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- Convenor:
-
Miguel Niño-Zarazúa
(UNU-WIDER)
- Location:
- Room 15 (Examination Schools)
- Start time:
- 12 September, 2016 at
Time zone: Europe/London
- Session slots:
- 2
Short Abstract:
In recent years, social protection emerged as a key policy strategy against poverty and vulnerability in the developing world. Financing remains a key constraint, although their feasibility often depends on political economy considerations. What political economy factors explain such developments?
Long Abstract:
In recent years, social protection emerged as a key policy strategy against poverty and vulnerability in the developing world. Financing remains a key constraint in that process, although the feasibility of revenue mobilisation strategies often depends on political economy considerations. What political economy factors explain this development?
Recent work has underlined important knowledge gaps in theoretical and conceptual wok, and also in comparative analysis of political institutions, norms, and financial considerations that facilitate (or limit) the evolution and sustainability of these systems.
This panel aims to address the following questions:
What political regimes or conditions have facilitated (or limited) the expansion of social protection in developing countries? How domestic and external actors could promote these conditions? What underlines their political legitimacy?
What are the (dis)incentives of incumbent governments to use natural resource rents, redistribution, or other forms of revenue mobilization to finance social protection? What are the short-term and long-term implications of such decisions?
Comparative analysis, as well as theoretical models and conceptual analysis are essential, and therefore, welcome to address these questions
Accepted papers:
Session 1Dharendra Wardhana (King's College London)
Paper short abstract:
This paper investigates the relationship between local direct elections and the change in targeted social expenditure using panel data set for Indonesian provincial level from 2001 to 2012. The quantitative analysis is accompanied with a preliminary study on platforms of incumbent political parties.
Paper long abstract:
What is the effect of deepened democracy and broadened political participation on public expenditures for social programmes? Since the end of the Asian financial crisis in 1998, Indonesia has undergone a deep transformation of its political system. The adoption of constitutional amendments throughout 'Reformasi' has affected not only electoral franchise but has also had far-reaching implications for the nature of social protection. This paper investigates the relationship between local direct elections and the change in social spending—controlling for GDP per capita, revenues, and wide-range socio-welfare indicators at the regional level—through a time-series cross-sectional panel data set for 33 provinces in Indonesia from 2001 to 2012. Preliminary analysis suggests that ideological platforms of incumbent political parties do not explain the pattern of social spending. While the results of panel data analysis indicate that local governments increase the allocation of social spending favourably during election periods. Furthermore, local revenues tend to be influential in determining the budget for social spending. I also find evidence that indicators on social welfare generally does not relate to the expansion of social protection programmes. This paper ends with a cautionary note from case studies in two districts, pointing to ways in which combination of oligarchic power relations, elite capture, and limited capacity still undermine the implementation, despite expansion of coverage.
Subhasish Dey (University of York ) Kunal Sen (University of Manchester)
Paper short abstract:
This paper tests if partisan alignment exists in the allocation of funds for India's largest social protection programme, the National Rural Employment Guarantee Scheme in the state of West Bengal, India, and whether incumbent local governments gain electorally in the practise of partisan alignment.
Paper long abstract:
Do ruling parties positively discriminate its own constituencies in allocating public resources? If they do, do they gain electorally in engaging in such a practice of partisan alignment? This paper tests whether partisan alignment exists in the allocation of funds for India's largest social protection programme, the National Rural Employment Guarantee Scheme (NREGS) in the state of West Bengal in India, and whether incumbent local governments (village councils) gain electorally in the practise of partisan alignment. Using a quasi-experimental research design in the form of Fuzzy Regression Discontinuity Design, we find that the village council level ruling-party spends significantly more in their own party constituencies as compared to opponent constituencies. We also find strong evidence of electoral rewards in the practise of partisan alignment in distribution of NREGS funds. However, we find that the results differ between the two main ruling political parties at the village council level in the state.
Rachel Strohm (Social Policy Insights)
Paper short abstract:
Since 2005, nearly 60% of African countries have adopted cash transfer programs -- an unprecedented expansion of the welfare benefits available to poor citizens. This paper examines whether CTP expansion is best explained by pressure from aid donors, or by domestic electoral incentives.
Paper long abstract:
Since 2005, nearly 60% of African countries have begun providing poor citizens with targeted cash transfers. This is an unprecedented expansion of the welfare state, which has historically restricted benefits to civil servants and urban elites. What explains the rapid spread of cash transfer programs (CTPs) in Africa? Standard explanations focus on pressure from aid donors and the diffusion of policy ideas from Latin America. However, this elides questions of domestic political agency, and does not fully explain cross-national variation in the timing of CTP adoption. In this paper, I use a new dataset on African CTPs to examine the correlates of program adoption.
Ken Mitchell (Monmouth University)
Paper short abstract:
Cross-national comparison of tax-to-GDP ratios in Argentina, Brazil and Chile shows that post-commodity boom (2010-2016) national performance varies. What factors explain this variation?
Paper long abstract:
Latin America's commodity boom crested round 2010, and the regional terms-of-trade deteriorated thereafter. How commodity price declines might impact the region is a pivotal and potentially a troubling socioeconomic issue. Taxation is a significant area of interest because tax-to-GDP ratios rose fast during the commodity boom (2002-2010) and paid for new social programs (conditional cash transfers, popular sector pensions, etc.) and public employment schemes that expanded the middle class and lowered poverty. More consumer spending resulted, which fueled economic growth. Latin America has been the world's lowest taxed region post-WWII, and the regional tax-to-GDP ratio flattened during the 1990s, so the end of the commodity boom rightly raises concern that public revenue mobilization might revert to its historical, low norm. Did tax-to-GDP ratios decline with commodity prices? Aggregate taxation combines varied taxes (i.e., income, corporate, consumption, trade, etc.), and here country case studies differ. The Value Added Tax (VAT) merits special attention due to its rising importance as a revenue tool across Latin America. Which national tax strategies managed to maintain commodity boom-era tax-to-GDP ratios? This paper tries to answer the above question by comparing Argentina, Chile and Brazil between 2002 and 2014, with special attention to the period 2010-2014 (i.e., post-commodity boom). Counterintuitive given the literature on taxation specific to Latin America, Argentina, historically an especially low tax country outperforms its neighbors after 2010, something the paper tries to explain. The paper will use OECD tax data to make cross-national comparisons.
Syed Murshed (Coventry University)
Paper short abstract:
This paper empirically examines the determinants of social protection and public health expenditure in a cross-section of heterogeneous developing countries from 1990 to 2010.
Paper long abstract:
This paper empirically examines the determinants of social protection and public health expenditure in a cross-section of heterogeneous developing countries from 1990 to 2010. Our hypothesis is that these types of spending are a function of fiscal capacity, the degree of democracy, institutional quality, inequality, internal conflict, trade openness, the presence of financial crises, food insecurity, as well as macroeconomic variables such as inflation and debt servicing that inhibit government expenditure. Our findings suggest that debt servicing robustly reduces social protection spending, whereas higher per-capita income and fiscal capacity encourage it. Greater openness does not necessarily encourage more spending, nor does increased inflation always inhibit it. Rising democratisation promotes social sector spending, and the presence of greater democracy and fiscal capacity reinforces this effect. More equal societies spend more in this direction. Internal conflict and crises variables have ambiguous effects that depend on the type of democratic competition.
Carla Canelas (The American University of Paris and Centre d'économie de la Sorbonne)
Paper short abstract:
In 2006, the Bolivian government introduced a large scale social protection programme: the Bono Juancito Pinto. Exploiting the variation in the programme coverage and the timing of the programme expansion, this study examines the impact of the transfer on schooling and child labour.
Paper long abstract:
In 2006, the Bolivian government introduced a large scale social protection programme: the Bono Juancito Pinto. Exploiting the variation in the programme coverage and the timing of the announcement of the programme expansion, this study examines the impact of the programme on schooling and child labour. The analysis suggests that the transfer reduces one hour of market work per week among school age children. Knowing that, on average, one hour of work per week increases the likelihood of dropping out of school by five percent, the positive externality induced by the programme is not negligible.
Miguel Niño-Zarazúa (UNU-WIDER)
Paper short abstract:
Poverty and inequality have fallen over the past 15 years or so in Latin America. The reduction in poverty and inequality has been linked to a significant implementation of social assistance programmes that also coincided with i) favourable conditions in commodity prices that generated an unprecedented fiscal space to finance these programmes, and ii) important political transitions that have led in general to more competitive electoral systems. How natural resource rents have helped incumbent governments to improve their expected electoral returns? Recent impact evaluations seem to support the hypothesis that social assistance is associated with political participation of recipients in favour of the incumbent. In this paper we discuss and test whether the revenues from natural resources have facilitated the implementation of transfer programmes and whether this redistribution of resources has been motivated by electoral outcomes. We find that, in fact, natural resources have driven public spending in social transfers that would have otherwise not taken place, however, we do not find strong evidence to support the electoral-returns hypothesis.
Paper long abstract:
The introduction of social assistance in Latin America in the late 1990s coincided with a democratization process in the region and a significant increase in the contribution of revenues from non-renewable resources to the public budgets.
This paper provides an analysis of the distributional effects of revenues from the natural resources via social spending. A primary concern is to establish whether the redistribution of income via social spending would have not taken place in the absence of natural resources. Another aspect of this relation is that lessons from Latin America can also provide insights into the political incentives that natural resource rents generate to the incumbent. Experimental and quasi-experimental studies suggest that social assistance programmes can produce electoral gains to the incumbent.
Our working hypotheses are the following: H1) revenues from non-renewables have facilitated social spending in Latin America, and H2) natural resources have generated electoral gains to the incumbents in increasingly more competitive political systems. In order to test our hypotheses, we first examine the economics of redistribution via revenues from natural resources, with a particular focus on the incentives that drive incumbent decisions on social spending. Second, we consider a model of income redistribution in which an incumbent can make allocation decisions of public funds in the presence of taxation. We expand the model by allowing revenues from natural resources facilitating social spending without affecting the disposable income of better-off households. We empirically test our hypotheses using fixed effects estimators with instrumental variables in three stages. The results indicate that the expansion of social spending in Latin America over the period 1990-2009 has indeed been facilitated by the natural resource rents; however, the electoral gains hypothesis is not supported by the empirical analysis.