Glossary

This is a "living document" based on and adapted from a number of sources within the World Bank.

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Average Benefit Incidence Analysis: See Benefit Incidence Analysis (BIA) 

Beneficiaries: The men and women, communities, or organizations expected to benefit from an intervention.

Behavioral Analysis: Behavioral analysis explores individual and household-level decisions and behaviors in response to changes. For instance, behavioral analysis approximates the ways in which individuals or households switch to consuming or producing other goods and services in response to a price or other policy change.

Behavioral Benefit Incidence Analysis: See Benefit Incidence Analysis (BIA)

Benefit Incidence Analysis (BIA): Benefit incidence tells us who benefits from services. BIA generates distributions of benefits, i.e. benefit incidence, by combining information about the unit costs of providing those services (usually obtained from government data) with information on the use of these services (usually obtained from household surveys). In effect, the analysis computes the cost of providing the service to the household or individual, i.e. the amount households or individuals would have to pay for the services they receive to cover the cost of these services. There are different types of BIA: average, marginal and behavioral.

• Average Benefit Incidence Analysis measures the incidence of all benefits on different household or individual groups (for instance, groups with different income levels or living in different regions). It measures the distribution of all, or average benefits, rather than marginal ones. It is applicable to any type of policy change or public finance reform, including reforms affecting prices that change household income or expenditure, reforms in public expenditure or in taxation. Also known as simple incidence analysis.
• Marginal Incidence Analysis estimates the distributional incidence of the last or next unit of expenditure on households or individuals, in other words it focuses on who will benefit from an increase or decrease in provision of services.
• Behavioral Benefit Incidence Analysis combines incidence analysis (simple or marginal) with econometric estimates of household or individual behavior. It can be used to explain distributional changes arising from a policy change taking into account households' or individuals' reactions to the changes (and thereby addresses one of the shortcomings of simple incidence analysis).

Capacity Building: A coordinated process of deliberate interventions to (i) upgrade skills (ii) improve procedures, and (iii) strengthen organizations. Capacity building refers to the investment in people, institutions and practices that will enable countries to achieve their development objectives. Capacity is built effectively when such activities contribute to the achievement of national goals while donor aid dependence decreases.

Civil Society: The web of associations, social norms and practices that comprise activities of a society as separate from its state and market institutions. A "healthy," powerful civil society requires institutions with strong intellectual, material and organizational bases that reflect social diversity. It also requires an open, constructive interaction between civil society organizations (CSOs) and the state and market sectors. Civil society includes cooperatives, religious organizations, foundations, guilds, professional associations, labor unions, academic institutions, media, pressure groups and political parties.

Computable General Equilibrium (CGE) models: See General Equilibrium Analysis

Country Risks: Country risks are created by the prevailing conditions in the country as a result of its history, culture and political systems. They may include social tension based on a history of exclusion, delicate international relations or a set of cultural traditions that militate against women's access to education. These underlying factors may work against the effective implementation of a reform or shape the way that policies are conceived.

Demand Analysis: Measures impact of prices and income on consumption. Single-good demand models can be used to assess willingness to pay of households for goods with no close substitutes (e.g., water, electricity). Demand models do not capture supply–side impacts, i.e. on production, wages, profits and income. Prices are exogenous. See also Supply Analysis.

Direct and Indirect Impacts: Some policy reforms may have primarily direct impacts: impacts that result directly from changes in the policy levers altered by the reform. For example, an increase in value-added tax will translate directly into a lower purchasing power for a given disposable income. Reforms may also have important indirect impacts: impacts resulting from the reform through channels other than the actual policy lever or action. Using our earlier example, an increase in value-added tax rates will have a positive impact on the fiscal stance of the country. If this is translated into increased government expenditure, it will have impacts on various groups of households through the goods, services, transfers and subsidies that they receive. Such a stronger fiscal stance will likely generate improved growth, affecting household welfare. See also Transmission Channels.

Direct Impact Analysis: This is an assessment of who is directly affected by the policy change, and by how much. It assumes no behavioral response from affected households or groups, i.e. if prices change, quantities do not adjust. Elasticities are assumed to be zero, including own-price elasticities. This assumption is appropriate for assessing short-term reform impacts, before economic agents have time to make adjustments. It is a limited approach and will tend to overstate the impact on household welfare.

Empowerment: Empowerment is the expansion of assets and capabilities of poor people to enable them to participate in, negotiate with, influence, control and hold accountable institutions that affect their lives. In its broadest sense, empowerment is the expansion of freedom of choice and action. It is a participatory process which places or transfers decision-making responsibility and the resources to act into the hands of those who will benefit. This can include (i) capacity-building for stakeholder organizations; (ii) strengthening legal status of stakeholder organizations; (iii) stakeholder authority to manage funds and workers, supervise work and procure materials; (iv) stakeholder authority to certify satisfactory completion of project and establish monitoring and evaluation indicators and (v) support for new and spontaneous initiatives by stakeholders.

Endogenous: Generated by internal factors, as opposed to outside (exogenous) factors. Endogenous effects include for example technological change or economies of scale.

Evaluation: Evaluation is the systematic and objective assessment of the relevance, efficiency, effectiveness, sustainability, and impact of development interventions. See Monitoring & Evaluation.

Exogenous: Generated by external factors, as opposed to internal factors (endogenous). Exogenous effects include for example natural disasters or regional economic crises.

Ex-Ante Analysis: Analysis carried out before policy changes take place, typically by "simulating" events and "forecasting" the impacts of these changes.

Ex-Post Analysis: Analysis carried out after a policy change has been implemented, by examining actual events.

Gender: Gender refers to the socially constructed roles ascribed to males and females and the resulting socially determined relations. These roles are learned, change over time and vary widely within and across cultures. Gender is one of the key entry points for social analysis. It is important to understand the social, economic, political and cultural forces that determine how men and women participate in, benefit from and control resources and activities. A good analysis would highlight gender specific constraints, risks and opportunities.

General Equilibrium Analysis: General equilibrium analysis models all economic accounts in an economy and aims to present a comprehensive picture of the economy. For example, a general equilibrium approach to the study of day-laborers' wages would concentrate both on demand and supply in the market for day-laborers and the effects of wages or unemployment in other markets more generally. Specific tools for general equilibrium analysis are Social Accounting Matrices (SAMs) and Input-Output Models, and Computable general equilibrium models (CGEs)

• Social Accounting Matrices (SAMs) measure distributional impacts using policy simulations with complete specification of the economy. Prices are fixed and exogenous to the model. It normally contains entries for productive activities, commodities, factors, institutions, the capital account, and the "rest of the world." An activity produces (and receives income from) commodities, buys commodities as production inputs, pays wages to labor, rents to capital, and taxes to the government. Factor income accrues to households as owners of the factors. The SAM can be constructed to distinguish household groups by, for example, sources of income.
• Computable General Equilibrium (CGE) models model goods and factor markets explicitly, with wages, prices and private income determined endogenously. They measure the distributional impact of policy reforms in a completely specified model of the economy. They measure indirect effects of policy changes as well as direct effects (which can be missed by partial equilibrium approaches).

Household models: Household models are based on the observation that many households are units of production and consumption simultaneously. Consumption decisions depend on production, and vice-versa. The household must also decide how to allocate labor to productive activities within and outside the household, and how much leisure to consume. Within the household, family members produce items that yield utility, such as child care, and they allocate resources such as child labor, for which there may not be perfect or even functioning markets. Household models are particularly suited to addressing agricultural reforms, but have been used in relation to several different sorts of reforms, including taxation.

Impacts: See Direct and Indirect Impacts and Transmission Channels.

Incidence Analysis: See Benefit Incidence Analysis

Indirect Impacts: see Direct and Indirect Impacts

Institutional Risks: These include risks that assumptions made regarding institutional performance are incorrect. This could be due, for example, to market or institutional failures that exist where none were assumed (e.g. asymmetric information or missing markets) or to the fact that key organizations involved perform in unexpected ways.

Institutional Analysis: Institutional analysis helps to identify constraints within an organization that could undermine policy implementation. These constraints may exist at the level of internal processes, relationships among organizations (e.g. between ministries), or be a product of the way that the system is organized (reporting hierarchies) or operation in practice (the financial year is not followed in practice and accounts are not closed). Institutional analysis evaluates formal institutions, such as rules, resource allocation, and authorization procedures. It also evaluates "soft" institutions, such as informal rules of the game, power relations and incentive structures, that underlie current practices. In the latter sense, it identifies organizational stakeholders that are likely to support or obstruct a given reform. The analysis is most useful for complex reforms that affect institutional responsibilities or coordination, such as delivery of public services, regulation of markets or decentralization.

Marginal Incidence Analysis: See Benefit Incidence Analysis

Monitoring: Monitoring is the regular tracking of inputs, outputs, outcomes and impacts of development activities. See Monitoring & Evaluation.

Monitoring & Evaluation (M&E): These are two complementary, but distinct processes. Monitoring focuses on tracking inputs, outputs, outcomes and impacts as interventions are implemented. Evaluation assesses the efficiency and impact of interventions (typically after they have been implemented). Together, monitoring and evaluation allow policymakers to track results, suggest corrections or improvements during implementation, and assess success. M&E systems can also promote ownership of reforms and accountability.

Multi-Market Models: See Partial Equilibrium Analysis

National Capacity: Many low-income countries have limited capacity and experience in areas of critical importance to PSIA. These areas range from data collection systems, analytical capacity, monitoring and evaluation systems, the capacity to translate data and analysis into policy, and the capacity for debate on such policy issues in the public domain. See Capacity Building.

Non-Government Organization (NGO): NGOs are defined as private organizations that pursue activities to promote the interests of the poor, protect the environment, provide basic social services, relieve suffering or undertake community development. NGOs often differ from other organizations in the sense that they tend to operate independent from government, are value-based and are generally guided by principles of community and cooperation. There are two major categories of NGOs: i) operational NGOs, whose primary purpose is the design and implementation of development-related projects, and; ii) advocacy NGOs, whose primary purpose is to defend or promote a specific cause and who seek to influence policies and practices.

Partial Equilibrium Analysis: Equates supply and demand in one or more markets so that prices clear at their equilibrium level, i.e. prices are endogenous. Partial equilibrium analysis is distinguished from general equilibrium analysis in that it does not include all production, consumption, markets or prices in an economy. Partial equilibrium approaches allow indirect feedback effects from the impact of changes in one market on other markets. Partial Equilibrium analysis includes multi-market models and reduced-form estimation.

• Multi-market models focus on a set of inter-related markets in which the policy being analyzed is likely to have its main effects. Models focus on the combination of direct effects and indirect effects through price and quantity changes in a small group of commodities or factors with strong interlinked supply and demand. These models are most appropriate for the evaluation of policies that change the relative price of a specific good, e.g. the removal of a subsidy, or elimination of a tariff or quota. Also known as limited general equilibrium or multi-market partial equilibrium.
• Reduced-form estimation focuses on outcomes in only one dimension, e.g. the change in the total level of consumption. Systems of supply and demand equations are solved to yield reduced form equations which are then estimated. The approach is used to estimate the impact of policy changes on welfare, and/or to examine the determinants of poverty/income or income growth rates.
  Participation: A process through which stakeholders influence and share control over development initiatives and the decisions and resources that affect them. It is a process which can improve the quality, effectiveness and sustainability of projects and strengthen the capacity, ownership and commitment of stakeholders.

Participatory Monitoring and Evaluation: This provides feedback on ongoing program effectiveness, allowing for adaptation during implementation. The perspectives and insights of all stakeholders (beneficiaries as well as project implementers) are considered. Stakeholders identify issues, conduct research, analyze findings, make recommendations and take responsibility for necessary action. The participatory aspect of the process can be particularly effective because it ensures the ownership and commitment of the involved stakeholders for any identified corrective actions. See Monitoring & Evaluation.

Political Economy Risks: These include the risk that powerful interest groups may undermine reform objectives by blocking implementation, capturing benefits, or reversing reform actions.

Poverty Map: Poverty maps are geographical profiles that show the spatial distribution of poverty within a country, and where policies could have the greatest impact on poverty reduction. For instance, a poverty map can be combined with maps that show the placement of primary health care facilities to understand the access to health services by the poor. The technique is particularly suited to reforms with regionally differentiated impacts such as decentralization and agricultural reform. Applications include planning of public investments and expenditure in education, health and transport, and targeting of direct social assistance and food aid to vulnerable populations. The method is most useful when constructed at a detailed level of disaggregation, although this has substantial data requirements.

Poverty Reduction Strategy Papers (PRSPs): PRSPs describe a country's macroeconomic, structural and social policies and strategies and programs to promote growth and reduce poverty, as well as associated external financing needs. PRSPs are prepared by governments through a participatory process involving civil society and development partners. Click here for more information: http://www.worldbank.org/prsp

Poverty Reduction Support Credit (PRSC): The PRSC is a World Bank lending instrument available to eligible IDA borrowers. The PRSC provides support for the implementation of the country's Poverty Reduction Strategy and the associated program of social, structural, institutional and policy reforms. The PRSC is grounded in the principles of the Comprehensive Development Framework (CDF) and the international development goals. Click here for more information: http://wbln0018.worldbank.org/html/eswwebsite.nsf/PRSC/Guidelines+PRSC?OpenDocument

Poverty Reduction and Growth Facility (PRGF): The PRGF, established in 1999, is the IMF's low-interest lending facility for poor countries. Through the PRGF, the IMF aims to integrate the objectives of poverty reduction and growth more fully into its operations in its poorest members. PRGF-supported programs are designed to cover only areas within the primary responsibility of the IMF, unless a particular measure is judged to have a direct, critical macroeconomic impact. Areas typically covered by the IMF include advising on prudent macroeconomic policies and related structural reforms, such as exchange rate and tax policy; and better fiscal management, budget execution, fiscal transparency, and tax and customs administration. Click here for more information: http://www.imf.org/external/np/exr/facts/prgf.htm

Poverty and Social Impact Analysis (PSIA): PSIA is the analysis of intended and unintended consequences of policy interventions (ex-ante, during implementation, and ex-post) on the well-being of different social groups, with a particular focus on the poor and vulnerable.

Public Consultation: This is the process of engaging affected people and other interested parties in open dialogue through which a range of views and concerns can be expressed in order to inform decision-making and help build consensus. To be meaningful, consultation should be carried out in a locally appropriate manner, for example with information in local languages distributed in advance.

Reduced-Form Estimation: See Partial Equilibrium Analysis

Scenario Analysis: Scenario analysis is a tool to help decision-makers and stakeholders think through how a particular reform will perform under different plausible future situations (scenarios). Each scenario focuses on a plausible discontinuity (e.g. changes such as currency devaluation, significant positive or negative shifts in commodity and input prices or changes of political regime), takes into account significant but predictable factors (such as demographic trends) and then explores how successful the policy would be in this new scenario. It effectively "pre-tests" policy changes under a variety of circumstances by questioning crucial policy assumptions rather than just relying on high/medium/low predictions that assume, through the use of historical data, that future events are likely to follow past trends.

Sensitivity Analysis: Sensitivity analysis is used when dealing with quantitative economic models. It is used to test the importance of different assumptions to the projected performance of an intervention. For example, sensitivity analysis could be used to test the extent to which growth projections are affected by changes in the price of key export commodities on the world market. One practical limitation of the approach is that it is more often used to test sensitivity within a given model rather than to present completely different models.

Social Accounting Matrix (SAM): see General Equilibrium Analysis

Social Capital: The social capital of a society concerns the institutions, relationships, attitudes and values that govern interactions among people and contribute to economic and social development. It includes the shared values and rules for social conduct expressed in personal relationships, trust and a common sense of "civic" responsibility, which make a society more than just a collection of individuals.

Social Capital Assessment Tool (SOCAT): Social Capital Assessment (SOCAT) measures social capital (institutions and networks, and their underlying norms and values) at the level of households, communities and key organizations. It allows analysts to identify how these social assets affect productive behavior (e.g., income generation and risk management), and how this in turn responds to policy reform. For instance, the existence of well-functioning networks with high levels of trust such as among parent-teachers' associations or farmers' associations may facilitate policy changes that call for collective action or cooperation.

Social Development Outcomes: Inclusion, empowerment and security in order to increase equity and access to markets and services, strengthen social capital and social cohesion, and promote accountable and transparent governance.

Social Impact Assessment (SIA): This technique is a form of direct impact analysis used to assess how the costs and benefits of reforms are distributed among different stakeholders and over time. SIA is based on stakeholder analysis, and is particularly useful for disaggregating data on assets (physical, financial) and capabilities (human, organizational) into meaningful social categories. When reasonable national survey data exists, SIA uses a range of qualitative data collection tools (focus groups, semi-structured key informant interviews, ethnographic field research, stakeholder workshops) to determine impacts, stakeholder preferences and priorities, and constraints on implementation. In the absence of adequate quantitative data, SIA supplements qualitative, sociological impact analysis with purposive surveys that capture direct impacts and behavioral responses to reform, or specific dimensions (e.g. time-use patterns) that affect reform outcomes

Social Risk Assessment: Social risk assessment is an approach for systematically identifying risks to and from social groups, and the importance of those risks to achieving the goals of a reform. It is based on the premise that risks become reality when assumptions turn out to be wrong. The likelihood of an assumption being invalid is therefore another way of judging the extent of risk. The social risk assessment matrix helps identify the importance of assumptions and the likelihood that risk will occur.

Stakeholders: Stakeholders include all individuals and groups who are affected by, or can affect, a given operation. Stakeholders can be individuals, interest groups or corporate organizations.

• Stakeholder analysis is a prerequisite for understanding poverty and social impacts. It responds to the question: which interests matter in policy reform? The analysis identifies people, groups and organizations that should be taken into account when conducting impact analysis for a particular policy, by examining their interests and influence on policy. The basic output is the identification and analysis of groups that a policy is designed to help, as well as those whose assent or involvement is required to make the policy work.

Stakeholder Analysis: See Stakeholders

Supply Analysis: Supply analysis measures the impact of price changes on household, labor, firm and aggregate supply. It is useful in analyzing supply responses, for one or several commodities. Supply models do not capture demand–related impacts. Prices are exogenous. See Demand analysis.

Targeted Population: The persons or groups who an intervention means to affect.

Transmission Channels: Policy reforms can be expected to have an impact on various stakeholders through five main transmission channels: (1) employment; (2) prices (production, consumption, and wages); (3) access to goods and services; (4) assets; and (5) transfers and taxes. Each policy reform is likely to have impacts through more than one channel. For example, utility reforms might result in changes in "prices" and "access", but might also have an impact on the fiscal stance of a country, and hence on "transfers and taxes". Further, different stakeholders are likely to be affected differently through these channels. For example, relative price changes will affect net consumers and net producers differently, and even among these groups, the impact may vary. For example consumers will be affected differently depending on their consumption patterns or ability to substitute goods. The transmission channels that are going to dominate and require analysis will vary and will convey distinct impacts on different stakeholders, depending on the reform and country context. Impacts may differ along two key dimensions: first, impacts can be direct or indirect; and second, impacts can occur in the short or in the long term. For the first dimension, see Direct and Indirect Impacts. The second critical dimension relates to the timing of impacts. Given that the nature of the impacts may change over time, so will net impacts on various stakeholders. For example, in the case of an increase in value-added tax rates, the direct impacts on purchasing power will likely be felt in the very short-term, while the indirect impacts on improved service delivery and higher growth will typically take more time to materialize. Stakeholders might therefore feel both negative and positive impacts, but at different points in time.

Vulnerability: This denotes a condition characterized by greater risk to and reduced ability to cope with shock or negative impacts. It may be based on socio-economic condition, gender, age, disability, ethnicity or other criteria that influence people's ability to access resources and development opportunities. Vulnerability is always contextual, and it must be assessed in the context of a specific situation and time. Good practice indicates that interventions should assess vulnerability, and target interventions to reduce risk for the vulnerable.

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