INSTITUTIONALITY OF POVERTY REDUCTION POLICIES AND PROGRAMS IN LATIN AMERICA

1. INSTITUTIONALITY OF POVERTYREDUCTION POLICIES AND PROGRAMS IN LATIN AMERICA Document prepared for the Regional Policy Dialogue Poverty Reduction and Social Protection Network Inter-American Development Bank Carlos H. Acuña and Fabián Repetto Washington, DC April 24-25, 2006

2. STRUCTURE OF PRESENTATION

3. Poverty in Latin America: multidimensionality and evolution of state responses

4. Five issues worth highlighting… • Certain types of intervention logic and institutional design will arise depending on the definition of poverty (including its causes) adopted by the different governments. • The “official” definition of poverty implies conceptual as well as ideological and power-relation aspects. • In recent history, the region’s major milestones in the fight against poverty have included Social Funds, focalized and limited programs, Poverty Reduction Strategies, and Conditioned income transfer programs. • A number of ideas aimed at making interventions on poverty consistent are gaining strength, whether by focusing them on the family, the life cycle or the local territory. • It is important to recognize that the type of good or service provided by a poverty-fighting program will determine the kind of institutional design and operational management required.

6. Bringing up (once again) the issue of Latin American heterogeneity (I) National/regional differences: • By political regime • By political-regional organization • By political-governmental organization • By political-party organization • By political-state organization • By civil society organization • By relative weight of urban vs. rural aspects • By relative weight of racial, ethnic and cultural homogeneity/heterogeneity • By type of economy and insertion into the global economy • By degree of autonomy vis-à-vis external agents

7. Bringing up (once again) the issue of Latin American heterogeneity (II) Differences by type of poverty: In addition to the aforementioned issue that “poverty” as a matter of public policy implies ideological and political construction, attention must be paid to other aspects of the phenomenon: • Presence or absence of cultural gaps. • Presence or absence of ethnic, racial and/or religious gaps. • Presence or absence of regional and/or geographical gaps. • Presence or absence of “seasonal” conditions, like “new” vs. “historical” poor segments. • Differential impact of poverty on diverse vulnerable subgroups, including groups not affected by any of the gaps mentioned above (poverty and exclusion have a different impact on women, children, teenagers, men or disabled individuals).

8. THE ARENAS OF POVERTY FIGHTING Policy and Program System (PFS) The phrase “poverty-fighting policy and program system” (PFS) will be used to refer to the set of institutions, actors and practices (state-run, non state-run and private) aimed at reducing poverty in a certain society.

9. Institutionality of the Poverty-Fighting Policy and Program System

10. Government/coordination subsystem (I) Responsible for the government function and entitled to: • set the goals and objectives pursued by the policy that will guide the system; • establish priorities and intervention methodology (strategies); • assign duties and responsibilities to the areas and actors dependent upon the organization; • allocate the funds required to fulfill the activities related to compliance with the duties and responsibilities assigned; • monitor progress of the activities, compliance with the intervention methodology and fulfillment of goals in time and form; • systematize pertinent information and evaluate the policy implementation process; • redefine the policy (its implications, objectives, goals and intervention methodology) in accordance with the conclusions drawn from the evaluation.

11. Government/coordination subsystem (II) Responsible for the coordination function, which is to be understood as: “…the process whereby synergy is created between the actions and resources of the different agents involved in a specific field of public management, coincidental with the establishment […] of a system of formal and informal playing rules that operate within the same process and whose application represents significant incentives for the participating actors to cooperate […]. The process in question will create actual and valuable coordination once it begins setting priorities, allocating responsibility by agreement, deciding which and how many resources to mobilize and, last and perhaps most important, implementing rules in a manner that comes significantly close to the goals set by those responsible for social policies and programs” (Repetto 2005).

12. THE VARIABLES OF POVERTY FIGHTING Institutions and Actors An analysis of the decisions concerning poverty reduction policy should consider: a)The Institutional Framework where the interaction takes place, by defining: formal rules informal rules  b)The participating actors defined by reference to their: Interests Resources Ideology  c) Poor social groups without the resources to resolve their collective action problems and, consequently, without becoming participating actors: Interests Resources (existing and missing) Ideology

13. Main lessons and conclusions of the poverty-fighting experiences over the last two decades

14. Decentralization, Participation and Intersectoriality: What do we know? (I) Actors involved and political resources • In general, impoverished sectors lack significant political power resources (beyond their potential capacity for mobilization and electoral influence), which facilitates the introduction of clientelist practices by decision makers and bureaucrats. • The fight against poverty implies involvement from multiple actors inside and outside the State, thus making collective action an increasingly complex process. • Coordinating the multiple groups and actors involved requires a formally credible and authoritative “catalytic agent”; in addition, the different state sectors should receive some sort of incentive to take steps in the fight against poverty. • Decentralization did not stand by all its promises to promote participation and improve the quality of democracy. • Let us not forget that strengthening the role of the poor as influential actors will affect power relationships and (potentially) the contents of the entire set of public policies.

15. Decentralization, Participation and Intersectoriality: What do we know? (II) The importance of budgetary and organizational resources • Dealing with poverty from a comprehensive perspective calls for a type of budgetary allocation that does not undermine “the purpose or organizational identity” of classic social ministries. • The importance of achieving a common vision between those allocating the budget and those responsible for the fight against poverty, as a way to relieve the Ministry of Finance from conducting it on its own. • Hardly ever does the participation of impoverished groups have an influence on the core aspects of budgetary allocation. • There is still insufficient knowledge on the transit from mono-sectoral solutions with dispersed allocation of resources to integrality-boosting coordination perspectives. There is an evident lack of technical expertise in coordination. • Municipalities tend to have very little incidence on the poverty-fighting programs that have been decided and funded by the central government; besides, their management capacity is usually very heterogeneous.

16. Decentralization, Participation and Intersectoriality: What do we know? (III) The rules of the game and their impact on the fight against poverty • The path chosen to fight poverty is usually very weakly institutionalized, and there is little clarity on the assignment of responsibilities. • Too much confidence has been placed on “formal institutional engineering”, which has rested on heaping amounts of laws, decrees and regulations. • Transition has begun towards the establishment of agreements and clear rules between the State and the citizens who receive the goods and services of certain poverty-fighting programs (e.g.: Oportunidades, Chile Solidario). • Although still in some exceptional cases, attempts are being made towards a more accurate description of State responsibilities and resources in terms of who should do what to fight poverty.

17. Summary of the lessons learned?(aspects to be considered I) • The first aspect to be considered is that poverty-reduction strategies must stay away from the temptation of applying universal recipes: Latin America exhibits very diverse social and national conditions, and very different types of poverty. • The second aspect to bear in mind is that the new institutional framework designed will build upon the previous (historical) one in terms of its formal and informal rules, and must conform to the governing coalition’s definition of poverty, its causes and possible consequences (the coalition includes other sectors besides the government itself).

18. Summary of the lessons learned? (aspects to be considered II) • Greater empirical information seems to be required (especially in view of Latin America’s characteristic heterogeneity) on how the different types of decentralization, participation and intersectoriality affect the fight against poverty and, more importantly, what happens when different types of each of these three institutional arrangements are combined. • Designing better poverty-fighting institutions also implies the recognition of significant potentialities of centralized, non-participatory and sectoral matters. • Building and increasing capacities must be the guiding principle of any institutional design aimed at fighting poverty, not only in the state sphere (at the national, sub-national and local levels), but also in the civil society arena. When referring to “capacities”, we must avoid a reductionist vision and concentrate on the entire set of political, budgetary and organizational capacities. • Although the institutional framework and its hierarchical structures deserve some attention, the main focus should be on strengthening intermediate institutions that help create the conditions to ensure continuity of those social policies that are pertinent to a successful fight against poverty.

19. In brief... Budgets for poverty-fighting actions: Poverty-reduction strategies: a) must conform to the specific national characteristics by considering the peculiarities of the poverty they are geared at as well as the political, economic and organizational capacities that establish the limits to feasibility; and b) must be designed, decided and implemented by analyzing the strengths and weaknesses of the institutional framework surrounding them. The first step of institutional strengthening: The national government/coordination subsystem must be the starting point of any political, institutional and organizational strengthening of each country’s poverty-fighting system. Without sufficient autonomy, cohesion and collective action capacity for this national management/leadership body to perform its duties, the chances to generate and support a poverty-fighting strategy will be non-existent.