Comments on Poverty Reduction and Growth Virtuous and Vicious Circles

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Comments on Poverty Reduction and Growth
Virtuous and Vicious Circles

• Fabio Veras Soares International Poverty
  Centre/UNDP/IPEA

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Main Argument

• Poverty may, in fact, be part of the reason for
  a countrys poor growth performance.
• But how to fight poverty growth or
  redistribution?
• Growth more important to poor and more equal
  countries Bolivia, Honduras, Haiti.
• Redistribution more important to better off and
  more unequal countries Brazil, Mexico, and
  Colombia.

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Some trade-offs

• How to escape poverty traps or poverty drag on
  growth?
• Wouldnt redistributive measures be important
  for Low Income Countries either?
• If poverty hinders growth, then how extreme poor
  countries could ever grow? Or poverty would
  hinder growth only after a threshold? Or is the
  report talking about inequality after all?
• Policy implication policy makers in poorer and
  more equal countries should focus mainly on
  growth

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More on trade-offs

• If some important pro-growth policy are pro-poor
  only in the long run, LIC would have to implement
  mitigating measures.
• Win-win policies education and infrastructure
  would not have immediate effect on poverty and
  disadvantage groups. Cash transfer would be an
  alternative? Procampo (Mexico) and Empleo en
  acción (Colombia). Non-contributory pension?
• Financing Silent about MDG 8 and ODA indicators
  Development assistance can help building social
  protection schemes!

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Social Protection

• Why shy away of saying that those countries
  should have some sort of social protection
  policies in place?
• Europe is used as an example but equalizing
  opportunities and more equal access to assets are
  stressed, focusing on human capital. Land reform?
• Silent about European pension schemes. (They were
  not conditonal!) and criticism of pension
  subsidies and unemployment insurance.

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Social Protection

• Are CCT magic bullets? Some caution with
  targeting mechanism obsession smart transfers
  may lead to dumb results and ending up in
  ineffective policies.
• CCTs are quite different all over Latin America
  and diversity is good. Countries should dialogue
  more about their experience.
• We dont have recipes but...Transfer programs
  should always seek to directly stimulate the
  accumulation of assets that will advance the
  growth process Oportunidades and Bolsa Escola.
  Why not when possible??

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Incidence analysis of cash transfers programmes
(conditional versus uncoditional)
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Incidence analysis of cash transfers programmes
and pensions
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Trade-offs in Education

• Schooling return are flat during basic and
  secondary cyles and increase after completion of
  secondary education, the full return materializes
  only after completion of tertiary education.
• Policy implication the poor need to increase (a
  lot) their human capital. Increase in Supply will
  depress returns and improve income distribution.
• Access to tertiary education as trade opennes
  tend to bring skill-biased technological change.
  HOS was not found