Poverty and Social Impact Analysis in the World Bank

1. Poverty and Social Impact Analysis in the World Bank March 2006 Aline Coudouel Poverty Reduction & Economic Management The World Bank

2. What PSIA does • Analysis of distributional impact of policy interventions on the well-being of different groups, with a particular focus on the poor and vulnerable. • PSIA helps to: • Keep a pro-poor focus in policy reform • Underpin policy reforms with empirical evidence • Provide inputs towards a better policy dialogue • Contribute to country ownership of policies Ultimately: Enhance the effectiveness of interventions

3. PSIA in the World Bank Initial efforts: • Develop users’ guide • Prepare technical guidance • Intensive training • Provide additional funding to teams Results: • Over 150 PSIAs since 2002, in 72 countries • After phase with incremental funds, now funded from regular budgets

4. Regional distribution of PSIAs with incremental funding Number of PSIAs

5. Sectoral distribution of PSIAs with incremental funding

6. Five analytical lessons • Impact on different groups • Operational (and reform-specific) groups • Negative and positive impacts, influence • Political economy of reforms is critical • Multiple channels, short and long-term • Net impacts (affect direction/size of impact) • Institutions matter • Transaction costs, incentives, performance, capacity • Choice of methods and team • Multiple data sources, complementarity • Multi-disciplinary best, but hard

7. Five operational lessons • Reform identification • From national policy process, selectivity essential, specific works best • Analytical work • Rigorous and unbiased, transparent and easy to understand • Interface analysis/policy making • Reform implementing agency close to analytical process • Policy dialogue and debate • Align with broader policy cycle • Policy process no clear beginning/end (continuous scrutiny) • Participation • Part of broader policy process (choice and debate) • No monopoly on analysis (but objectivity and rigor) • Stakeholders’ perception part of inputs into analysis

8. Challenge: Consolidating success Steady state scenario • PSIA conducted by countries, part of PRS process • WB relies on PRS (or similar) In the meantime… • Part of operational policy on Development Policy Lending (OP 8.60) • Mainstreaming in analytical and operational tools - Country Assistance Strategy, analytical pieces (PA, CEM, PER), lending (PRSC, DPL)

9. Ensuring the future: country capacity • Capacity to analyze and monitor: • Research organizations and government • Data collection and analysis • Methods should be understandable and replicable. • Capacity to use results: • Ability of policymakers to utilize the findings • Dissemination transparent • Communication of results in right format • Interest for evidence-based policymaking Multi-donor effort ongoing.

10. www.worldbank.org/psia • PSIA User’s Guide • PSIA e-learning course • PSIA Good practice Note • Economic tools for impact analysis: • “The impact of Economic Policies on Poverty and Income Distribution: Evaluation Techniques and Tools” (Bourguignon and Pereira da Silva, 2003) • “Evaluating the Impact of Macroeconomic Policies on Poverty and Income Distribution Using Micro-Macro Linkages Models” (forthcoming) • Tools for Institutional, Political and Social analysis • www.worldbank.org/tips • Country examples, case studies (book out June 2006) • Guidance on specific sectors • Trade, monetary policy, utility provision, agricultural markets, land policy, education (Volume 1) • Health, labor market, pension, decentralization, public sector downsizing, taxation, and macroeconomic modeling (Volume 2)