Chapter 5 MITIGATING RISK
Social Protection and the Rural Poor
Ravi Kanbur
SUMMARY People in developing countries—particularly the agricultural poor—face a host of risks to their lives and livelihoods, including those stem- ming from globalization, climate change, and weather shocks. Tese experiences highlight the importance of social protection, which can have a potentially sig- nificant impact on reducing poverty and vulnerability when implemented with the optimal design, targets, and resources.
T
he financial crisis of 2008–2009 crystallized a “new normal” in the global economic discourse. Te vulnerability of national econo- mies to global instability, and its implications for individual livelihoods,
became clear to citizens and governments of developed countries as they strug- gled to cope with the biggest recession since the Great Depression. However, this new normal for developed countries is in fact the old normal for developing countries, where national- and individual-level vulnerability to shocks has been an ever-present reality. As developing countries have integrated into the global economy, they have
experienced not only enormous opportunities but also an intensification of risks of different types. Tese include the collapse of particular industries under a con- stantly shiſting global market, the spread of infectious diseases through greater population mobility, and of course the global financial crisis. Climatic risks have also clearly worsened over the past few decades, which poses particular risk to countries dependent on agriculture. Te history of agriculture reminds us that even without intensification of
risks at the global level, the poorest of the poor, always vulnerable to weather shocks, lead a precarious existence. Luck oſten plays a great role in determin- ing even their basic survival. Going beyond weather shocks, individual-level shocks—such as poor health or accidents at work—can set off a spiral of ever-increasing indebtedness from which escape is near impossible. For poor households, financial traps are just one dimension of the spiral.
Ravi Kanbur is professor, Charles H. Dyson School of Applied Economics and Management, Cornell University, New York.
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