1. Commitment to Equity (CEQ): A Diagnostic and Ranking Tool of Latin American Governments’ Fiscal Policies First Phase: Wrap-Up Workshop CIPR & Inter-American Dialogue Tulane University, New Orleans October 27, 2010 Revised Version: November 17, 2010 Nora Lustig Dept. of Economics and Stone Center, Tulane University Non-resident Fellow, Inter-American Dialogue 1

2. MORNING: 9:00-11:45 Session 1: CEQ Diagnostics and Index: Background and Results in Three Pilot Countries: Argentina, Mexico and Peru Nora Lustig, Carola Pessino (via oovoo), John Scott and Miguel Jaramillo 10:15-10:30 Break CONTENTS: Background of project and intellectual content & results of CEQ 1.What is the Commitment to Equity project? 2.CEQ Project: Background 3.Why a CEQ? Inequality, Poverty and Fiscal Policy in LA 4.CEQ Diagnostics: Description and Results Highlights for Pilot Studies: Argentina, Mexico and Peru Presentations by Scott, Pessino and Jaramillo 5.CEQ Index: Description and Preliminary Results for Mexico and Peru 2 Outline of Workshop

3. 12- 1:30 --LUNCH: BROWN BAG (NORA’S COLLEAGUES FROM ECON DEPT WILL ATTEND; INCLUDING JIM ALM, EXPERT ON PUBLIC FINANCE) AFTERNOON: 1:30-1:45 Break 1:45-3:30 Session 3: Taking Stock, Next Steps and Next Round of CEQ: Bolivia, Costa Rica and Uruguay Nora Lustig, George Gray Molina, Maximo Rossi, Pablo Sauma (via oovoo or skype) 3:30-4:00 Wrap-up Nora Lustig will lead off CONTENTS: 6.Preparing the CEQ, Intellectual Outputs and Intellectual Property 7.Taking Stock 8.Next Steps Brief Presentations by Gray, Rossi and Sauma 9. Wrap-up 3

4. 1. What is CEQ? 4

5. What is the Commitment to Equity Project? The CEQ project’s main purpose is to design and implement diagnostic and ranking tools to: quantify, assess, compare, and publicize the extent to which Latin American governments use fiscal policies to reduce poverty and inequality in ways that are broadly consistent with macroeconomic stability and growth 5

6. What is the Commitment to Equity Project? Basic Questions: Do governments collect and allocate sufficient resources to substantially reduce poverty and human capital gaps and protect the poor from income fluctuations? Do taxes and public spending patterns reduce inequality and by how much? Are policies efficient and can spending be maintained? Is information to monitor outcomes readily available and reliable, and is evaluation carried out? 6

7. What is the Commitment to Equity Project? The CEQ project has two components: – CEQ Diagnostic: an assessment tool – CEQ Index: a scorecard 7

8. 1. What is the Commitment to Equity Project? Focuses on government efforts rather than outcomes – Different from/complement to HDI, MDG Monitoring Reports and Equality of Opportunity Index at WB, for example Based on “hard” data and not perceptions – Different from Transparency’s Corruption Index Relies on primary sources of information and research – Different from PREAL’s Education Report Card CEQ more analytical than other exercises (e.g., Pew’s GPP). More similar to public expenditure reviews, incidence analysis, or Jeff Sach’s needs assessments

9. 2. CEQ Project: Background 9

10. Project Background: Participating Institutions and Funding Inter-American Dialogue interested in developing a comprehensive scorecard to assess social policy in the region (similar to its Education Report Card but much broader) Nora Lustig invited to coordinate the initiative in 2007; under Dialogue’s Social Policy Vicepresidency (Jeff Puryear); Mariellen Jewers (IAD), project’s Associate; an Advisory Board and Steering Committee were formed (see membership in Lustig’s paper) Currently, a joint project between the Dialogue, and Tulane’s Center for Inter-American Policy and Research (CIPR) and Department of Economics; – Ludovico Feoli joined the Steering Committee; Samantha Greenspun joined as project’s Associate; Angela Reed, administrative support; Sean Higgins and Parker Smith, Econ. Dept.’s Research Assistants 10

11. Project Background: Participating Institutions and Funding Funding : – CIDA (lead funder), Norwegian Government, UNDP and General Electric Foundation; and – resources directly provided by the participating institutions (most of it through staff’s time) : Dialogue, Tulane, UdiTella, CIDE, GRADE 11

12. Background: Implementation of First Phase Diagnostic and ranking tools developed: – Key document: Lustig (2010) “Commitment to Equity (CEQ): A Diagnostic and Ranking Tool of Latin American Governments’ Fiscal Policies.” Inputs from pilot authors Miguel Jaramillo, Carola Pessino and John Scott; members of the Advisory Board (in particular, Santiago Levy, Mario Marcel and David Roodman) and Mariellen Jewers (IAD) were crucial 12

13. Background: Implementation of First Phase Three Pilot CEQ Diagnostics: – Argentina (Carola Pessino, U. di Tella), – Mexico (John Scott, CIDE), and – Peru (Miguel Jaramillo, GRADE) Diagnostic completed in all three Index was completed in Mexico and Peru. Argentina in progress 13

14. Background: Implementation of First Phase Dissemination and Partnerships: CEQ Diagnostics for Mexico, presented to CONEVAL in September CEQ Indices for Mexico and Peru, presented at the Dialogue’s Sol Linowitz Forum in June CIDE agreed to be local institutional partner for CEQ Diagnostic and Index in Mexico 14

15. Background: Implementation of First Phase – Pilot Studies Served to refine and adapt the questionnaire and indicators Demonstrated that relying on secondary sources alone does not work (experience from Peru) Demonstrated that diagnostic exercise takes several months of preparation and requires a highly skilled professional with expertise in poverty, incidence analysis and public finance Demonstrated importance of homogenizing language and methods: CEQ needs a handbook/mindbook 15

16. Background: Implementation of First Phase – Pilot Studies Served to identify unresolved issues with the CEQ Diagnostic & Index: – how best to estimate required resources in the face of idiosyncratic and adverse shocks: Unemployment poverty gap (Carola’s method) Increase in poverty due to systemic shocks (econ crisis, natural disasters, policy reforms, etc.); three studies used different methods – What is the “benchmark” to establish an ideal goal for the reduction of inequality? For now we used regression analysis to compare country with international norm – Standardization of indicators & scores across countries when information is different (due to lack of data, for ex) 16

17. 3. Why a CEQ? Inequality, Poverty and Fiscal Policy in LA (Section 2 of Lustig’s paper) 17

18. Inequality, Poverty and Fiscal Policy in LA Latin America is very unequal and extreme poverty is too high for its level of per capita GDP Thanks to the expansion of education and monetary transfers, inequality and poverty have been falling since 2000 However, redistributive power of the state through fiscal policy is grossly underutilized Upper-middle income LA should not have extreme poverty at all, and inequality could be much lower if proper policies were in place 18

19. Gini Coefficient by Region (in %), 2004 19

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21. Annual Change in Gini (2000-2006) (striped rectang. not stat. significant) 21

22. 22 Europe after taxes & transfers Europe before taxes & transfers

23. Why a CEQ? Fiscal Policy in LA: Little Redistribution Before direct taxes and monetary transfers Gini is 13 percent higher than the European average while disposable income Gini is 60 percent higher Adding in-kind transfers (spending on education and health), the redistributive impact is larger but still limited. – Incidence analysis finds a fairly flat distribution of social spending across income quintiles in Latin America 23

24. 4. CEQ Diagnostics: Description and Main Results for Pilot Studies: Argentina, Mexico and Peru (Section 3 of Lustig’s paper and Diagnostics for Argentina, Mexico and Peru) 24

25. What is CEQ Diagnostics? CEQ Diagnostic is an assessment tool to quantify and evaluate how aligned fiscal policies are with two principal policy objectives: – supporting a minimum living standard and – reducing income inequality. 25

26. The Redistributive Power of the State: Three Main Mechanisms 26

27. Policy Instruments Covered Monetary transfers Subsidies to consumption goods and (some) producer subsidies (e.g., agriculture) In-kind transfers through the fully or partially subsidized provision of goods and services particularly in the area of education and health Taxes on income, consumption and assets (including tax expenditures) 27

28. CEQ Diagnostic: What form does it take? CEQ Diagnostics’ is a questionnaire whose theoretical underpinning can be found in: – economics of the welfare state and – criteria-based approach. Indicators derived from standard poverty and inequality analysis, fiscal incidence analysis and public finance Experimenting with approaches to generate indicators in areas not well developed in the literature (e.g., estimate resources required due close poverty gaps caused by systemic or idiosyncratic shocks) It uses static incidence analysis; it does not include behavioral responses or general equilibrium effects. 28

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30. Standards in CEQ: Two Policy Objectives 30

31. Policy Objective 1: Supporting a minimum living standard has 4 elements 1. poverty reduction: ensuring that everyone has a minimum level of consumption 2. insurance: preventing individuals from falling (or falling further) below the minimum level of consumption due to adverse shocks, both idiosyncratic (unemployment, illness, bad harvests, etc.) and systemic (economic crises, natural disasters, spikes in food prices, etc.) 3.income smoothing: ensuring that a minimum level of consumption is achieved throughout an individual’s life-cycle (maternity/paternity leave and retirement, in particular) 4.building poor people’s human capital: ensuring that everyone has a minimum level of education and health. 31

32. Criteria in CEQ are 4 32

33. Indicators for PO 1: Synthesis (Fig 3) 33

34. Indicators for PO 2: Synthesis (Fig 4) 34

35. CEQ Diagnostic: Summing Up CEQ has two standards or policy objectives 1. Supporting a minimum standard of living 2. Reducing inequality First policy objective has four sub-standards: everyone has a minimum level of (1) consumption and (2) human capital (3) throughout the life-cycle and (4) in the face of adverse shocks CEQ has four criteria: resources, equity, quality & accountability CEQ has 71 indicators; 32 quantitative (Resources and Equity sections of questionnaire) and 39 “qualitative” (Quality and Accountability sections). Thirty one indicators require poverty, inequality and incidence analysis from a household survey (preferably, an income-expenditure survey) 35

36. CEQ Diagnostic: Summing Up Primary data requirements: household survey (income expenditure surveys preferred) and detailed public sector accounts. => Incidence of government revenues and expenditures analysis – Calculate market, disposable, post-fiscal and final income (described below) Imputation methods for in-kind income (health and education services provided by government free or quasi free) Estimation of impact of indirect taxes (including tax expenditures) and subsidies requires consumption data at the household level – Government Revenues and Redistributive Spending – Calculate poverty gaps – Calculate progressiveness of revenues and expenditures 36

37. Methodology to answer questions under PO 1: Resources and Equity Definitions, Indicators and Data Requirements p. 13 of Lustig 37

38. PO 1 – Resources Question 1: Government Revenues vs. Requirements 38

39. PO 1 – Resources Question 2: Redistributive Spending vs. Requirements 39

40. Definition of Concepts Income: market, disposable, post-fiscal and final Government revenues Redistributive spending Poverty Gaps 40

41. Definitions of Income: Market, Disposable, Post-Fiscal and Final Income (Lustig, p. 20) 41

42. Definition of Government Revenue Includes the total budgetary income of the federal government: – tax and non-tax revenue – plus income generated by direct budgetary controlled entities or public enterprises In countries where revenue collected at the provincial or state level is important, the total will include the revenues obtained by governments at the subnational level 42

43. Definition: Redistributive Spending Redistributive spending: all monetary transfers, direct and indirect subsidies, and in- kind transfers PLUS consumer subsidies, some producer subsidies and “social” tax expenditures MINUS non-subsidized portion of social security pensions In countries where spending at the provincial or state level is important, the total will include redistributive spending by governments at the subnational level 43

44. Important: Redistributive and Social Spending are Different Social spending as commonly defined in official budgetary classifications: spending on education, health, social security, and social assistance Redistributive spending: all monetary transfers, direct and indirect subsidies, and in-kind transfers (mainly education, health, and some nutrition programs) PLUS – consumer subsidies (electricity and fuel) and some producer subsidies (agricultural support) – “social” tax expenditures (e.g., exemptions on VAT for food) MINUS – non-subsidized portion of social security pensions (i.e., it subtracts contributions to social security pensions made by workers and employers from total spending on social security pensions; included on the tax side of the analysis) 44

45. Fig 5: Redistributive vs Social Spending 45

46. Indicators for Policy Objective 1: RESOURCES : 46 Must determine whether resources collected and allocated to redistributive spending are sufficient to close all the pre-transfers gaps. Steps: 1.Calculate total government revenues 2.Calculate redistributive spending 3.Calculate total requirements: add up all the pre-transfers gaps (details next slides) 4.Calculate ratio of total requirements to a. government revenues and b. government redistributive spending  If ratios “substantially” lower than unity, means total fiscal and redistributive space is ample  If ratios close or above unity, government efforts in collecting resources and/or allocating them for redistributive purposes are insufficient

47. Indicators for Policy Objective 1: RESOURCES : Pre-Transfers Gaps 47 TOTAL INCOME POVERTY GAPS (pre-Transfers) Total Income Transfers Poverty Gap Total Pensions Gap Total Unemployment Compensation Gap Total Systemic Shock Gap (economic crisis, rising food prices, natural disasters, epidemics) TOTAL OPPORTUNITY GAPS (pre-Transfers) TOTAL HUMAN CAPITAL GAPS (pre-Transfers) Total Education Coverage Gap Total Health Coverage Gap TOTAL INFRASTRUCTURE GAPS (pre-Transfers) Total Drinkable Water Gap Total Electricity Gap Total Sewerage Gap Total Access to Markets Gap Total Housing Gap

48. Estimating the Relevant Poverty Gaps: Definition of Variables 48

49. Total Requirements Total (Pre-Transfers) Income Poverty Gaps 49

50. Total Requirements (cont) Total (Pre-Transfers) Human Capital Gaps 50

51. Total (Pre-Transfers) Requirements (TR) Total (Pre-Transfers) Gaps 51

52. Example: Mexico (Scott, 2010) 52 Must determine whether resources collected and allocated to redistributive spending are sufficient to close all the pre-transfers gaps. Steps: 1.Calculate total government revenues 2.Calculate redistributive spending 3.Calculate total requirements: add up all the pre-transfers gaps (details next slides) 4.Calculate ratio of total requirements to a. government revenues and b. government redistributive spending  If ratios “substantially” lower than unity, means total fiscal and redistributive space is ample  If ratios close or above unity, government efforts in collecting resources and/or allocating them for redistributive purposes are insufficient

53. Example: Mexico (Scott, 2010) Indicators for Policy Objective 1: RESOURCES : Pre-Transfers Gaps 53 TOTAL INCOME POVERTY GAPS (pre-Transfers) Total Income Transfers Poverty Gap Total Pensions Gap Total Unemployment Compensation Gap Total Systemic Shock Gap (economic crisis, rising food prices, natural disasters, epidemics) TOTAL OPPORTUNITY GAPS (pre-Transfers) TOTAL HUMAN CAPITAL GAPS (pre-Transfers) Total Education Coverage Gap Total Health Coverage Gap TOTAL INFRASTRUCTURE GAPS (pre-Transfers) Total Drinkable Water Gap Total Electricity Gap Total Sewerage Gap Total Access to Markets Gap Total Housing Gap

54. Example: Mexico (Scott, 2010) (2009 Billion Mx$; z = US$4 a day) 54 PO1 - RESOURCES

55. Example: Mexico (Scott, 2010) PO 1 - RESOURCES 55

56. Indicators for Policy Objective 1 EQUITY Remember that EQUITY measures whether: i. existing programs are adequate ii. allocation of redistributive spending is consistent with supporting a minimum standard of living for everybody iii. coverage among the poor iv. leakages to non-poor 56

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59. Indicators for Policy Objective 1 EQUITY Remember that EQUITY measures whether: i. existing programs are adequate ii. allocation of redistributive spending is consistent with supporting a minimum standard of living for everybody iii. coverage among the poor iv. leakages to non-poor 59

60. Indicators for Policy Objective 1 EQUITY 60 Must determine whether resources allocated to the poor per relevant category are sufficient to close each and all the after-transfers gaps. Steps: 1.Calculate government spending per relevant category 2.Calculate additional requirements per category (details next slides) 3.Calculate difference in spending per relevant category minus additional requirements in relevant categories  If positive, government is spending sufficient resources in the relevant category to potentially close the gap  If negative (or zero), government efforts in terms of how much it is spending on the relevant gaps are insufficient

61. Indicators for Policy Objective 1: EQUITY 61 INCOME POVERTY GAPS Income Transfers Poverty Gap Pensions Gap Unemployment Compensation Gap Systemic Shock Gap (economic crisis, rising food prices, natural disasters, epidemics) OPPORTUNITY GAPS: HUMAN CAPITAL GAPS Education Coverage Gap Health Coverage Gap INFRASTRUCTURE GAPS Drinkable water Electricity Sewerage Access to markets

62. Additional Requirements After Transfers Income Poverty Gaps 62

63. Additional Requirements After-Transfers Human Capital Gaps 63

64. Total Additional Requirements (AR) Total (After-Transfers) Gaps 64

65. Example: Mexico (Scott, 2010) (2009 Billion Mx$; z = US$4 a day) 65

66. Example: Mexico (Scott, 2010) (2009 Billion Mx$; z = US$4 a day) 66

67. Calculating Systemic Shocks Poverty Gaps (econ crisis, nat disaster, policy reform, etc. Three different methods: – Arg (frequency of economic crisis, average impact on GDP; impact on poverty calculated using a poverty/growth elasticity) – Mx (“arithmetic” calculation of additional income poverty due to 2008-2009 recession) – Pe (probability of facing shock by the poor and estimated income loss for the poor due to a shock using regression analysis) 67

68. PO 1 – Resources Questions 68

69. PO 1 – Resources Indicators 69 Calculate the poverty gaps and compare them with total revenues: R1.1: Calculate the ratio of total income poverty gap (IG) as a share of total revenues R1.2: Calculate the ratio of total overall poverty gap (OG =human capital gap (HKG) + IG) as a share of total revenue) R1.3: Different methods were used

70. R1. Does the government collect sufficient combined resources to: – R1.1 Close the total income poverty gap (transfer, unemployment and pension gaps combined? – R1.2 Close the overall poverty gap (transfer, unemployment and pension gaps plus human capital gaps combined)? ANSWER: in Argentina, Mexico and Peru, government revenues are more than sufficient to close the income (orange highlight) and overall poverty (green highlight) gaps See Table 1 in next slide (it will also be available in hard copy) 70 Example PO 1 Resources: Questions 1.1, 1.2

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73. Results from three pilots: authors’ presentations (15 mins. each) Carola Pessino, Argentina – Tracking the impact on poverty and inequality John Scott, Mexico – Matrix of needs vs. available resources Miguel Jaramillo, Peru – Learning by doing 73

74. CEQ: Argentina Impact of Fiscal Policies on Poverty and Inequality Carola Pessino Universidad Torcuato di Tella 74

75. Argentina: Impact of Monetary and In- kind Transfers on Headcount, Pov Gap and Gini (Pessino, 2010) 75

76. CEQ Mexico Estimating the Poverty Gaps John Scott CIDE and CONEVAL 76

88. CEQ Peru Are fiscal resources enough to protect the poor?: Vulnerability vis-á-vis idiosyncratic shocks. The case of Peru Miguel Jaramillo Baanante GRADE – CEQ Project

89. The problem High vulnerability vis-á-vis natural disasters, compared to other Latin American countries. In 2007, 30.1% of Peruvian households (38.3% of poor households) experienced an idiosyncratic shock (loss of employment, loss of family business, serious health problem, delinquency victim, natural disaster). Natural disasters account for 38.8% of these shocks, 62.3% for households below the poverty line.

90. Estimating fiscal cost of shocks ¿Does Peru’s state have the financial capacity to protect poor households from these shocks? Fiscal cost = (Pr(s)*H p ) *C h, donde Pr(s) is the probability of having a shock, Hp is the number of poor households, and C h is cost per hh. We know Pr(s) and H p from household survey. We need to estimate C h.

91. Estimating impact of shocks on poor households Mincer equation with dummy that identifies shocked households and interaction of having received shock and being poor.

92. Results Households that experienced a shock observe income 11.1% below those not suffering a shock. An additional 24.8% impact is associated to poor households. Subtracting 35.9% from the annual income of poor households that faced a shock and multiplying by the number of poor households that faced a shock we arrive at a figure of 229’500,000 USD, or 0.17% of GDP, which compares to government revenue of 18% of GDP.

93. Conclusion It is financially feasible for the Peruvian state to finance protection of the poor vis-á-vis natural disasters.

94. 5. CEQ Index (section 6 of Lustig’s paper) 94

95. CEQ Index CEQ Index is a scorecard designed to rank countries on how they use their fiscal powers to advance social equity as defined by the policy objectives and indicators outlined above. It is not perceptions-based. As such, differs from the WEF’s Global Competitiveness Report, Transparency International’s Corruption Perceptions, etc. 95

96. CEQ Index: Description and Preliminary Results for Mexico and Peru Questionnaires were not exactly the same During pilot studies – Questionnaire has been evolving – Indicators have been fine-tuned 96

97. CEQ Index: Description and Preliminary Results for Mexico and Peru Mariellen Jewers and Samantha Greenspun prepared a question-by-question and indicator-by-indicators comparison Parker Smith prepared an excel file to automatically generate averages by policy objective, criteria and total 97

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102. Pending Overall “grade” has little variation. Develop a “true” index (John Scott’s suggestions) Re-visit weights? Standardization method to compare results across countries 102

103. From numbers to qualitative categories In the pilot version of CEQ Index we used words such as “mediocre” for the average score – The average score was set up at 5 (variables were re-scaled) Terminology may not be suitable (“too aggressive”) An alternative proposal: see next slide 103

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105. 6. Intellectual Outputs, Process and Intellectual Property 105

106. CEQ Diagnostics and CEQ Index: Project Outputs Four key outputs: – CEQ Diagnostic at the country level – CEQ Index, country report – CEQ Index, regional report – Interactive website/s In addition, there are derived outputs such as academic publications, training manuals, etc. 106

107. CEQ Diagnostics and CEQ Index: Process CEQ Diagnostic is prepared by an expert in the fields of poverty, inequality and incidence analysis (sponsoring institutions will pay 2,500 dollars per study—at a minimum); author can hire whomever they choose to help Once CEQ Diagnostic is completed, the author convenes a CEQ National Committee integrated with experts in the fields of poverty and inequality, public finance, public economics, labor economics, evaluation of social programs and macro-economics 107

108. CEQ Diagnostics and CEQ Index: Process Members of the Committee should not be government officials or work in an organization which may create conflict of interest Based on the CEQ Diagnostic, each member assigns scores to every question at the one digit level (that is, Resources: R1, R2, etc.); scores can go from 1 to 10 (see Table 3 for correspondence between numbers and qualitative categories) 108

109. CEQ Diagnostics and CEQ Index: Process Scores will be determined by the “distance” between the actual indicator and a pre-defined goal (ideal). The pre-defined goal can be: – endogenous and absolute (for example, allocate enough resources to eradicate extreme poverty, where the amount of resources will depend on the poverty rates in the country in question) or – exogenous and relative when indicators are subject to benchmarking (that is, when the country’s performance is compared with international norms). 109

110. CEQ Diagnostics and CEQ Index: Intellectual Property Rights CEQ Diagnostics Outputs are published as internal reports and/or academic outputs under the name of the respective author(s) who preserve(s) the intellectual property right to use it for teaching, research or other activities HOWEVER: 110

111. CEQ Diagnostics and CEQ Index: Intellectual Property Rights Lustig as coordinator and CIPR retain the right to be the first to publish the Diagnostic and derived academic outputs in any language; if there are no publication plans or no such publication takes place, the author is free to publish it somewhere else; author must request permission in writing AND in any and all reports, publications, presentations, etc., role of CIPR and the Dialogue must be acknowledged as sponsoring institutions; authors (Nora Lustig and collaborators) must be acknowledged as author of the CEQ Diagnostic tool and Index. Nora will send language. 111

112. CEQ Diagnostics and CEQ Index: Project Outputs and Intellectual Property Rights CEQ Index reports: – Regional Report: published and disseminated as “institutional” outputs (Dialogue and Tulane’s CIPR and national institution in the case of country reports and CIPR and Dialogue for the regional report) – contributions of CEQ’s author (N. Lustig & collaborators), authors of country CEQ Diagnostics, members of the National Committees and members of the AB are explicitly acknowledged – National Report: published and disseminated by local institutions. Role of CIPR and the Dialogue must be acknowledged as sponsoring institutions; Nora Lustig & collaborators must be acknowledged as author of the CEQ Diagnostic tool and Index. CEQ Steering Committee will provide appropriate language 112

113. CEQ Website (English and Spanish) CEQ’s home page (similar to PREAL’s and CGD’s Commitment to Development Index) Content proposal: – Brief description of CEQ – Include summary table for CEQ diagnostic and graph for CEQ index – Main messages of CEQ diagnostic and CEQ index for each country – Collaborating institutions, coordinators and authors – Links on the right hand side: What is CEQ? What is the CEQ Diagnostic? What is the CEQ Index? CEQ Diagnostic in Individual Countries CEQ Index: A Ranking of LA Governments Effort About the project Steering Committee Advisory Board and National Committees Past CEQs Links to Websites of Collaborating Institutions 113

114. 7. Taking Stock of First Stage 114

115. Taking Stock of First Stage: CEQ Diagnostics Diagnostic exercise turned into a full-fledged research project that used primary sources of information such as household surveys and detailed government accounts. Research time is longer than was anticipated. Diagnostic tool has a much greater potential than initially anticipated. =>It serves its own purpose whether accompanied by the scoring process or not 115

116. Taking Stock of First Stage: CEQ Diagnostics In particular, CEQ Diagnostics can be used by governments (executive and legislative branches) to inform policy and the budget process Multilateral organizations could include it as part of their diagnostic toolkit to help governments identify strengths and weaknesses and orient their economic and sector work Diagnostic tool useful for teaching and advising undergraduate and graduate theses (Tulane’s experience) Diagnostic tool can be used as a training device for staff in finance and planning ministries 116

117. Taking Stock of First Stage: CEQ Diagnostics Based on experience, diagnostic exercise will take around 9 months Peru, de facto, became the “test” case for CEQ Diagnostics and – led to substantial revisions of the diagnostic tool and the method. – revealed the great limitations of relying on secondary sources. => Peru’s results are not really comparable for this reason. “Update” will require re-doing a large portion of the diagnostic 117

118. Taking Stock of First Stage: CEQ Index Scoring process: – Confirm if equal weights for each criterion and question is fine – Must choose a method to standardize across countries – Will country scores be reported before or after the standardization? – Must decide if initial scores are provided by author of CEQ Diagnostic or everyone starts from a clean slate – Application of CEQ Index to Mexico and Peru shows that, with current scoring and weighing methods, the (overall) index has little variation. Dissemination: – Must find language and format to convey results of CEQ Diagnostics and Index to the wider public (comments by Peter Bell in the Sol Linowitz Forum). However, it must preserve rigor and be used to educate the wider public – Suggestions: CGD’s CDI & Dialogue’s ERC 118

119. 8. Next Steps 119

120. Next Steps: Institutional Arrangements Formalization of collaboration between CIPR and Dialogue (MOU) Division of Labor: – CIPR takes lead responsibility for coordination of implementation, publication and dissemination of CEQ Diagnostics – Dialogue takes lead responsibility for coordination of publication and dissemination of CEQ Index – Dissemination of CEQ Index will be done jointly and Lustig will be identified as the point person for questions and commentaries Nora Lustig – coordinates the preparation and implementation of CEQ Diagnostics and publication of its derived outputs – continues as Lead Advisor to CEQ (technical design of the CEQ Diagnostics and Index, oversight for the technical quality of the national and regional reports, chairing the Advisory Board, and participating in the dissemination of the diagnostic and index) Must establish local collaborating institutions. – In Mexico: CIDE’s President has agreed to host it 120

121. Next Steps: CEQ Diagnostics & CEQ Index Three new diagnostic studies and scoring exercises (Summer 2011): – Bolivia, George Gray-Molina (Inst. Alternativo) – Costa Rica, Pablo Sauma – Uruguay, Maximo Rossi, Updates of diagnostic and scores (Summer 2011: – Argentina – Mexico – Peru: per earlier comment, it will be treated as a “new” study in terms of resources First regional report 121

122. Presentations by authors of Bolivia, Costa Rica and Uruguay George Gray Molina (Bolivia) Maximo Rossi (Uruguay) Pablo Sauma (Costa Rica) (via oovoo) 122

123. 9. Wrap-up 123

124. Wrap-up: Tasks for Next “Year” 1.Final version of Background document (Lustig and her Tulane team) – Dec 2010 2.Handbook/Mindbook of Terms, Methodology and Indicators (MMJ & SG with Lustig guidance) – Dec 2010 3.Review of diagnostic reports for Argentina, Mexico and Peru (Lustig and three pilot authors) – Dec 2010 4.Preparation of academic publications: book with three pilots and/or article (Lustig and three pilot authors) – March 2011 5.Presentation of results in academic and government fora (Lustig and pilot authors); brown bag Econ; NIP in LACEA in Nov (Lustig and authors) – ongoing 6.Design of CEQ Update (Lustig and authors) – Summer 2011 7.Diagnostic and scoring in Bolivia, CR, Peru and Uruguay (Lustig and authors) – July/August 2011 8.Update in Argentina and Mexico – Fall 2011 124

125. Wrap-up : Tasks for Next “Year” 8.Conference in Dialogue (March/April 2011) (Dialogue and CIPR) 9.Convening Advisory Board (Dialogue and CIPR) – first half of 2011 10.Review of scoring system (Lustig and Jewers) – by March 2011 11.Website (CIPR) – by March 2011 12.Design of CEQ Diagnostic and Index outputs for wider public (Dialogue team) - by March 2011 13.Translation of dissemination outputs (English, Portuguese and Spanish) (Dialogue team) – Fall 2011 14.Publication of dissemination outputs (Dialogue team) – Fall 2011 15.Dissemination of results to wider public (logistics Dialogue, CIPR and participating local inst.) – Fall 2011/Winter 2012 125

126. Wrap-up : Summing Up Tasks 1.Lustig with Jaramillo, Pessino, Scott (in person and/or electronically) will complete Diagnostic studies (previously called technical documents); prepare publishable versions; design of yearly update => PERU will repeat exercise using primary data 2.Lustig with Grey Molina, Rossi and Sauma to set up Diagnostic studies in Bol, CR and Uru. Questions: send to NL with copies to MMJ (Mariellen Jewers) & SG (Samantha Greenspun) 3.Lustig with MMJ and SG Handbook/Mindbook 4.CIPR will present WEB proposal 5.Dialogue will prepare proposal for dissemination reports of CEQ Index 6.Dialogue will prepare proposal for conference 7.CIPR/Dialogue (Lustig) will convene AB 126