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Poverty Alleviation

In recent decades, Latin America and the Caribbean have made significant progress in terms of improving the living standards of the population. Nevertheless, poverty remains a central problem, and large differences can be seen among countries and within them. Nearly one in five people still lives on an income below US $2.50 per day.

The IDB, through its Division of Social Protection and Health, is working with countries to effectively protect those whose standard of living falls temporarily or persistently below levels considered acceptable by society, and to provide opportunities and an acceptable standard of living for all citizens.

Consolidating the process of poverty reduction certainly requires achieving and sustaining strong levels of economic growth. However, growth does not automatically translate into improvements in the living standards of those with little capacity to take advantage of opportunities created by economic progress. The region remains the most unequal in the world, both in terms of access to opportunities and results. Many households are trapped for generations in cycles of low productivity. They have few productive assets (including knowledge and job skills); thus, they have no means to help their children to escape poverty in adulthood on their own.

In addition to important ethical implications and considerations regarding social cohesion, achieving a minimum standard of living is a basic prerequisite, without which the development of skills and competencies cannot be effective. It also allows low-income people to feel less exposed to situations that can endanger their livelihoods and life prospects, thereby leading them to put off making investments that can improve their and their children’s standard of living.

Our mission is to help countries obtain the analytical and operational knowledge they need to implement programs that deliver scarce fiscal resources to priority groups in an expeditious and efficient manner, and to strengthen the capacity of beneficiary families to take action and overcome poverty on their own terms. How do we do it?

We are committed to prevention. We emphasize the development of skills and competences that enable people to prevent or mitigate circumstances that may affect their means or prospects. For this strategy to be relevant to people living in extreme poverty, it is necessary to ensure access to an acceptable standard of living that will allow them to develop their skills and competencies.

We leverage progress. We ensure that social assistance and protection resources leverage other initiatives by families and governments, in order to help young children achieve better nutritional and health status and education. At the same time, we look for ways to fund and design programs that are compatible with the objective of gradually increasing social protection service coverage.

We encourage inter-institutional coordination. Since we understand that poverty is multidimensional, one of our priorities is to develop operational tools and strategies that facilitate coordination among multiple public and private institutions and agencies that work with low-income populations.

The IDB has extensive experience in the design, implementation and evaluation of poverty alleviation programs based on the above three principles. The most visible expression of this experience is the support that it has provided since the late 90’s via Conditional Cash Transfer Programs (CCTP). Almost every country in the region has used this type of program as a pillar of its strategy for alleviating poverty and inequality at some time in its development history, and the Bank has had a role in just about every one of those programs.

To a large extent, the popularity of the CCTP is attributable to its effectiveness, which has been proven through rigorous evaluation. The vast majority of these programs have shown positive results, including increasing the skill sets of poor households. In particular, results achieved thanks to CCTPs include: increasing food and caloric intakes in low-income populations; reducing the prevalence of chronic malnutrition, particularly in children under 2 years of age; increasing daily school attendance, and carrying out growth monitoring and preventive health checks; and increasing school enrollments and progression rates, particularly in rural and secondary schools.

These programs have also achieved attractive operational results. In this regard, highlights include their high degree of success in funneling needed resources to the poorest population subgroups and the implementation of reliable information systems to track both human capital investments and cash transfers to program beneficiaries. It should also be noted that CCTPs have been important in encouraging operational coordination among social sector agencies, which paves the way for the effective and integrated social spending.

With 10 years of experience in the implementation of social protection programs, the Bank will focus its future efforts on:

  • Ensuring effective access to nutrition, healthcare, early childhood stimulation, and high quality education, through targeted investments the improve the supply and quality of these services in areas where they are most needed
  • Updating the beneficiary selection process and ensuring that it is objective, clear, and transparent.
  • Adjusting the cash transfer mechanisms and incentive structures, as well as monitoring required program conditionalities, in order to ensure even more profound and sustainable behavior changes that will lead to increased investment in human capital by program beneficiaries.
  • Adjusting the form of financing, the selection process and the timing of programs in order to create incentives compatible with the formalization of employment.
  • Strengthening synergies with programs that support school-work transitions for young people.
  • Maintaining sound evaluation processes to measure the programs’ long-term impacts.
 

 

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