Poverty and Social Change in Colombia Diagnostic and Main Challenges Juan M. Ramírez Fedesarrollo, Associate Researcher (with the contribution of Roberto Angulo, Inclusion, Director) Revisiting Socio-economic policies to address poverty in Middle Income Countries Beirut, May 8, 2018
Content 2 1. Social Change in Colombia 2002-2016 2. Main factors behind social change since 2002 3. Main challenges
1. Social change in Colombia 2002-2015
Ecuador Costa Rica Guatemala Chile Argentina Honduras Paraguay Colombia (new) Colombia (new) Uruguay Mexico Colombia (previous) Dollars PPP Measurement Poverty Line 4 Poverty Line in Colombia vs. other L.A. Countries Daily value per capita LP in dollars PPP
Measurement Multidimensional Poverty 5 Education 0.2 0.2 0.2 0.2 0.2 Childhood & youth conditions Labor Health Public utilities & housing conditions Educational achievement Literacy 0.1 School atendance No school lag Access to child care services Absence of long-term unemployment Formal employment 0.1 Health insurance Access to health care services when needed 0.1 Access to improved drinking water Adequate elimination of sewer waste Adequate flooring Adequate walls Absence of child employment 0.05 No critical overcrowding 0.04
Social change in Colombia 2002-2015 60% 50% 40% 30% 20% 10% 0% 50% 32% 16% Poor Vulnerable Middle class High 2010 2013 39% 37% 36% 31% 28% 25% 2% 2% 2% Since 2013 middle class surpasses poor population. Since 2010 vulnerable population is the largest group. THIS IS A CHALLENGE! Source: calculations Angulo et al (2013) for 2002-2011 y DPS for period 2012-2015 based in DANE, GEIH and methodology by the World Bank
Extreme Poverty Ratio (%) 35 30 33.1 Rural 25 20 15 17.7 National 15.4 10 12.2 Urban 7.4 5 5 0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Source: DANE -ECH (2002-2005) and GEIH(2008-2016)
Gini Coefficient 0.600 0.572 National 0.560 0.550 0.550 Urban 0.537 0.517 0.500 0.518 Rural 0.495 0.450 0.471 0.458 0.400 0.350 0.300 Source: DANE -ECH (2002-2005) and GEIH(2008-2016)
Multidimensional Poverty Incidence (%) 9 100 90 80 70 60 50 40 30 87 60.4 51 77 49.2 40 Rural National Urban 60 44.8 53.1 30.4 Multidimensional poverty reduction has been larger than monetary poverty Are social policies more effective than productive policies 40 37.6 20 27 23.5 20.2 17.8 10 14.4 12.1 0 Source: Ocampo et al. (2015), DANE- ECV.
Main variables explaining changes in MPI 1997-2016 Deprivation 1997 2016 Change (p.p.) Non Health Insurance 62.3 9.6-52.9 Low educational achievement 70.0 46.4-23.6 Barriers to access childcare services 28.8 8.7-20.1 Critical overcrowding 23.9 9.5-14.4 Source: Ocampo et al. (2015), DANE- ECV.
Main challenges remain in more rural territories 43.3 IPM* (%) 48.1 53 59.1 Monetary Poverty (%) 51.2 51.5 49.1 42.3 39.4 55 27.7 30 32 31.7 18.8 20.9 Ciudades Cities and y agglomerations aglomeraciones Intermediate Municipios Municipalities Intermedios Municipios Rural Municipalities Rurales Municipios DispersedRural rural Municipalities Disperso Cities Ciudades and y agglomerations aglomeraciones Intermediate Municipios Municipalities Intermedios Municipios Rural Municipalities Rurales Dispersed Municipios rural Rural Municipalities Disperso Cabecera Urban Rural Cabecera Urban Rural Source: DNP, Mission for Rural Transformation (2014) *Adaptation of the official-ipm
And specially in the post-conflict territories Multidimensional poverty incidence (H) in prioritized and nonprioritized municipalities (% of poor people) Intensity of average multidimensional poverty (A) in deprivation of poor people Source: DNP, Mission for Rural Transformation (2014) *Adaptation of the official-ipm
2. Main factors behind social change since 2002
GDP growth and monetary poverty 8.0 GDP growth (%) and poverty reduction 7.0 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017-1.0 GDP Poverty reduction Source: own development based on DANE Synthesis and National Accounts and GEIH. * At constant prices, seasonally adjusted series.
Growth, distribution and inflation effects on monetary poverty change (Shorrocks decomposition) 2015-2016 6 4 3.3 3 4 2 0 0.2 0.8 0.2-2 -4-2.3-0.8-1.8-0.5-1.7-6 -8 Nacional National Cabeceras Urban Rural -6 Crecimiento Growth Redistribución Redistribution Línea Line Total Source: DANE (2017)
The role of Conditional Cash Transfers (CCT) in the reduction of poverty The Conditional Cash Transfers (CCT) contributes to the reduction of: Monetary Poverty Extreme Poverty Total 1,4 p.p. 1,5 p.p. Urban 0,9 p.p. 0,8 p.p. Rural 3,3 p.p. 3,0 p.p. 16
6. Main challenges
Main challenges 18 Despite significant social progress there are large poverty gaps in regional terms: urban vs. rural territories and large gaps of disconnected and posconflict regions. Growth has not been sufficiently pro-poor: high inequality and high informality. Conditional Cash Transfers have a positive but limited impact on monetary poverty alleviation. A big challenge is to increase productivity to achieve a higher potential growth and to overcome the middle income trap.
Growth Decomposition in L.A. Countries 2000 2016 TFP Physical Capital Human Capital Source: DNP based om The Conference Board
Main challenges 20 Multidimensional poverty reduction has been larger than monetary poverty Are social policies more effective than policies to connect poor people and regions with markets? Behind the factors explaining the largest reductions in multidimensional poverty there are specific and successful social policies: (a) access to health services and health insurance, (b) early childhood services and (c) educational attendance policies. o Lessons from effective coordination horizontally (across various sectors) and vertically (across national, regional and sub-national levels).
Main challenges 21 The main challenge is to accelerate social change: o Modernizing public policies and policy instruments with second generation objectives: productive inclusion, middle class consolidation, social mobility, Sustainable Development Agenda. o Social change speeds up but public policies tend to lag behind. o More effective policies to connect poor people with markets. o Example: Jóvenes en Acción (Youth in Action) o Address regional inequalities and gaps: rural urban, disconected territories. o o o Rural urban linkages To increase spillovers from the System of Cities The role of intermediate cities to promote rural development.
The SDA is an opportunity to address regional inequalities Households percentage Indicative regionalization, percentage of urban households with quantitative housing deficit Caribbean Middle-South Amazon (b) Middle-east and Bogotá Coffee area and Antioquia Plains (b) Pacific 2015 baseline 2018 goals 2030 goals Source: Calculations DNP (2017) based on DANE - Large Integrated Household Survey (GEIH). Weighting of goals for closing gaps and urban households
Main challenges 23 The main challenge is to accelerate social change: o Demands for effective horizontal and vertical coordination. o o Contratos Plan (Plan Contracts) The need of a Government Center for social change o A different approach to decentralization. o To go beyond fiscal federalism schemes o Capacity of local governments to coordinate with national and regional governments, and other municipalities. o Capacity agendas of local governments to coordinate intersectoral o Capacity of local governments to make clear local needs to national government and to adjust delivery of publics goods and services.from national government o Capacity of local governments to work with NGOs, international cooperation agencies and to coordinate initiatives with private sector.
Poverty and Social Change in Colombia Diagnostic and Main Challenges