The Changing War on Poverty

• DOI: http://doi.org/10.1111/puar.12364
• Published date: 01 May 2015
• Date: 01 May 2015

The Changing War on Poverty 359

Public Administration Review,

Vol. 75, Iss. 3, pp. 359–360. © 2015 by

The American Society for Public Administration.

DOI: 10.1111/puar.12364.

Marcelo M. Giugale is senior director

of the World Bank ’ s Global Practice for

Macroeconomics and Fiscal Management

and a fellow of the National Academy of

Public Administration. This column is based

on his 2014 TED: Talk “Ending Poverty.”

Twitter : @Marcelo_WB

Perspective

Marcelo M. Giugale

The Global Practice for Macroeconomics and Fiscal Management

 e Changing War on Poverty

O ver the past decade, identification and com-

munication technologies have revolutionized

the way developing countries fight poverty.

This started in Mexico in the mid-1990s when the

government decided to transfer cash directly to the

poor. The payments were conditional—the recipients

had to keep their children vaccinated and in school—

and the money was literally transported by officials

into remote villages. The idea made no political sense,

for it put the spotlight on the country ’ s persistent

poverty—an embarrassing reality for a party that had

been in office for almost 70 years. The Mexicans did

it anyway.

Today, about 70 developing countries, 35 of which are

in Africa, have followed the example. They use digital-

ized biometrics to identify people, and cell phones or

debit cards to make the transfers. India alone has bio-

metrically identified half-a-billion people in about five

years, at a cost of around $4 per person—a bargain

if you compare it with the economic cost of keeping

someone in legal inexistence. Most evaluations show

that, as a tool for social assistance, the cash transfer

programs have worked well.

But the programs transformed much more than social

assistance. By forcing governments to know the poor

by name, individually, they forged a new kind of state–

citizen relationship that is changing the balance in the

war on poverty. First, a massive amount of information

is being generated in real time. We now know where

the poor live, how much they earn, and how many

kids they have—the personal information you collect

when you register someone in the program. But we

also know what they consume, pay, and need—the

data that become available as they spend the transfer.

This can lead to better targeting, smarter design, less

duplication, higher progressivity, closer monitoring,

and more rigorous evaluation. In other words, you can

improve the quality of public expenditures.

Second, you can now listen to the poor—literally.

The same cell phone used to transfer the cash can be

used to build continuous panel surveys. That is, you

can call and follow the same individual or household

over time and ask questions like: “You had told us

that rice is your family ’ s staple food; we noticed the

price of rice has doubled in your country. Are you

eating less rice? Are you eating less?” This is the kind

of information that helps you deal with shocks faster

and better. Have you ever wondered why there was

no social explosion in Mexico when the global crisis

of 2008–09 brought the American economy to a

screeching halt? The fact that the Mexican govern-

ment hiked—by 15%—the cash transfers to the five

million poorest families must have surely played a

role.

Third, you can direct more public funding from the

supply to the demand for services. Take, for example,

universal health coverage. A number of governments

in emerging economies—China, Chile, Georgia,

and Nigeria, to name a few—are experimenting with

paying for the medical treatment of people who could

not otherwise afford it. The innovation is that patients

can choose between public and private suppliers. The

former are then pressed to reform and compete. Think

of this as school vouchers but for healthcare. They do

not work everywhere—they are useless in areas with

no alternative providers—but where they do work,

they make a huge difference.

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Fourth, you can put an end to long-standing fiscal

aberrations. Gasoline subsidies are a prime example.

They are captured mostly by the rich and, in several

countries, absorb more resources than, say, primary

education. Trying to dismantle, or even cut, those

subsidies has many times been met with violent social

unrest—witness the rioting in Nigeria in early 2012.

But others have found a way. In 2010, Iran came up

with an interesting idea: it converted the subsidy into

cash and transferred it to bank accounts opened for

every Iranian citizen—$40 per person per month,

to be precise (Guillaume, Zytek, and Farzin 2011).

Certainly, these transfers have no impact on the lives

of the rich, but they may be the difference between