Antigua Monday, December 7, 2009

What is PSIA? The analysis of the distributional impact of policies …on the welfare of different socio- economic groups and stakeholders with a particular focus on the poor and vulnerable 2

What is the purpose of PSIA? To encourage evidence-based policy dialogue Improve policy choices and design Ensure that the well-being of poor and vulnerable is addressed 3

Where does PSIA fit in? PSIA is not entirely new, it is closely linked with: Impact evaluation Poverty Assessment Social cost-benefit analysis Policy research Focus is on policies, as opposed to programs / projects 4

The Context PRSPs (Poverty Reduction Strategy Papers) have raised importance of assessing impacts of policy reforms on the poor and underpinning development strategies prior to implementation Based on recognition that prior World Bank work was less focused on impacts of specific reforms – now a systematic application PSIA a response to a call for assessing the policy options of reforms

Integrating PSIA into the policy process Ex- ante: inform choice, design and alternative policy options (most typical and effective) During implementation: refinement of the reform, reconsideration of paces, strengthening of mitigation measure Ex-post: analysis of actual impact to project possible future impacts of a reform

Poverty Diagnostic Strategy design Implementation of reforms Ex ante During Ex-post Monitoring PSIA in the PRS-Cycle

In what ways can PSIA be useful? 8 Promotes and strengthens evidence-based policy making Aligns policy with poverty reduction strategies Identifies winners and losers Fosters debate on policy reform Encourages policies takes account of the poor and vulnerable Can identify mitigation measures when negative impacts are expected Enhances transparency and accountability in the policy making process.

How can PSIA contribute to policy? Describes how policies affect living conditions and how this filters down to the poor and vulnerable Assesses the social implications of policies using data collection methods and tools that facilitate group discussion and assessment Compares policy options in light of their potential social impacts Identifies the channels of transmission by which the impacts are being spread (usually jobs, prices, access to goods and services; assets and resources; transfers and taxes) 9

PSIA Tools and Techniques A variety of tools and techniques drawn from both economic and social approaches. Mixed methods – using qualitative and quantitative techniques – is good practice The choice of tools depends on: Type of reform being analyzed, Information available, and Resource constraints (funding, expertise, time) Each PSIA will typically call for a specific mix of tools 10

Core Elements of the Analysis P: Focus on income dimensions and distributional effects Social and economic distribution Spatial distribution, Gender distribution Age distribution, Ethnic distribution S: Focus on social and political dimensions of reform Stakeholders affected and affecting the reform Institutions (capacity, structure, incentives) needed to change status quo. Which rules of the game will change, how and to which extend? Political Economy Analysis: Who supports, who opposes the intervention, why and how can opponents be addressed?

Core Elements of the Analysis I: Assessing anticipated Impacts –Direction & magnitude of impact, nature and size Positive and negative impacts Short term and long impacts Direct and indirect impacts A: Robust Impact Analysis is based on A tool box of econometric, social science tools Interdisciplinary research design and application of qualitative and quantitative methods  achieves depth and rigor via triangulation Research design, including selection of methods depends strongly on the country and reform context

Social Implications of the Global Economic Crisis on the Caribbean PSIA currently in progress differs from most in several key aspects: Not focused on one particular policy, but on impact of an external shock, and the various policy responses Heavy reliance on qualitative data Multi-country study Implications: Allows for broad cross country comparisons Potential distributional impacts are identified, but not quantified Serves as a preliminary study for follow-up, policy- specific PSIAs

Thank you! 14