The political economy of targeted safety nets

This paper is the written version of a lecture that draws principally on research on safety nets and operational experience with the implementation of safety nets, drawing heavily on the crisis of safety net programs in Indonesia from 1998 to 2000. As such it provides more views than reviews of the literature on the principal issues in the political economy of targeted safety net programs. The text is followed by a Q&A that clarifies views put perhaps too starkly in the text. Five major issues are reviewed. First, the implications of some simple models of electoral politics which make the budget allocated to programs endogenous to their targeting design highlight the dangers in ignoring political economy. Second, the political economy of safety net versus safety rope programs is reviewed. Third, some of the literature on the perception of fairness of the targeting criteria is reviewed. Fourth, the issue of local versus central targeting of programs is discussed. Fifth, the political economy of program implementation that considers the fit between program targeting and the organizational culture of the implementing organization is considered.