OECD Forum on Mexico: Policies to Promote Growth and Economic Development Mexico City 3 November 200 - PowerPoint PPT Presentation

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OECD Forum on Mexico: Policies to Promote Growth and Economic Development Mexico City 3 November 200

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Title: OECD Forum on Mexico: Policies to Promote Growth and Economic Development Mexico City 3 November 200


1
OECD Forum on MexicoPolicies to Promote Growth
andEconomic DevelopmentMexico City 3
November 2004
  • Ray Boshara
  • New America Foundation
  • Washington, DC
  • 202-986-2700 boshara_at_newamerica.net

2
What is Asset Building?
  • Public and private strategies to enable
    low-income persons to save and accumulate
    long-term assets a home, post-secondary
    education, investments, a small business, and a
    nest-egg for retirement
  • Includes both specific tools and a new
    framework
  • Informed by Amartya Sen (capabilities) and
    compatible with Hernando De Soto
  • Asset Building can mean
  • Social Investment
  • New Welfare Policy
  • Combating Financial Exclusion
  • Creating an Ownership or Stakeholder Society

3
Why Assets?
  • Assets change family balance sheets financial
    security, opportunity
  • Lack of income means you dont get by lack of
    assets means you dont get ahead
  • Assets change heads attitudes, expectations.
    Asset effects posited and tested
  • See Michael Sherraden, Assets and the Poor (1991)

4
Social Policy Evolution
  • Income -gt Work -gt Assets
  • Passive -gt Active
  • Programs -gt Accounts
  • Placed-based -gt Citizen-based (portable)
  • - Assets are well-suited to 21st Century economy
    and new social contract that combines choice and
    responsibility
  • - Challenge remains to preserve some traditional
    social insurance programs, where certain risks
    may need to be pooled.

5
Assets and Market Failure
  • Financial market failure
  • Huge gap between the poor and mainstream
    financial institutions
  • 10-50 unbanked households throughout OECD
    countries
  • Institutional failure
  • Asset development policies
  • Asset denial policies
  • Contributes to wealth inequality and social
    exclusion
  • Policy goal
  • Inclusion expand institutional
    mechanisms/policies to everyone
  • Must have (1) public subsidies, (2) regulatory
    framework, and (3) targeted financial products.

6
Assets Building in OECD Countries
7
Asset Building Outside the OECD
8
Research on Savings
  • Developed Countries
  • 1. Can the poor save in IDAs?
  • Savings by the poor are modest, ranging from
    18 to 38 per month in net savings (USA, UK,
    Canada, Taiwan)
  • 2. What effect do IDAs have on savings and asset
    accumulation?
  • Access to the IDA program had a significant
    influence on the savings and asset accumulation
    of those served by the Tulsa IDA program (USA,
    experimental research)
  • Developing Countries
  • Stuart Rutherford, The Poor and Their Money
  • Microfinance institutions, credit unions, other
    kinds of savings/assets (land, livestock, etc)

9
Research on Asset Effects(Research led and
summarized by Sherraden, 2004)
  • IDAs (more likely to)
  • Work or stay employed, and work more hours
  • Make educational plans for self and children
  • Feel more economically secure
  • Feel confident about the future
  • Feel in control of their life
  • Create greater future orientation
  • See more clearly and better visualize a future
  • More likely to save for their future
  • Assets
  • Better labor market experience, marriages,
    health, health behaviors, political interest
  • Better cognitive development, physical health,
    and socio-emotional behavior, even among very
    income-poor families
  • Single mothers assets are positively associated
    with childrens educational attainment

10
Assets as Social Investment
  • Asset policies hold the potential to
  • Transform passive welfare and states to active
    social investment states
  • Result in better economies and better
    citizens, thus providing a greater return on
    scarce public dollars
  • Reduce inequality and social exclusion, thus
    resulting in greater social cohesion

11
Questions
  • Would assets be the best use of public funds?
    Does the evidence thus far justify multi-billion
    policies?
  • Whats the appropriate balance between income
    support and asset building programs for the poor?
    Between social insurance and individual
    accounts?
  • How can asset programs be effective and
    affordable at scale, given the important role
    played thus far by community-based organizations?
  • How can asset policies reduce relative wealth
    disparities between whites and non-whites?

12
Asset Building Resources
  • LEED Programme, OECD, Paris
  • Antonella Noya Antonella.NOYA_at_oecd.org
  • 33(0) 1 45 24 78 95
  • Center for Social Development, Washington
    University in St. Louis, USA
  • 314-935-7433
  • http//gwbweb.wustl.edu/csd/
  • Asset Building Program, New America Foundation,
    USA
  • 202-986-2700
  • www.NewAmerica.net
  • Asset Building Clearinghouse www.AssetBuilding.or
    g
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