1 / 22

State Role in Welfare in Developing Countries: A Case Study of Bangladesh

State Role in Welfare in Developing Countries: A Case Study of Bangladesh. Mozammel Huq Department of Economics University of Strathclyde, Glasgow 30 May, 2014. Structure of the paper. Introduction Main objective of the study State role in Welfare: Theoretical P erspectives

milly
Download Presentation

State Role in Welfare in Developing Countries: A Case Study of Bangladesh

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. State Role in Welfare in Developing Countries:A Case Study of Bangladesh MozammelHuq Department of Economics University of Strathclyde, Glasgow 30 May, 2014.

  2. Structure of the paper • Introduction • Main objective of the study • State role in Welfare: Theoretical Perspectives • Poverty in Bangladesh • SSN Programmes • Moving beyond the Basic SSN Programmes • The Way Forward • Concluding Remarks

  3. Introduction • State Role in Welfare: a fascinating proposition? • A genuine question: Why the state should play a role at all and, if so, to what extent • A genuine outcome of democratic development

  4. Main Objective • To view the state role in welfare as it has been emerging in developing countries, using Bangladesh as a case study. • And, in the process, analyse the aspiration of moving from the initial goal of poverty removal to some comprehensive welfare measures. • Thus, we are trying to widen the focusin terms of a comprehensive welfare approach as a long-term vision.

  5. Theoretical Perspectives (only some key points) • As with the efficient allocation of resources, the economists have remained concerned with the distribution of income. • Society's view of just distribution may conflict with the existing distribution. In particular, there is concern with the injustice in the original distribution of endowments. • Also factor market imperfections, especially monopoly pricing of the factors of production, can be an important cause of income inequality.

  6. Theoretical Perspectives (cont’d) • Private redistributions made voluntarily, say through charities, are riddled with problems, a major concern is that the task may be too big for the private redistribution to execute. • Musgrave (1959), among others, would like to justify state intervention to maximise social welfare. • Moreover, various charities may compete with each other as a coordinating role will be missing. Indeed, the state can perform a redistribution policy in a coordinated and comprehensive way. (See, e.g. Brown & Jackson 1990.) • However, Hayek (1960)and other libertarians are rather concerned that state intervention in income distribution will cause curtailment of personal freedom and, in the process, hamper growth. • Hence the emphasis on voluntary contributions made by individuals personally and/or help channelled through NGOs.

  7. Poverty in Bangladesh • The early years: Very high levels of poverty • A major challenge to the economy: Is it going to remain a “bottomless basket”? • Indeed, “a test case of development”.

  8. Fig 1: Bangladesh - Dramatic Fall in Poverty Source: Bangladesh Bureau of Statistics, Household Income and Expenditure Survey (various years).

  9. SSN Programmes in Bangladesh • In Bangladesh, the SSN programmes got a serious start in the early 1990s with the democratic government taking over in 1991. • There now exists an extensive range of SSN programmes, as many as 90 or so (World Bank 2006; Khuda 2012; GOB 2011 Part 2). • “The bulk of the programmes are implemented through government channels. However, non-government channels play an important supportive role particularly in those programmes focused on sustainable graduation. 97% of annual allocations are spent through 30 major programmes.” (Rahman and Chowdhury, 2012, p. 3). • The programmes are mainly rural based, those with “an urban focus as yet remain minuscule , as only 0.7% of the total allocation” (ibid, p. 3).

  10. Table 1: Major Types of SSN Programmes TYPEPROGRAM EXAMPLES • Cash Transfers • Old Age Allowance • Widowed and Distressed Women Allowance • Disabled Allowance • Conditional Cash Transfers • Primary Education Stipend Program (PESP) • Stipends for Female Secondary Education • Public Works or Training-based or in-kind Transfer • Rural Maintenance Program, Food for Work • Vulnerable Group Development (VGD) • Employment Generation Program (EGP) • Emergency or Seasonal Relief • Vulnerable Group Feeding • Gratuitous Relief (GR); Test Relief (TR) • Open Market Sale (OMS) Source: GOB (2011), 6th Five Year Plan, Part 1, o.166.

  11. Major SSN Programmes: Govt Expenditure Allocations • Govt expenditures (as % of GDP) on SSNs from 1999-00 to 2011-12 are shown in the next slide (Fig 2). • Except the Food for Work programme (in which financial allocation by the Government of Bangladesh decreased from Taka 8,060 million in 1999-00 to Taka 6,224 million in 2011-12), all the other major SSN programmes have witnessed an increase in allocations . • Such increases are particularly marked in Honorarium for Freedom Fighters, Primary Education Stipend Project, Old Age Allowance, and the Allowance for Destitute Widows.

  12. Fig 2: Government Expenditures on SSNs: 1996-7 to 2010-11 (as % of GDP)

  13. Review and Assessments • The emergence and the growth of the SSN programmes in Bangladesh have attracted attention from a large number of researchers. • Various international organisations including the World Bank, UNDP and FAO have also shown a keen interest in it. • Findings from selected studies (brief summary, next slides).

  14. Impact of SSNs on Poverty Decline,Findings by Inchausteet al (2012) • Negligible role of public transfers in poverty reduction in Bangladesh; “leakages and small size of individual transfers made their impact on poverty negligible, despite an expansion of transfer programs during the last decade”. (Inchauste et al, 2012, p19). • In contrast, labour-market related factors contributed to 61% of poverty decline in Bangladesh, “pointing to an increase in real wages and higher productivity as the main contributors to poverty reduction.” (p. 4) • International remittances, and also decline in population growth and fall in the dependency ratios also contributed significantly to poverty reduction in Bangladesh.

  15. Key Issues & Concerns • Although the SSN-support has been of particular help to some needy groups and areas, e.g. poor elderly, destitute women and the poverty-stricken parts, the programme is still low in coverage and size. Also, day labourers and beggars, among others, are also found to be left out. • As strongly argued by the World Bank (2006), Bangladesh seems to spend somewhat below the norm (less than 2% of GDP) – as compared to 2% for Africa and close to 5% for South Asia. (The serious resource constraint faced by the Govt in Bangladesh is, understandably, a major hindrance.) • There are also a number of other concerns (see below).

  16. Key Issues & Concerns (cont’d) • A major concern relates to the deficiency in administration of the SSN programmes. Some 30 or so Government Ministries are reported to be involved, and without any inter-Ministerial collaboration. • Also, at times various Government and non-Government agencies are found to be working without any coordination. • “Leakages” are frequently reported, and in some programmes as high as 26% (GOB, 6th Five Year Plan, Part 1, p.168). • Hence the need for improving the administrative capacity and, in particular, involving central co-ordination, thus institution building demanding a serious attention (World Bank, 2010).

  17. Moving Beyond the Basic SSNs:Case of a Long-term Vision • Many developing countries are still struggling to remove extreme poverty. • Also, there are strong oppositions to create welfare provisions. • Ideological pressures following globalization. • However, with the march of democracy, the West European model is likely to remain a cherishing dream.

  18. The Way Forward • Realistically, any hope of comprehensive welfare measures is likely to remain a long term vision. • Two key components: • Need to grow steadily government expenditures on welfare provisions as a percentage of GDP and • Need to keep improving the administration of such welfare measures.

  19. Concluding Remarks • Need to maintain a strong competitive market economy, thus helping to keep improving the resource allocation, while also the state remaining active in income distribution with carefully selected (and also well administered) welfare measures. • The short-term goal is likely to remain the eradication of poverty. • Any success in providing comprehensive welfare measures will be dependent on how the capacity pf the state has improved, involving two main areas: (a) social welfare allocations as a percentage of GDP and (b) an organisational set up to administer the programme efficiently.

  20. Thanks!

More Related