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Part One
Global challenges
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TWO
Antipoverty transfers and zero extreme poverty targets
Armando Barrientos
Introduction
Perhaps the most significant change in antipoverty policy in developing countries has been the growth of large-scale programmes providing direct transfers in cash and in kind to families and individuals facing poverty and vulnerability, with the objective of facilitating their escape from poverty. The spread of antipoverty transfer programmes since the turn of the century has been astounding. Our estimates suggest that by 2010 between 750 million and 1 billion people in developing countries lived in households receiving antipoverty transfers (Barrientos et al, 2010). This chapter examines the growth of antipoverty transfer programmes in low and middle income countries, and assesses their potential contribution to reducing poverty and eradicating extreme poverty.
The rapid growth of antipoverty transfer programmes has taken many in the international development community by surprise (Hanlon et al, 2010). Practice has sprinted ahead of the conceptual frameworks needed to study and assess them. As a consequence, there is some uncertainty around the orientation and scope of antipoverty transfers, especially in international policy debates. Some brief comments on approach and terminology will be helpful.
From an institutional perspective, antipoverty transfers are one of the components of social protection. Social protection includes social insurance which consists of schemes financed by contributions from workers and employers aimed at addressing life course and work contingencies; social assistance which includes tax-financed programmes addressing poverty; and employment programmes, whether ‘active’, facilitating employment and training, or ‘passive’, concerned with the protection of workers’ rights.
In a developing country context, stakeholders sometimes conflate humanitarian and emergency assistance with social or public assistance. The notion of safety nets, as employed by Bretton Woods institutions for example, makes no distinction between short-term emergency assistance and social or public assistance (Weigand et al, 2008). Humanitarian and emergency assistance has an important role to play in addressing the effects of disasters and conflict. But the recent expansion of social protection in the South is focused on establishing and developing longer-term institutions needed to eradicate poverty and deprivation.
The growth of social protection programmes has been swift in middle income countries, which is of great importance given the fact that a majority of poor people in the world lives in middle income countries. Progress has been slower in low income countries. To an extent, this is explained by acute constraints in financial resources and implementation capacity in these countries. Political factors are significant too. Limited democratisation and the absence of political competition can make elites unresponsive to the needs of their citizens. In aid-dependent countries, elites are able to ‘export’ poverty reduction to donors, which becomes a task for aid agencies. Successful antipoverty programmes require good technical analysis but also political support.
Democratisation and enhanced fiscal space in low and middle income countries, especially with recent economic growth in Africa, could become the drivers for the expansion of social protection. The role of democratisation in the development of social policy and related institutions is well documented (see Haggard and Kaufman, 2008; Huber and Stephens, 2012). Enhanced fiscal space in developing countries is explained by improvements in revenue collection capacity, especially corporate taxation linked to natural resources. Revenues from natural resource exploitation and from the spread of VAT have facilitated the financial conditions for the growth of antipoverty transfer programmes. In some cases, antipoverty transfer programmes have been established and justified as a means to share the gains from natural resource exploitation (Moss, 2011). The sources of financing also generate some challenges for low and middle country governments, especially relating to the sustainability of antipoverty transfer programmes and to the legitimacy of the emerging institutions.
Generalising from the experience of developing countries which have introduced and supported large-scale antipoverty transfer programmes, several factors can be found to generate political consensus behind the expansion of social assistance. They include: (i) strengthened social contracts – embedding shared solidarity values – as in South Africa or Brazil; (ii) the role of fiscal pacts around natural resource revenues and consumption taxes, which is the primary revenue source for governments in the South as in Bolivia or Argentina; (iii) awareness by policy makers and the mass public regarding the effectiveness of antipoverty transfers, especially through the findings from independent impact evaluations such as those in Mexico; (iv) broadly shared concerns regarding the adverse effects from structural transformation, as in India, Mexico or China. Political support for the expansion of social protection is often found to be associated with a renewed commitment to the gradual realisation of rights and social citizenship, and the pursuit of equity.
The diversity in social assistance programmes in the South and the specificity of the political processes and outcomes supporting them confirms the primacy of national policy and political processes in the emergence of social protection in each country.1
Current trends suggest that global poverty is no longer foremost an issue of poor countries but rather of people in poverty in low and middle income countries. The majority of people in extreme poverty today live in middle income countries (Sumner, 2010). However, as the global projections show, over time the global population in extreme poverty is likely to concentrate in sub-Saharan Africa. Sustaining recent trends in global poverty reduction into the future will require sustaining growth and ensuring that the distribution of the gains from growth favours disadvantaged groups. Driving global extreme poverty to zero, will involve paying special attention to policies facilitating the social and economic inclusion of groups in extreme poverty. It will require addressing the barriers preventing these groups from making full use of economic opportunities. This chapter assess the potential contribution of antipoverty transfer programmes to achieving these goals.
The rest of the chapter is divided into three sections. The second section makes the link between antipoverty transfers, inclusion of disadvantaged groups, and human development. This is central to permanent exit from poverty. The third section reviews the outcomes of existing antipoverty transfer programmes. The fourth section draws out the main policy lessons. A final section discusses the role of international aid and concludes.
Antipoverty transfers, inclusion, and human development
In developed countries, welfare states have been successful in integrating the provision of basic services, such as health and education, with social protection institutions. For the majority of countries in the North, social insurance and basic service provision are the largest components of welfare states and social assistance can be a relatively small and residual component (Adema, 2006).2
In developing countries, social insurance schemes and employment programmes are restricted in coverage (ILO, 2010). Even in Latin America and the Caribbean, where social insurance schemes can be traced back to the early twentieth century, coverage is restricted to workers in formal employment – around one half of the labour force. In Asia and Africa, a minority of workers are in formal employment and therefore social insurance is residual. The recent expansion of social protection in the South has concentrated on antipoverty transfers, the social assistance component (Fiszbein et al, 2014).
The political and economic conditions within which antipoverty transfers have emerged in developing countries in the last decade have encouraged a focus on self-standing flagship programmes, as opposed to integrated institutions. The reasons behind a programme approach are complex and often country specific. They include fiscal constraints, political opposition, knowledge gaps, the time window of international aid, and the hubris of silver bullets in international development policy. As a result, the focus of international discussions is largely on flagship programmes such as Mexico’s Progresa/Oportunidades, Brazil’s Bolsa Escola/Familia, South Africa’s Child Support Grant, Ethiopia’s Productive Safety Net Programme, India’s National Rural Employment Guarantee Scheme to name a few.
In the pioneer countries, a shift in policy and practice from flagship programmes to stable and, more or less permanent, institutions is underway. In many Latin American countries, for example, ministries of social development combine and coordinate public policy on poverty and vulnerability (Cecchini and Martínez, 2011). Further institutionalisation of social assistance is a welcomed development and will determine the future shape of social protection in the South. It makes sense to approach antipoverty transfer programmes as embryonic social protection institutions, as opposed to short-term development projects.
In just a decade, social protection has become widely accepted in developing countries as an essential component of an inclusive development strategy. Growth delivers economic opportunity and basic services support productive capacity, but without social assistance they are unlikely to reach the poorest.
It is important to avoid a minimalist and residual poverty orientation in international development policy. The US$1.25 a day poverty line focuses primarily on physical subsistence in low income countries.3 Wellbeing thresholds help identify the worst off but are not endowed with unique standing. Extreme poverty can be represented, by the US$1.25 a day, but it is not reducible to it. It is also important to focus on poverty measures that take account of differences in wellbeing among disadvantaged groups.
People are not poor, they are in poverty. A significant proportion of those in poverty are in persistent poverty – around 40 per cent as a rough rule of thumb (CPRC, 2005). The proportion of people experiencing poverty within a year is significantly larger than those observed to be in poverty at a point in time. An implication is that the share of the population which is the focus of effective antipoverty policies is bound to be much larger than the poverty headcount rate as measured at one point in time.4
In high income countries, tax-transfer systems shape the distribution of income. Through progressive taxation and transfers, welfare states reduce the inequality in income generated by market processes to the benefit of the less advantaged.5 In addition, universal provision of basic services such as education, health and housing aim to reduce disparities in access to these services. In low and middle income countries, on the other hand, tax and transfers systems can be neutral or even regressive in their effects (for Latin America see Lustig et al, 2013), and disparities in access to basic services, and in their quality, ensure the persistence in disparities in opportunity to the detriment of disadvantaged groups (see De Barros et al, 2009).
In the context of sustaining poverty reduction trends into the future, reducing disadvantage is hugely significant, perhaps more significant than focusing on changes in population-wide inequality measures, important as they are. Ensuring that growth is pro-poor, that tax-transfer systems are progressive, and that disadvantage groups have fair access to basic services are all essential components of a strategy to poverty eradication.
When the focus is on the population in extreme poverty, acute deficits in access to basic services create the conditions for persistent poverty and deprivation, lead to poverty traps, and disconnectedness and disengagement with growth and political processes. Recent studies have developed a Human Opportunity Index to draw attention to the distribution of access to basic services across population types sharing similar circumstances, in order to throw light on the role of disparities in opportunity (Brunori et al, 2013; Molinas Vega, 2012). Box 2.1 provides a description of the Human Opportunity Index approach and some estimates for education across countries in Africa and Latin America. The inclusion of groups in extreme poverty in redistribution of income and consumption and improved access to basic services will help maximise the poverty reduction effect of economic growth.
Sustainable exit from poverty requires the economic, social and political inclusion of people in poverty and extreme poverty. In policy terms, this implies the inclusion of disadvantaged groups in employment, fiscal redistribution, and preferential access to basic services. Antipoverty transfer programmes have demonstrated considerable effectiveness in reaching disadvantaged groups and facilitating inclusion.
Box 2.1: Human Opportunity Index
The Human Opportunity Index (HOI) measures coverage of basic services adjusted for disparities across population types with similar circumstances (typically groups partitioned according to education of parents, rural–urban location, and so on) (Molinas Vega et al, 2012; Barros et al, 2009). The index is intended to provide a measure of disparities in opportunity. The share of the population with access to services is adjusted by an index of dissimilarity which computes normalised and population weighted deviation from the mean across the population types. The index takes account of the fact that both the average coverage and its distribution are important in assessing opportunity. The Index varies between 0 and 100.
Brunori et al (2013) collected computed HOIs for countries in Latin America and Africa. Figure 2.1 shows the values for the HOI in education. Disparities in access to education explain, for example, why Brazil ranks lower than Paraguay, or Jamaica ranks higher than Chile. Brunori et al (2013) note that the HOI is closely correlated with gross national income (GNI) per capita and even more strongly correlated with the Human Development Index (HDI) for these countries.
Design and implementation
Antipoverty transfer programmes show considerable diversity in low and middle income countries. The design, scope and objectives of antipoverty transfer programmes reflect, to a large extent, local learning about what works in poverty reduction, economic development, institutional capacities and political processes and priorities. The expansion of antipoverty transfers in developing countries is largely driven by national politics and policy making (see among others, Barrientos, 2013; Borges Sugiyam, 2011; Fiszbein and Schady, 2009; Grosh et al, 2008; Holzmann et al, 2009b).
Mexico’s 1997 Progresa/Oportunidades developed out of a concern with the impact of agricultural liberalisation on intergenerational poverty persistence in rural areas. Its design, including transfers to families with children conditional on school attendance and primary healthcare utilisation, was a reaction to ineffective food subsidies (Levy, 2006). India’s 2005 National Rural Employment Guarantee Scheme, providing 100 days employment on demand to unemployed heads of household, is a response to persistent poverty in rural areas designed around existing state level employm...
