Poverty%20in%20Pakistan:%20Issues,%20Priorities%20and%20Policy%20Options%20A%20Concept%20Note

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Poverty in Pakistan Issues, Priorities and
Policy OptionsA Concept Note

• OBJECTIVE
• Build a sound knowledge base to develop a
  framework for poverty reduction
• Translate this framework into action on the
  ground

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Why Now ?

• Inform and shape key reforms, including a
  far-reaching devolution plan, envisaged for the
  country
• Coordinate with and inform Interim-PRSP and PRSP
  efforts of the government
• Extend the coverage of previous PA to track the
  evolution of poverty for the entire 1990s
• Formulate strategy on the basis of the three
  pillars suggested by WDR-2001 opportunity,
  security, and empowerment

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Incidence of Poverty In Pakistan
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New Themes of the Report

• Expand conventional poverty profiles to reflect
  non-income/consumption dimensions of poverty
• Explore the role of macroeconomic policy to
  promote long term pro-poor growth
• Examine the relationship between poverty and
  vulnerability, and the need for explicit risk
  management strategies to reduce vulnerability
• Explore how governance issues, including lack of
  access to institutions and lack of protection of
  the rights of the poor, affect poverty

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Macroeconomic Environment for Poverty Reduction

• The PA will explore the link between growth and
  poverty in Pakistan
• On preliminary evidence, stagnant growth is
  associated with stalled poverty reduction
• Examine how Pakistans necessary fiscal
  adjustment can be made pro-growth and pro-poor
• Explore the virtuous circle in fiscal adjustment
  and growth -- fiscal adjustment can promote
  growth, and higher growth rate in turn makes a
  given debt to GDP ratio more sustainable

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Promoting Pro-Poor Growth

• By tracking a few key indicators, the PA will
  analyze the composition of fiscal adjustment and
  track the effects of its changes
• In addition to macroeconomic environment, a
  number of micro factors are critical to pro-poor
  growth
• Unequal distribution of land and other assets,
  and the role of land reform in correcting that
• Lack of access of the poor to market
  opportunities, including credit and insurance
• The role of institutions and governance

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Vulnerability and Poverty-- Key Issues

• What is vulnerability and how do we measure it
• Income and non-income dimensions
• Does vulnerability cause chronic poverty
• May depend on type of shock transient or
  persistent
• What are the indicators that help predict
  vulnerability
• Critical for policy analysis

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Analyzing Vulnerability-- Methodology

• Re-survey the IFPRI panel
• Questionnaire to be extended to incorporate
  questions on mechanisms to cope with risk
• Develop a qualitative survey instrument to assess
  type, frequency, intensity and impact of shocks
• Broaden coverage to include urban slums and
  provinces not covered by the IFPRI panel
• Survey expected to be implemented by February 2001

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Analyzing Vulnerability--Policy Implications

• If shocks lead to temporary or persistent
  poverty, then
• Social protection should be an integral part of a
  long-term poverty reduction strategy
• Improve instruments for risk diversification and
  coping examples are credit and insurance,
  pensions, social security
• If transitory poverty is found to be high, then
  it may be efficient to gear anti-poverty programs
  toward increasing exits from and reducing entry
  into poverty

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Governance Access of the Poor to Institutions
-- Hypothesis

• Service delivery in Pakistan is inadequate
• The deficiency in service delivery arises from
  the poor having little influence over decisions
• Why do the poor have little influence on
  decisions
• The poor are uninformed about decision making
• They are intimidated against seeking hearings
• They vote only if persuaded to do so by the local
  elite

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Governance Access of the Poor to Institutions
-- Methodology

• In-depth interviews and focus groups with
  selected villages, selected according to distance
  from major cities, province, income, etc.
• Interviews with (former) politicians, perhaps
  undertaken by journalists who covered them

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Governance Access of the Poor to Institutions
-- Policy Implications

• If the evidence reveals that the poor lack access
  to decision making channels, this reinforces the
  need to
• Change decision making channels such that the
  poor have greater access
• Modify decentralization proposals to ensure that
  current obstacles confronting the poor in
  participating in federal and provincial decisions
  are not replicated in decentralization

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Governance Rule of Law--Hypothesis

• Rule of law problems discourage investment, and
  also constitute significant obstacles to
  emergence from poverty
• The following hypotheses are supported by
  anecdotal evidence
• The poor confront extra-legal pressure to agree
  to unfavorable contract terms
• The poor suffer income shocks due to
  expropriation by public authorities

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Governance Rule of Law--Methodology

• In-depth interviews and focus groups with
  selected villages, selected according to distance
  from major cities, province, income, etc.
• Analyzing existing, somewhat sparse data on rule
  of law problems

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Governance Rule of Law-- Policy Implications

• If the evidence reveals that rule of law problems
  create significant obstacles to surmounting
  poverty, this underlines the need to
• Deregulate documentary requirements for access to
  services
• Crack down on corruption as a poverty
  alleviation strategy, as well as an investment
  promotion strategy
• Suggest reforms in law and order enforcement

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Evaluating Targeted Programs

• The Poverty Assessment will also evaluate
  targeted poverty reduction programs in the
  country, with the following objectives
• to explore how various indicators of poverty and
  human development derived in the report are
  related to the performance of actual programs on
  the ground
• to derive ideas on best practices, which will
  inform policy strategy
• to identify directions for extensions and
  improvements of existing programs

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Towards an Integrated Poverty Strategy

• The report will derive key policy priorities,
  drawing on poverty profile findings, the new work
  on governance and vulnerability, and experiences
  with programs in the past
• Five critical themes for a strategy will be
  articulated
• Creating productive opportunities
• Empowering the poor
• Improving public sector governance
• Reaching the ultra-poor
• Incorporating risk management