News
Poor Need Better Protection
During economic Crises – World Bank
Written by BEN-BRIGHT MKPUMA
During economic recessions, policymakers and economists tend to
focus on how the crisis affects growth, employment, overall
household incomes and tax revenues. The local, individual story
is often missed in such big-picture analysis.
The lack of “micro” data is especially acute in developing
countries where household surveys are often sporadic and out of
date. That makes it difficult for governments to retool existing
poverty programs, much less predict who is likely to be pushed
into poverty during an economic shock.
A new book published by the World Bank outlines a comprehensive
approach for estimating data at the individual and household
level to help policymakers target their responses in a more
timely and effective manner. It also offers suggestions for how
they can better plan for future crises.
The book, Knowing, When You Do Not Know, came in response to
demands from World Bank staff who worked in countries and
national governments following the 2008 – 2009 global financial
crisis. Many of them felt that existing analysis lacked critical
information on employment, poverty, and social impacts needed to
design responses to the crisis.
The model outlined in the new book focuses on predicting impacts
on individuals and household, as well as on identifying who was
most likely to be affected by the economic recession — and in
what way.
It was conceptualized, refined and tested in Bangladesh, Mexico,
Mongolia, the Philippines and Poland over the last couple of
years. The results were then fed into country policy dialogues
and Bank lending operations to promote systems that better
protect the poor going forward.
“Although this is not the first time that micro simulation
techniques are used by World Bank staff to predict the impact of
macroeconomic shocks, the proposed model produces a more
complete set of predictions,” said Carolina Sanchez-Paramo, a
lead economist and co-editor of Knowing, When You Do Not Know.
It allows users to identify affected groups and individuals and
to evaluate the effectiveness of existing poverty and safety-net
programs.”
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