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Reaching poor areas in a federal system

Author

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  • 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.

Suggested Citation

  • Ravallion, Martin, 1998. "Reaching poor areas in a federal system," Policy Research Working Paper Series 1901, The World Bank.
  • Handle: RePEc:wbk:wbrwps:1901
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    References listed on IDEAS

    as
    1. Brown, Charles C. & Oates, Wallace E., 1987. "Assistance to the poor in a federal system," Journal of Public Economics, Elsevier, vol. 32(3), pages 307-330, April.
    2. 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.
    3. Datt, Gaurav*Ravallion, Martin, 1990. "Regional disparities, targeting, and poverty in India," Policy Research Working Paper Series 375, The World Bank.
    4. Hoff, Karla, 2008. "Joseph E. Stiglitz," Policy Research Working Paper Series 4478, The World Bank.
    5. Davis, Michael L & Hayes, Kathy, 1993. "The Demand for Good Government," The Review of Economics and Statistics, MIT Press, vol. 75(1), pages 148-152, February.
    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.
    Full references (including those not matched with items on IDEAS)

    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. Le, Minh Son, 2014. "Trade openness and household welfare within a country: A microeconomic analysis of Vietnamese households," Journal of Asian Economics, Elsevier, vol. 33(C), pages 56-70.
    3. Escobal, Javier, 2005. "The Role of Public Infraestructure in Market Development in Rural Peru," MPRA Paper 727, University Library of Munich, Germany.
    4. World Bank, 2003. "Madagascar : Decentralization," World Bank Other Operational Studies 14663, The World Bank.
    5. World Bank, 2004. "Decentralization in Madagascar," World Bank Publications, The World Bank, number 14921, April.

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