| | | | Most of the material on this site consists of technical work in progress. It is preliminary and should not be quoted. This material is not intended to constitute rigid guidelines, is just informative and is posted to contribute to a debate between researchers, practitioners in the countries and aid agencies, Bank staff and other users. In that spirit please send comments and suggestions to the following email address: toolkit@worldbank.org. |
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| | | | Luiz A. Pereira da Silva, François Bourguignon, and Roula Yazigi
The World Bank
1818 H Street NW
Washington DC, 20433
Room MC-4-335
Mail Stop MC4-404
Fax: 1-202-522-1158 |
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Objectives of the Toolkit The World Bank group has been working and collaborating with countries, academic researchers, aid agencies and NGOs to build and test various techniques and tools that evaluate the poverty and distributional impact of economic policy choices. One of the goals is to allow countries to better quantify the trade-offs in alternative scenarios that are evoked when policy makers design and evaluate Poverty Reduction Strategy Papers (PRSPs). For example, what is the poverty impact of changes in taxes and public spending in education and health? Another goal is to improve the evaluation of the consequences of economic policies in general and/or of any exogenous shock that may result from the process of economic integration or “globalization.” As we know, that process can affect countries through a number of channels, e.g., migration, tariffs, market access, re-shaping the production structure, commodity prices, international interest rates, exchange rate fluctuations and the availability –and direction-- of public and private capital flows. This Toolkit (TK) website assembles best practices and a description of the most robust available techniques and tools for Poverty and Social Impact Analysis or PSIA. The site reviews available methods applicable to various situations and policy fields, from the simplest, e.g., partial equilibrium effect of a tax change, to the most complex ones like for instance the general equilibrium effects of a change in foreign trade policy. In some cases, software is also made available. Microeconomic Techniques The microeconomic techniques of this toolkit focus on the poverty and distributional incidence of public finance — taxation and spending — at the individual, or household level. Here, observations come from various types of sample surveys, mostly nationwide labor force and household expenditure surveys but also ad-hoc surveys often undertaken to evaluate specific policies. Macroeconomic Techniques The macroeconomic techniques of this toolkit consider tools to evaluate economic policies that affect poverty through changes in both the structure (output growth, sectoral composition) and the parameters (prices, factor income) of the macro economy. These tools are usually composed of macro-frameworks and macro models linked to household data either at an individual level or regrouped into representative groups of households. Users should remember that economic policy choices need to be evaluated and monitored ex-ante and ex-post for their impact on poverty and distribution. Ex-ante evaluation comprises quantitative techniques — both micro and macro — that try to "predict" the distributional, poverty and other effects of policy changes in the field of taxes, subsidies, trade regimes, exchange rate regime, etc., prior to their implementation. Ex-post evaluation comprises quantitative techniques — both micro and macro — that evaluate the actual impact of policies, the distance from what was intended to be achieved and actual outcomes. Users should also be aware that all model have limitations, are based on assumptions and are only designed to address particular issues. It is critical to realize that no single model can answer all the questions. To get the maximum benefits from these tools and to avoid misinterpreting results imply also working with country economists that know best their own local context and modeling problems. This website intends to be a community of practice so that users can pose questions (e.g., on assumptions, value of coefficients, etc.) and get answers from an expert(s) and use it as a way to improve the tools. Links with Other Sites and Work SimSIP (Q. Wodon) is a set of user-friendly Excel-based simulators that facilitate the analysis of issues related to social indicators and poverty. Originally, the simulators were prepared to help Governments preparing Poverty Reduction Strategies, but they can be used for other purposes as well. A similar type of software, PovStat (G. Datt and T. Walker) has been developed and an example of application is given above. The World Bank Institute (WBI) has also developed the Integrated Macroeconomic Model for Poverty Analysis (IMMPA) built by P.R. Agenor, A. Izquierdo and H. Fofack [2000]. IMMPA is a more complex tool that tries to provide a unifying framework to integrate a financial sector, a broad range of macro-economic closure rules and poverty and distributional analysis using representative groups of households within a computable general equilibrium approach. In addition to its own products and activities, WBI collaborating with others units in the World Bank groups will have a key role in disseminating (through training, websites or discussions) the tools in this toolkit. Directions for the “future” and other “cutting-edge” techniques While the TK will provide a direction, we are not recommending at this stage that it includes complex micro-macro models. However, economists working in a country with a set of more complex issues (e.g., macro-financial issues, banking crises, choices between types of targeted social transfers, etc.) need also to be informed (through a toolkit Newsletter) that more advanced tools exist and are under testing. At least three other experiments are well under way: Economists could possibly engage in further experimentation with the appropriate experts. We will provide in the Toolkit website examples of applications that represent the "cutting-edge," the "future" where we are in less solid ground than for the TK itself but where we are confident that promising results will come soon. This will also come around the end of this fiscal year with country cases for Indonesia and Brazil.
It must also be kept in mind that there are even more complex issues that need to be addressed to deal with questions which are practically not covered for the time being. This is true in particular of truly dynamic distributional evaluations of educational or health policies. The effects of these policies on individual and aggregate incomes may take one or two decades to materialize. Microsimulation tools with this horizon and with adequate links with long-run growth models have to be designed. For the moment, not much can be introduced in the TK at this respect. But at least ideas for experimentation should be made explicit so that all complementarity between practical concerns and research interests be fully exploited in the future. Back to Tools and Methods for PSIA |
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