries that achieved a large poverty reduction shows the source of additional household income to help them out of poverty was an increase in labour income, and another dominant factor was an improvement of labour productivity. Productive work for poor households means to have wage occupation, access to value chain and higher yield in smallholder farming. Without such factors, they are probably disadvantaged.

For job creation, structural transformation is a catalyst for raising labour productivity and enabling poor workers to change occupations, particularly in Sub-Saharan Africa. Underinvestment in people’s connectivity to markets is another constraint, which is caused by high fixed costs due to landlocked.

Resilience

Resilience, the mitigation of shocks, is necessary to complete the last mile. Shocks happen at different levels: illness and job loss at the household level; poor harvest and disaster at the community level; and political instability and commodity price rise at the national level.

Poverty is a driver of vulnerability. Poor people live in places that lack institutions to provide resilience. They often have no access to formal coping mechanisms such as insurance and credit. An empirical study shows there are only 23 percent of adults below $2 poverty line have access to formal coping strategies. Instead, the poor tend to rely on unreliable sources like informal kin mechanisms.

Vulnerability to shocks is a cause of poverty. Coping shocks with unsustainable ways like selling productive assets to maintain a subsistent level of consumptions causes long-term negative effects. A study shows 10 years after droughts, Ethiopia and Tanzania still had consumption of the poor 17 – 40 percent lower than pre-disaster levels.

People above poverty lines are also vulnerable to falling into poverty. A research finding illustrates that people even with doubled consumption from a poverty line had 10 percent probability of backslides.

Cost benefit analyses show effectiveness of risk management interventions. Although the poor are the least resilient, coverage of social safety nets in low income countries remains as low as 10 percent.

Author: Ippei Tsuruga is the Editor-in-Chief and the founder of The Povertist. He has extensive experience and knowledge in poverty and social protection in Asia and Africa.

Book Review: The Last Mile in Ending Extreme Poverty

This post was originally published on The Povertist.

The Last Mile in Ending Extreme Poverty will be a classic book for the era of Sustainable Development Goals (SDGs) towards 2030.

Implementing SDGs to End Poverty and Malnutrition through Sustainable Development

This post was originally published on The Povertist.

At the United Nations General Assembly in this month, representatives will adopt a new sustainable development goals (SDGs), consisting of 17 goals and 169 targets. It illustrates a road towards 2030. One single message word would be no one should be left behind. Another key word is environment. Though there is a general agreement to work on poverty eradication and environmental friendly development, it has not been identified how to implement.

On September 2, International Food Policy Research Institute (IFPRI) organised a panel discussion ‘Road to New York: Keeping the SDGs’ Agenda in Focus’ to discuss how the development community should be engaged in SDGs. Here is my brief memo for what panellists argued.

At the end of panel discussion, Nabeeha Kazi, Humanitas Global Development, the moderator, asked each panellist, ‘what to take to New York’ as important agenda. The answers were ‘poverty eradication’, ‘implementation’, and ‘data’.

Francisco Ferreira, World Bank

  • The World Bank will aim at twin goals of reducing extreme poverty to 3 percent, and promoting shared prosperity for the bottom 40 percent. We are pleased to see SGDs include an inequality goal. With the goal, we cannot simply target absolute poverty through growth but also need to focus on distribution.
  • There is an agreement of importance of multidimensional poverty. But there is no agreement on what indicators or dimensions to be included. Income poverty targets may be achievable but what of other dimensions? Inequality will be another problem. Reducing poverty is no longer enough.

Homi Kharas, Brookings Institution

  • Hunger, food security and nutrition will be an important area to work on (Goal 2). A challenge is how to measure or what indicators to measure achievements. It is estimated that the number of malnourished children will possibly decrease from 12 percent to 7 percent with a business-as-usual model. However, it will be challenging to get it closer to zero.
  • Public investment in nutrition is extremely limited. Nutrition budget is about $205 per capita in developing countries. Of which $180 come from their self-financing, while ODA and FDI contribute to very few proportion.
  • Data collection and analysis are multi-stakeholder’s tasks. Data does not necessarily come from a national statistical office. Thanks to technology, we can think about methods to collect data from individuals, remote sensing etc.

Claudia Ringler, IFPRI

  • All goals and targets related to agriculture production and environment system will be important. It is good that SDGs put goals and targets on developed countries as well, for climate change related issues.

Andrew Steer, World Resources Institute

  • Monitoring is important. In order to measure the achievement of each goal, we need to think how to monitor. Monitoring means how to count and scale. For example, how can we monitor deforestation?
  • To eradicate hunger, we need to deal with food loss and waste. Again, how can we measure? Thanks to technology, data collection has been improved.

Shenggen Fan, IFPRI

  • Food security and nutrition are our focus (Goal 2). Since April 2013, those issues are under serious consideration. To work on, we need data. To achieve this goal, a role of research community is vital.
  • Eradication of malnourishment or hunger can be achieved by 2030. Malnutrition and child stunting will be a critical challenge. By 2025, it is estimated that there will be still 40 percent of children suffering from malnutrition. Good news is there are some cases that show a significant achievement within a short period of time. Thailand has reduced child stunting from 30 percent to 7 percent for 20 years. Vietnam, Bangladesh and Ethiopia also made great progress.
  • A key of success is to take combined approaches across health, social protection, direct intervention of nutrition, community works and so on.

Implementing SDGs to End Poverty and Malnutrition through Sustainable Development

This post was originally published on The Povertist.

At the United Nations General Assembly in this month, representatives will adopt a new sustainable development goals (SDGs), consisting of 17 goals and 169 targets.