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Reaching poor areas in a federal system

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Author Info

  • Ravallion, Martin

Abstract

The author studies how well a federal antipoverty program reaches poor areas, taking the reactions of lower levels of government into account. He studies performance in reaching poor areas before and after World Bank-sponsored reforms in Argentina's anitpoverty program. Program resources were substantially reallocated across provinces when Argentina's Trabajar 1 program was replaced by Trabajar 2, with increased spending and greater targeting to poor areas. Overall, performance in reaching poor areas (regardless of province) improved nationally. About a third of the gain in the program's ability to reach poor areas was attributed to the program's greater ability to reach poor provinces. The rest was attributed to better targeting of poor areas within provinces. The provinces differed greatly in ability to reach poor areas. Historymattered. Differences in performance after reform partly reflected differences under the old program. Controlling for those factors, however, poorer provinces were less successful in targeting their poor areas. A higher provincial poverty rate attracted more central spending, which tended to result in more pro-poor spending within provinces. But even with greater central spending on poor provinces, poorer provinces were less successful at discriminating in favor of their poor areas. Decentralization generated substantial horizontal inequality in public spending on poor areas. The center clearly needs to give provincial governments stronger incentives to target the poor. Allocations to a province should depend not only on how poor the province is but on how successfully it discriminates in favor of poor areas. The results of this study suggest that stronger incentives are needed.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 1901.

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Date of creation: 31 Mar 1998
Date of revision:
Handle: RePEc:wbk:wbrwps:1901

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Related research

Keywords: Poverty Reduction Strategies; Services&Transfers to Poor; Poverty Monitoring&Analysis; Regional Governance; Poverty Impact Evaluation; Poverty Reduction Strategies; Poverty Monitoring&Analysis; Safety Nets and Transfers; Rural Poverty Reduction; Services&Transfers to Poor;

References

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  1. Keen, Michael & Marchand, Maurice, 1997. "Fiscal competition and the pattern of public spending," Journal of Public Economics, Elsevier, vol. 66(1), pages 33-53, October.
  2. Charles Brown & Wallace E. Oates, 1985. "Assistance to the Poor in a Federal System," NBER Working Papers 1715, National Bureau of Economic Research, Inc.
  3. Davis, Michael L & Hayes, Kathy, 1993. "The Demand for Good Government," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 148-52, February.
  4. Datt, Gaurav & Ravallion, Martin, 1990. "Regional disparities, targeting, and poverty in India," Policy Research Working Paper Series 375, The World Bank.
  5. Hoff, Karla, 2008. "Joseph E. Stiglitz," Policy Research Working Paper Series 4478, The World Bank.
  6. Robert P. Inman & Daniel L. Rubinfeld, 1997. "Rethinking Federalism," Journal of Economic Perspectives, American Economic Association, vol. 11(4), pages 43-64, Fall.
  7. Deller, Steven C, 1992. "Production Efficiency in Local Government: A Parametric Approach," Public Finance = Finances publiques, , vol. 47(1), pages 32-44.
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Citations

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Cited by:
  1. Billy Jack, 2003. "Poverty Reduction Using Self-Interested Intermediaries: Implications for the Design of Inter-Governmental Transfers," Working Papers gueconwpa~03-03-18, Georgetown University, Department of Economics.
  2. World Bank, 2004. "Decentralization in Madagascar," World Bank Publications, The World Bank, number 14921, October.
  3. World Bank, 2003. "Madagascar : Decentralization," World Bank Other Operational Studies 14663, The World Bank.
  4. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.

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