Monitoring targeting performance when decentralized allocation to the poor are unobserved

National antipoverty programs often rely heavily on provincial governments. The center targets poor provinces in the hope that they will reach their own poor. Without successful intraprovincial targeting, however, even dramatic redistribution from rich to poor provinces can have little impact on poverty nationally. However, data for assessing performance at provincial level are often far from ideal. Can a centralized government monitor the performance of decentralized social programs in reaching the poor when their benefit incidence is unobserved? The author shows that the poverty map and the corresponding spending allocation across geographic areas allow one to identify the latent differences in mean allocations to the poor versus the nonpoor. The national measure of targeting performance is also subgroup-decomposable. The author uses an application to an antipoverty program in Argentina (Trabajar II) to assess performance in reaching the poor and the measure the relative contributions to the program's performance - before and after reforms - of the center's provincial reallocation and decentralized targeting. Funding and program design changes led to large gains for the poor, although with diverse performance across provinces. Program funding and design choices by the central government can greatly affect the targeting performance of decentralized social programs. The allocation to a province should depend on how successful it is at reaching the poor with the extra resources, rather than how poor it is. Design choices should provide incentives for provincial governments to target resources to the poor . Finding feasible ways to monitor their performance and adjust ventral government's efforts accordingly are then crucial to better outcomes for poor people.Services&Transfers to Poor,Health Economics&Finance,Poverty Monitoring&Analysis,Poverty Reduction Strategies,Poverty Impact Evaluation,Safety Nets and Transfers,Poverty Monitoring&Analysis,Poverty Reduction Strategies,Services&Transfers to Poor,Rural Poverty Reduction

Are there lessons for africa from China's success against poverty ?

At the outset of China's reform period, the country had a far higher poverty rate than for Africa as a whole. Within five years that was no longer true. This paper tries to explain how China escaped from a situation in which extreme poverty persisted due to failed and unpopular policies. While acknowledging that Africa faces constraints that China did not, and that context matters, two lessons stand out. The first is the importance of productivity growth in smallholder agriculture, which will require both market-based incentives and public support. The second is the role played by strong leadership and a capable public administration at all levels of government.Rural Poverty Reduction,Population Policies,Achieving Shared Growth,Services&Transfers to Poor

On the contribution of demographic change to aggregate poverty measures for the developing world

Recent literature and new data help determine plausible bounds to some key demographic differences between the poor and non-poor in the developing world. The author estimates that selective mortality-whereby poorer people tend to have higher death rates-accounts for 10-30 percent of the developing world's trend rate of"$1 a day"poverty reduction in the 1990s. However, in a neighborhood of plausible estimates, differential fertility-whereby poorer people tend also to have higher birth rates-has had a more than offsetting poverty-increasing effect. The net impact of differential natural population growth represents 10-50 percent of the trend rate of poverty reduction.Health Monitoring&Evaluation,Services&Transfers to Poor,Safety Nets and Transfers,Rural Poverty Reduction,Health Indicators

Troubling tradeoffs in the Human Development Index

The 20th Human Development Report has introduced a new version of its famous Human Development Index (HDI). The HDI aggregates country-level attainments in life expectancy, schooling and income per capita. Each year's rankings by the HDI are keenly watched in both rich and poor countries. The main change in the 2010 HDI is that it relaxes its past assumption of perfect substitutability between its three components. However, most users will probably not realize that the new HDI has also greatly reduced its implicit weighton longevity in poor countries, relative to rich ones. A poor country experiencing falling life expectancy due to (say) a collapse in its health-care system could still see its HDI improve with even a small rate of economic growth. By contrast, the new HDI's valuations of the gains from extra schooling seem unreasonably high -- many times greater than the economic returns to schooling. These troubling tradeoffs could have been largely avoided using a different aggregation function for the HDI, while still allowing imperfect substitution. While some difficult value judgments are faced in constructing and assessing the HDI, making its assumed tradeoffs more explicit would be a welcome step.Economic Theory&Research,Inequality,Rural Poverty Reduction,Labor Policies,Debt Markets

The challenging arithmetic of poverty in Bangladesh

The arithmetic of poverty in Bangladesh is challenging from a number of perspectives. Counting Bangladesh's poor is difficult to do with seemingly tolerable precision, even just to get some idea of whether recent efforts to alleviate poverty have succeeded. But that is only the beginning of the challenge. The details of how to find resources, and design and implement effective policies - the arithmetic of poverty alleviation in Bangladesh - pose a severe challenge to policy analysts, governments, and the international community. This paper aims to offer a critical assessment of recent evidence relevant to these issues. It addresses the following three questions: (i) Has poverty decreased in Bangladesh during the 1980s? (ii) How responsive is poverty in Bangladesh to economic growth and changes in relative inequalities? (iii) What are the prospects for poverty alleviation through currently anticipated economic growth in Bangladesh? The paper takes a close look at some recent data suggesting that the problem of poverty in Bangladesh may be diminishing quite rapidly. It offers an empirical assessment of how much impact on poverty in Bangladesh is expected from economic growth, and from changes in overall inequality.Achieving Shared Growth,Poverty Assessment,Governance Indicators,Environmental Economics&Policies,Poverty Reduction Strategies

Do poorer countries have less capacity for redistribution ?

Development aid and policy discussions often assume that poorer countries have less internal capacity for redistribution in favor of their poorest citizens. The assumption is tested using data for 90 developing countries. The capacity for redistribution is measured by the marginal tax rate on those who are not poor by rich-country standards that is needed to cover the poverty gap or to provide a poverty-level of basic income, judged by developing-country standards. For most (but not all) countries with annual consumption per capita under $2,000 (at 2005 purchasing power parity) the required tax burdens are found to be prohibitive-often calling for marginal tax rates of 100 percent or more. By contrast, the required tax rates are quite low (1 percent on average) among all countries with consumption per capita over$4,000, as well as some poorer countries. Most countries fall into one of two groups: those with little or no realistic prospect of addressing extreme poverty through redistribution from the"rich"and those that would appear to have ample scope for such redistribution. Economic growth tends to move countries from the first group to the second. Thus the appropriate balance between growth and redistribution strategies can be seen to depend on the level economic development.Achieving Shared Growth,Rural Poverty Reduction,Population Policies,Debt Markets,Inequality

Competing concepts of inequality in the globalization debate

Differing value judgments in measuring inequality underlie the conflicting factual claims about how much poor people have shared in the economic gains from globalization. Opponents in the debate differ in the extent to which they care about relative inequality versus absolute inequality, vertical inequalities versus horizontal inequalities, and whether they are consistently individualistic in assessing the extent of inequality. The value judgments on these issues made by both sides need greater scrutiny if the globalization debate is to move forward.Poverty Impact Evaluation,Environmental Economics&Policies,Poverty Monitoring&Analysis,Services&Transfers to Poor,Economic Theory&Research,Inequality,Governance Indicators,Services&Transfers to Poor,Safety Nets and Transfers,Rural Poverty Reduction

Externalities in rural development - evidence for China

The author tests for external effects of local economic activity on consumption and income growth at the farm-household level using panel data from four provinces of post-reform rural China. The tests allow for non-stationary fixed effects in the consumption growth process. Evidence is found of geographic externalities, stemming from spillover effects of the level and composition of local economic activity and private returns to local human and physical infrastructure endowments. The results suggest an explanation for rural underdevelopment arising from under-investment in certain externality-generating activities, of which agricultural development emerges as the most important.Labor Policies,Economic Theory&Research,Economic Conditions and Volatility,Environmental Economics&Policies,Health Economics&Finance,Environmental Economics&Policies,Economic Theory&Research,Inequality,Achieving Shared Growth,Health Economics&Finance

The debate on globalization, poverty, and inequality : why measurement matters

In the last year or so, markedly different claims have been heard within the development community about just how much progress is being made against poverty and inequality in the current period of"globalization."Ravallion provides a nontechnical overview of the conceptual and methodological issues underlying these conflicting claims. He argues that the dramatically differing positions taken in this debate often stem from differences in the concepts and definitions used and differences in data sources and measurement assumptions. These differences are often hidden from view in the debate, but they need to be considered carefully if one is to properly interpret the evidence. The author argues that the best available evidence suggests that if the rate of progress against absolute poverty in the developing world in the 1990s is maintained, then the Millennium Development Goal of halving the 1990 aggregate poverty rate by 2015 will be achieved on time in the aggregate, though not in all regions. He concludes with some observations on the implications for the more policy-oriented debates on globalization and pro-poor growth.Services&Transfers to Poor,Health Economics&Finance,Environmental Economics&Policies,Economic Conditions and Volatility,Poverty Monitoring&Analysis,Safety Nets and Transfers,Rural Poverty Reduction,Governance Indicators,Achieving Shared Growth,Services&Transfers to Poor

Is undernutrition responsive to changes in incomes?

This paper discusses the effect that changes in individual incomes have on aggregate undernutrition. Undernutrition depends not only on nutrient intakes but on other factors, including nutrient requirements - which may differ widely amongst people. The author offers an approach to measuring the effects of shifts in budget constraints or other household parameters on undernutrition. Using household data on calorie consumption, income, prices, and other household characteristics, theaper illustrates how to: (a) estimate caloric intake functions for that data; and (b) use those functions to simulatethe effects of income changes on various measures of caloric undernutrition. The paper finds that the income elasticity of measured undernutrition is considerably higher than the income elasticity of individual caloric intakes. The reason is that the density of people tends to be high in a neighborhood of requirement norms, and intake responses tend to be highest amongst those who are least well nourished. Recent arguments that intakes are unresponsive to income changes should thus be interpreted with caution.Poverty Diagnostics,Environmental Economics&Policies,Economic Theory&Research,Inequality,Poverty Lines