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Targeted transfers in poor countries : revisiting the trade-offs and policy options

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  • Martin Ravallion

Abstract

The conventional wisdom in mainstream development policy circles is that income transfers to the poor, and safety net policies more generally, are at best a short-term palliative and at worst a waste of money. They are not seen as a core element of an effective long-term poverty reduction strategy. These views are starting to be questioned. Firstly, evidence from careful evaluations has pointed to a number of success stories. Secondly, the presumption of an overall trade-off between redistribution or insurance and growth has come to be questioned. This paper revisits the role of targeted transfers in poor countries in light of the new theories on the social costs of uninsured risks and unmitigated inequalities.This body of theory and evidence offers a new perspective on social protection policies in poor countries, suggesting that there is scope for using these policies to compensate for the market failures that help perpetuate poverty, particularly in high-inequality settings. While acknowledging caveats to policy implementation, the paper suggests that it is time for a pragmatic and open-minded approach to this class of interventions, recognizing the potentially important role they can play, but using careful design and evaluation to assure that the potential is realized.

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Bibliographic Info

Paper provided by The World Bank in its series Social Protection Discussion Papers with number 27869.

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Date of creation: 01 May 2003
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Handle: RePEc:wbk:hdnspu:27869

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Keywords: Safety Nets and Transfers; Services&Transfers to Poor; Rural Poverty Reduction; Environmental Economics&Policies; Achieving Shared Growth;

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Citations

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Cited by:
  1. Álvarez, Carola & Devoto, Florencia & Winters, Paul, 2008. "Why do Beneficiaries Leave the Safety Net in Mexico? A Study of the Effects of Conditionality on Dropouts," World Development, Elsevier, vol. 36(4), pages 641-658, April.
  2. Haagh, Louise, 2011. "Working Life, Well-Being and Welfare Reform: Motivation and Institutions Revisited," World Development, Elsevier, vol. 39(3), pages 450-473, March.
  3. Adrian Wood, 2004. "Making globalization work for the poor: the 2000 White Paper reconsidered," Journal of International Development, John Wiley & Sons, Ltd., vol. 16(7), pages 933-937.
  4. Coady, David P., 2004. "Designing and evaluating social safety nets," FCND discussion papers 172, International Food Policy Research Institute (IFPRI).
  5. Gentilini, Ugo & Omamo, Steven Were, 2011. "Social protection 2.0: Exploring issues, evidence and debates in a globalizing world," Food Policy, Elsevier, vol. 36(3), pages 329-340, June.
  6. Coco, Giuseppe & Pignataro, Giuseppe, 2010. "Inequality of opportunity in the credit market," DEMQ Working Paper Series 2010/5, University of Catania, Department of Economics and Quantitative Methods.
  7. Richard Heeks & Shoba Arun, 2010. "Social outsourcing as a development tool: The impact of outsourcing IT services to women's social enterprises in Kerala," Journal of International Development, John Wiley & Sons, Ltd., vol. 22(4), pages 441-454.
  8. Guy Standing, 2007. "How Cash Transfers Boost Work and Economic Security," Working Papers 58, United Nations, Department of Economics and Social Affairs.
  9. Stefan Dercon (QEH), . "Vulnerability: a micro perspective," QEH Working Papers qehwps149, Queen Elizabeth House, University of Oxford.
  10. Segal, Paul, 2011. "Resource Rents, Redistribution, and Halving Global Poverty: The Resource Dividend," World Development, Elsevier, vol. 39(4), pages 475-489, April.
  11. Stefan Dercon (QEH), . "Risk, Growth and Poverty: what do we know, what do we need to know?," QEH Working Papers qehwps148, Queen Elizabeth House, University of Oxford.
  12. Harounan Kaziango, 2004. "Motives for Household Private Transfers in Burkina Faso," Working Papers 895, Economic Growth Center, Yale University.
  13. Brown, Lynn & Gentilini, Ugo, 2006. "On the Edge: The Role of Food-based Safety Nets in Helping Vulnerable Households Manage Food Insecurity," Working Paper Series RP2006/111, World Institute for Development Economic Research (UNU-WIDER).
  14. Milan Vodopivec, 2004. "Unemployment Insurance: Efficiency Effects and Lessons for Developing Countries," World Bank Other Operational Studies 11809, The World Bank.

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