poverty gap. However, the impact on numbers and on the gap is weakest in Africa south of the Sahara, which is not surprising, given the low coverage of population noted above.14 What determines the impact of social protection
transfers on poverty? If we examine the total poverty gap, we intuitively see that there are two compo- nents to the impact. First is the total budget for social protection transfers relative to the pre-social pro- tection poverty gap. Second is the fraction of the total budget that actually goes to the poor to fill the poverty gap. Tese are the twin determinants of the efficacy of social protection transfers in addressing poverty: budgetary adequacy and targeting effi- ciency. ASPIRE data show that average targeting efficiency for the countries in the sample is 8 percent. Tis is very low, but compares with the best value of 40 percent and an average value for the top quartile of countries of 21 percent. Clearly, improving targeting efficiency will
increase the poverty reduction impact of social protection transfers. Suppose that we were to set a social protection goal of halving the poverty gap. Suppose further that we were to set an ambi- tious goal of having every country reach the very top targeting efficiency in the world: 40 percent. It has been shown that improving targeting effi- ciency is not enough to atain the poverty reduction goal. Only 73 percent of all countries in the sam- ple would achieve the goal of halving the poverty gap. For low income countries, only half would achieve the target even with the very best target- ing efficiency seen in the world. In other words, the problem is as much one of budgetary adequacy as it is one of targeting efficiency. Te total budget as a fraction of the poverty gap does not exceed 20 per- cent in low income countries in the sample, which is clearly insufficient to address poverty, no mater how well it is targeted.15 Te above calculations are for the impact of social
protection on income poverty. Some aspect of the insurance role of social protection is also captured in these calculations to the extent that insurance pre- vents negative shocks from driving households into poverty. However, the insurance role can also have beneficial long-term effects, which are not captured directly in the short-term impact calculations.16
CHALLENGES OF SOCIAL PROTECTION
Adequate budgets are a major challenge of social pro- tection programs, but the design of social protection poses additional hurdles. Targeting of benefits to the poor is of course another obstacle. Fine target- ing to the poor and only the poor is an even greater challenge. Tere are at least two issues that such fine targeting raises. First is the informational and administrative difficulties of identifying the poor and separating them from the nonpoor to receive the transfer. Recent improvements in information technology, such as biometric identification or elec- tronic banking, could help to address this problem.17 Tere is also the political economy challenge of find- ing a support program that only benefits the poor- est—one reason why less well-targeted programs are prevalent is because they enjoy the support of mid- dle-income groups as well. Even beyond targeting, social protection raises
a further set of impediments to design.18 Te first is the interaction between formal social protection programs and preexisting family, community, and informal mechanisms of insurance and transfers. A challenge for the design of state-supported social protection is how these programs and mechanisms will respond. If informal mechanisms decline in response to state provision, then the net effect of state intervention is less than the gross effect. Tis has to be taken into account in evaluating the suc- cess of social protection. A second challenge is conceptual and has polit-
ical implications. Is social protection best thought of as insurance or is it redistribution? Insurance has greater support than redistribution, especially among middle- and upper-income groups, but in practice separating one out from the other is diffi- cult.19 Tus, for example, a progressive tax system, or a cash transfer scheme to the poor financed from the general fiscal revenue, is redistribu- tive. Yet at the same time it also provides insur- ance through lower taxes or even transfers when incomes are low, just as it is financed by higher taxes when incomes are high. By the same token, programs that are labeled as social insurance but actuarially require transfers from the fiscal bud- get are redistributive without this being appre- ciated by the public. Any pension schemes for
MITIGATING RISK 37
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80 |
Page 81 |
Page 82 |
Page 83 |
Page 84 |
Page 85 |
Page 86 |
Page 87 |
Page 88 |
Page 89 |
Page 90 |
Page 91 |
Page 92 |
Page 93 |
Page 94 |
Page 95 |
Page 96 |
Page 97 |
Page 98 |
Page 99 |
Page 100 |
Page 101 |
Page 102 |
Page 103 |
Page 104 |
Page 105 |
Page 106 |
Page 107 |
Page 108 |
Page 109 |
Page 110 |
Page 111 |
Page 112 |
Page 113 |
Page 114 |
Page 115 |
Page 116 |
Page 117 |
Page 118 |
Page 119 |
Page 120 |
Page 121 |
Page 122 |
Page 123 |
Page 124 |
Page 125 |
Page 126 |
Page 127 |
Page 128 |
Page 129 |
Page 130 |
Page 131 |
Page 132 |
Page 133 |
Page 134 |
Page 135 |
Page 136 |
Page 137 |
Page 138 |
Page 139