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Developmental responses to the food price crisis: evidence on the
role of social transfers
UNICEF Workshop
Bangkok
11 November 2008
Economic
Policy
Research
Institute
Michael [email protected]
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Food prices have risen sharply in the past
year…
94. 1
0
50
100
150
200
250
2002 2003 2004 2005 2006 2007 2008*
Source: United Nations Food and Agriculture Organisation * April 2008
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…precipitating a wave of sometimes violent
protests around the world
Source: United Nations World Food Programme
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… food price inflation eroded social protection measures aimed at protecting the poor…
Baseline valuein March 2006
Consumption purchasing power in March 2008
Basic grains purchasing power in March 2008
SOURCE: EPRI based on data provided by Statistics South Africa and SOCPEN
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The greatest vulnerability is concentrated in
Africa and South Asia
Source: United Nations World Food Programme
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African agricultural productivity growth has
significantly lagged the rest of the world
0
1000
2000
3000
4000
5000
6000
7000
1961 1970 1980 1990 2000 2002 2004 2006
kg/H
a
United States
Latin America & Caribbean
Asia
Africa
Source: United Nations Food and Agriculture Organisation
USA
Africa
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African agricultural productivity growth has
significantly lagged the rest of the world
0
1000
2000
3000
4000
5000
6000
7000
1961 1970 1980 1990 2000 2002 2004 2006
kg/H
a
United States
Latin America & Caribbean
Asia
Africa
Source: United Nations Food and Agriculture Organisation
USA
Africa
WHY?• Risk• Scale• Investment
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Impact of social cash transfers
Empowerment
Access to
markets
(nutrition)
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Most cash transfers buy predominantly food
Use of Cash Transfer by Program
0%
10%
20%
30%
40%
50%
60%
70%
80%
Food Education Health Other Savings &Investment
South Africa OAP Zambia SCTSKenya Cash Transfer for OVC Mozambique INAS (urban)Namibia Old-Age Pension (urban) Malawi DECTMalawi FACT
SOURCE: IFPRI
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SOURCE: IFPRI
-20
-10
0
10
20
30
40
50
60
70
Health visits I llness Growth monitoring
Stunting
Ch
an
ge (
percen
tage p
oin
ts)
Honduras
Mexico
Nicaragua
Colombia
0
5
10
15
20
25
30C
hange in enrollm
ent
(percentage p
oints)I mpacts of Conditional Cash Transfers on School Enrollment
Primary School Secondary School
Social transfers also foster developmental education and health outcomes
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Human capital development promotes pro-poor growth
Social protection
Human capital
Labour productivity
Pro-poor growth
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Human capital development promotes pro-poor growth
Social protection
Human capital
Labour productivity
Pro-poor growth
South Africa
Increase wages 60-130% more than the cost of transfers
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Social transfers in South Africa support economic growth along multiple dimensions
Sub-Saharan Africa’s oldest social transfer programme
Costs 3% of GDP Substantial impact on
poverty reduction Extensive studies of
growth outcomes– Human capital– Labour markets– Macroeconomics
South Africa
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South Africa’s social pension reduces poverty and destitution substantially
96%
54%
21%
98%
71%
32%
0% 20% 40% 60% 80% 100%
Householdsonly with
older people
Householdsincluding
older people
Allhouseholds
Poverty gap reduction Destitution gap reduction
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The distribution of social benefits in South Africa
SO
UR
CE
: S
ou
th A
fric
an N
atio
nal
Tre
asu
ry
and
Sta
tist
ics
So
uth
Afr
ica
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0%
10%
20%
30%
40%
50%
60%
70%
Out of LF Unemp., nosearch
Unemp.,searching
Employed
Labor force status, March 2005
CSG households Non-CSG households
n=3462 n=1795
Social protection improves labour market participation and employment
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Propensity score matching techniques provide ex post evidence on agricultural resilience
Propensity score
13% agricultural attrition
8% agricultural attrition
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Lesotho demonstrates how social pensions build human capital for children
The world’s newest universal social pension, implemented in 2004
Formal evaluations still in progress
Costs 1.4% of GDP Supports children
increasing living with older people
Lesotho
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Social protection promotes better risk management and encourages investment
Higher investment and growth
Risk Manage-ment
Social protect
ion
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Social protection supports local economies
A transformed pension system since democracy in 1990
Near-universal take-up (85%)
Costs 0.7% of GDP Supports labour
market participation, particularly for women
Namibia
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Mauritius
Social protection reinforces social cohesion, facilitating economic reforms that promote pro-poor growth
EXAMPLES
Mauritius
Botswana
Nepal
Papua New Guinea