Poverty Alleviation and Governance

Governance Education NetworkFirst International Conference on

Governance, Islamabad, 13-15 December 2009

Arne Tesli

Norwegian Institute for Urban and Regional Research (NIBR)

www.nibr.no

1. Introduction• This presentation deals with the relationship

between governance and poverty alleviation.• Main characteristics and manifestations of

poverty• Focus on key state or governmental tasks and

responsibilities in the work to fight poverty: 1. The endeavour to ensure work and

employment opportunities and income for all

2. The provision of basic public services (and welfare).

• Institutional structures and arrangements – organisation, roles and relationships between central and local authorities

• Knowledge and expertise: evaluations and research – continuous reforms

Characteristics and manifestations of poverty

• Poverty manifests itself in many ways:– Lack of income and income earning

opportunities – Lack of food– Lack of resources, lack of access to, and

involvement in, central decision making– Insufficient housing, poor living

conditions, Lack of security, lack of trust

• Poverty can result in:– Marginalisation, alienation, frustration,

anger, extremism, revolt, apathy, hopelessness

Poverty relates to:• The control of, and access to, production means

and resources, such as land, natural resources, capital, etc.

• Ownership structures, control, power, distribution and redistribution of income.

• The opportunities an individual person has in life. – Human capital, and the development of HC.– Level of competence and qualifications – The chances to develop personal qualities and

qualifications, opportunities for education and personal growth at all levels.

• The inter-personal relationships in society. Bondage and trust between people and groups of people. – Social capital.

2. Government strategies and activities to avoid or combat poverty• Poverty is related to how the state and the

government is able to carry out key tasks and responsibilities linked to: – the provision of basic public services and

welfare • Education• Basic public health services• Social security• Housing

– Facilitating for Employment and work • It is therefore, necessary to discuss how

these fundamental governmental tasks are handled

• ... through a combination of policy measures and strategies.

3. The provision of basic public services – Education

• Education is considered to be a crucial element in poverty alleviation.

• It has been very important for the economic, social, and regional development in Norway for more than a hundred years.

• There are some differences in the level of education between different regions.

• However, it has been a political priority to maintain certain common standards and requirements for education in the various parts of the country.

• In the period 1960 - 1980s: Norway went through almost a revolution in educational development and achievements. The educational level was raised rapidly – reaching internationally high standards.

• For purposes linked to regional development, it has been essential that education was developed also at decentralised level, and at all levels of education, up to college and university: New universities, regional university colleges and research institutions.

Provision of health services and housing

• Health services– There is strong correlation between

poverty and many health variables and indicators.

– To provide basic health services to the general public is therefore also a central part of poverty alleviation.

• Housing– Housing schemes for the poor and

marginalised– Affordable housing for low-income groups– Housing cooperatives– Public financing of housing schemes

Care for elderly and vulnerable groups and persons• Safety nets and welfare arrangements

and provisions for weak, vulnerable and marginalised persons– In many societies, the old and weak/vulnerable

persons, or marginalised persons, have commonly been taken care of by their close family and relatives. This has also been the case in Pakistan.

– With urbanisation, increased globalisation, migration and general changes in society, family structures and relationships are changing rapidly, and this puts new demands and requirements on safety nets and social security measures provided by the state and public institutions.

4. The government approach to address the challenges

• So how can the state and government approach these challenges?– How can the work to provide basic

public services, such as education, health, social security, housing, etc. be organised.

– Who should have the responsibility for carrying out the various tasks?

– … by whom, at what level, etc.?– And how should it be financed?

The relationship between central and local authorities

• The state and authorities’ role in policy making, prioritising, planning, organising, coordinating and implementing

• Centrally defined objectives, policies, legislation, rights, standards, etc.

• Decentralised implementation and coordination.

Two opposing forces / tendencies• Centralisation to achieve:• Equality• Legal protection• Cost-efficiency • Specialised services

– Vs.

• Decentralisation to achieve:• Coordination between sectors and

services, and secure good services to people with complex problems

• To provide services that are as much as possible in compliance with the needs of the local citizens

Decentralized implementation – provision of basic public services at local level

Which level should be responsible?• The principle of Subsidiarity: • Tasks should be carried out at the lowest,

most efficient level of government. That is, a tendency towards decentralisation, but with some modifications or qualifications:

• Tasks requiring national considerations, Tasks requiring national considerations, setting and stipulating fixed standards, setting and stipulating fixed standards, regulations and control should be at regulations and control should be at national level should be at state/central national level should be at state/central levellevel

• Tasks requiring political judgement should Tasks requiring political judgement should be placed with the elected representativesbe placed with the elected representatives

Implementation at local level• In Norway there are three main

politico-administrative levels – National (state) level– Regional level: 19 counties– Municipal level: 430 municipalities

• There is an old tradition of decentralized provision of basic public services and welfare arrangements.

• The municipalities have been the main implementers of the welfare arrangements.

The municipalities have been the main implementers of the welfare arrangements

Responsibility for the following welfare tasks:

• Primary and secondary schools• Primary health care • Care for elderly, handicapped,

mentally retarded• Housing• Social service provision• Child care and day-care centres

Financing the implementation of activities at municipal level

• The importance of taxation and income redistribution to finance the provision of basic public services and activities

• In Norway a system of redistribution of public income has been developed to enable local authorities to provide a reasonable level of basic public services to the citizens.

• This system is based on universalism – or equal standards – regardless of where people live.

• In the so-called municipal income system, one of the main objectives, is to even out the differences that exists between the different municipalities in terms of:

• Income (mainly tax revenues) and • Actual expenditure needs

– how many children in primary school age– how many old persons, etc.

“The Municipal Income System” – From ear-marked grants to aGeneral Purpose Grant

• Prior to 1986 the municipalities received central government transfers mainly as “earmarked” grants linked to specific public sector needs. – A large number of such “earmarked” grants

• In addition, municipalities with tax income lower than average benefited from a “tax equalization fund”.

• From 1986 the approx. 50 “earmarked” sector-specific grants were substituted by a General Purpose Grant.

• This was to be at the disposal and discretion of the individual municipality to use within a framework of national standards, requirements, regulations and guidelines.

General Purpose GrantTwo main elements:• One mechanism to compensate for actual needs

and expenditures for basic public services in the individual municipality– Tailored to meet the particular needs of each municipality

according to a series of “objective” criteria, “equalization of expenditure”. The weight of these criteria are decided by the politicians in Parliament.

• One mechanism to reduce inter-municipality income differences

In this way, one has managed to achieve a relatively fair distribution of national public income, and to ensure a certain basic level of income for all municipalities.

Other key elements of this income redistribution system are:

• Transparency in the tax collection• Central collection and redistribution

5. Employment opportunities and income

• Poverty alleviation = sufficient work and employment opportunities

• One has to examine: – the contextual framework– the political strategies and policy measures– the organisational and institutional

arrangements– the implementing mechanisms to generate

sufficient employment opportunities and work.

• That is: To generate knowledge to introduce new policies and measures for change

Work or employment for all !• This has been the main slogan of the largest

political party in Norway since 1933.• The top political priority at all Norwegian

political campaigns and government strategies ever since.

• There is a strong consensus among the main political parties that this must be, and should be, the most important political objective and goal.

• Considered to be the most important strategy and element to avoid poverty.

• The most central political discussions, decisions and budgeting have been centred around this issue.

How to achieve high labour force participation and low unemployment rate• Not so easy to achieve in practice. • The labour force participation has

been low, and the unemployment rate has been high in many countries.

• Widespread under-employment in many parts of the world.

• Low wages or payment for many jobs.

• How has Norway managed to avoid this? To keep a low unemployment rate ever since the 1930s.

Balanced economic development

• Norway has had a strong focus on balanced economic development:

• between different regions, • between different sectors; as well

as • between urban and rural areas.

Regional economic policyThe main objectives of the regional policy have been:• To maintain the main characteristics of the settlement

pattern;• To ensure equal opportunities and living

conditions for people living in different regions – balanced regional development

• Work and employment (income) in all parts of the country

• Provision of basic public servicesDuring the 1970s, some important changes were

introduced in the regional policy, from primarily economic growth oriented, to becoming a more socio-economic and “green” oriented policy, with certain new priorities:

• Better conditions for the peripheries and the farmers; • Providing more welfare through public services at

decentralised and municipal level; • That is: a more bottom-up oriented regional policy was

initiated and stimulated from the 1970s.

The ”Narrow Regional Policy” – Key measures

• Investment support, constituting up to 30-40% of new investments, with a priority to innovation orientated investments.

• Start-up grants. Several kinds: from more general support, to more specific support to SME and entrepreneurs – at an early stage of initiating or developing projects.

• Support to restructure local communities. • Infrastructural programmes; knowledge and

competence building, and support to infrastructure development.

• Business environment support; business parks and incubators.

• Special programmes for women and youth.• A regionally differentiated social security fee.

The ”Broad” Regional Policy• The broad regional policy means that the politicians

and government have used priorities made on the basis of regional development objectives and goals to carry out sector policies.

The most important sectors in this respect have been:• Provision of Health services• Higher education and research and research

institutions• Transportation and the development of transport

infrastructure• Labour market – support and incentives.• Transfers to agriculture• Business development – Tourism, etc.• Defence• Culture

Development of sound economic enterprises and businesses

• Development of sound economic enterprises and businesses in the different regions

• The state and government trying to ensure and facilitate for a good, stable and predictable political and economic environment under which, private actors and companies can establish and operate business enterprises.

Public-private partnerships• Focus upon the role of the government

and authorities as facilitators for economic and social development:

• Cooperation between public institutions, the business and industrial community, and research institutions to identify: – options and mechanisms for economic

transformation and development in different regions and sectors

– The funding and financing• to generate innovation and establish new

economic business enterprises and opportunities at regional and local level.– Innovation and economic development

“parks”– Incubators

Planning and public participation• The involvement of: government agencies, private

enterprises and business as well as local residents and ordinary people in the planning and consideration of the proposed businesses activities and plans.

• The importance of public participation and involvement, and transparency.

• The regional and local development plans and strategies have to be based on proper assessments of the feasible economic development options and opportunities in the region and locally, and should include: baseline studies, as well as environmental and social impact assessments, EIAs, SIAs.

• These plans have to be based on, and be in accordance with national, regional and local development strategies and plans (strategic and regional impact assessments).

6. Knowledge generation – evaluations, research and reformsEvaluations and research: • Policies and strategies• Government and governance structures and

arrangements – organisations, procedures– Bottom Up vs. Top Down approaches

• Economic and legal mechanisms and provisions

• Implementation mechanisms and institutions• Effects, results and efficiency of poverty

alleviation strategies and measures – the performance.

• Knowledge generating and feedback to reformulate policies and administrative structures and mechanisms – Input to continuous reforms.

Thank You!

arne.tesli@nibr.no