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 Can Privatisation and Commercialisation of Public Services Help Achieve The MDGs? An Asses...
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Kate Bayliss and Tim Kessler 15 Privatisation proponents m aintain that all basic services can be im proved through increased form s of com petition. In the case of utilities, they argue that com petition in the bidding process itself helps reduce utility prices for consum ers. In...
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Kate Bayliss and Tim Kessler 15 Privatisation proponents m aintain that all basic services can be im proved through increased form s of com petition. In the case of utilities, they argue that com petition in the bidding process itself helps reduce utility prices for consum ers. In the case of health care, education, and electricity generation, privatisation advocates argue that consum ers benefit from direct com petition: low barriers to entry and the ability to choose am ong m ultiple
8 0 http://www.undp-povertycentre.org/pub/IPCWorkingPaper22.pdf#page=8 www.undp-povertycentre.org/pub/IPCWorkingPaper22.pdf#page=8
erous form s of m arket-based reform s, the m ost basic distinction is between <span class="highlight">com</span> m ercialisation and privatisation. Broadly speaking, commercialisation is the process of transform ing a transaction into a <span class="highlight">com</span> m ercial activity, in which goods or services acquire a m onetary value. U nder this approach, a service provider seeks to cover m ost or all of its costs directly from individual (or household) service users. The reduction or elim ination of subsidies is a <span class="highlight">com</span> m on form of <span class="highlight">com</span> m ercialisation
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bitious expectations of its prom oters. <span class="highlight">Com</span> m ercialisation <span class="highlight">Com</span> m ercialisation often signals an effort to cut fiscal deficits or generate m ore financial resources for the service itself. It can also discourage profligate use (as for exam ple in the water sector). <span class="highlight">Com</span> m ercialisation is perceived as an economic solution to the problem of scarce resources. Finance m inistries often prom ote <span class="highlight">com</span> m ercialisation to slash subsidies. Fiscal pressures can be so strong that financially viable and well-perform
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12 International Poverty Centre W orking Paper n&ordm; 22 profitability for private generators, and can expose governm ents to huge fiscal risks and losses that cannot be restructured through re-negotiation. In other words, PPAs can virtually elim inate the prospect of <span class="highlight">com</span> m ercial risk. For exam ple, a case study of energy sector reform in Bangladesh concludes: &ldquo;From a policy perspective, such long term contractual obligations, especially overly-generous ones, are an inadequate substitute for a proper
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Kate Bayliss and Tim Kessler 13 Private providers have strong incentives to lim it what regulators know about the utilities they operate. According to a W orld Bank researcher on infrastructure: &ldquo;The fundam ental problem of regulation is one of asym m etric inform ation between the regulated <span class="highlight">com</span> pany and the regulatory agency. The regulated <span class="highlight">com</span> pany will have a strong incentive to abuse [its] strategic advantage by under-supplying inform ation or distorting the inform ation supplied&rdquo; (Foster
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for-profit private sector are involved in unnecessary procedures, such as high rates of caesarian sections, unwarranted tests and surgeries (W orld Bank 2004). In the water sector, regulators are usually unable to <span class="highlight">com</span> pel firm s to disclose inform ation about perform ance or prices. Yet without such data, it is not possible to verify, for exam ple, if cost-based tariff increases are justified. In G abon, the regulator found it difficult to m onitor the activities of the private operator: &ldquo;In the absence
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Kate Bayliss and Tim Kessler 15 Privatisation proponents m aintain that all basic services can be im proved through increased form s of <span class="highlight">com</span> petition. In the case of utilities, they argue that <span class="highlight">com</span> petition in the bidding process itself helps reduce utility prices for consum ers. In the case of health care, education, and electricity generation, privatisation advocates argue that consum ers benefit from direct <span class="highlight">com</span> petition: low barriers to entry and the ability to choose am ong m ultiple
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private operators (G uasch 2004). The high level of renegotiation underm ines the nature of the <span class="highlight">com</span> petitive bidding process. W hile renegotiation m ay be expected in a long term project where conditions change over the years, evidence from Latin Am erica indicates that renegotiation takes place after an average of just 2.2 years from the start of the contract (Estache et. al. 2003). The need to m inim ize risks is leading both governm ents and private firm s to adopt short- term m anagem ent contracts
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Kate Bayliss and Tim Kessler 19 The challenges of creating well-functioning electricity generation m arkets are dem onstrated m ost powerfully in developed countries, where regulatory institutions are m ore experienced and have far greater financial and personnel resources than in poor ones. According to the U S N ational <span class="highlight">Com</span> m ission on Energy Policy, &ldquo;Electric industry restructuring [in the U S] has derailed. The m assive blackout of August 14, 2003 certainly was not needed to underscore the
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South Asia 51 14.98 Sub-Saharan Africa 38 7.64 Total 748 100.00 Adapted from Izaguirre (2005). M oreover, m uch of the investm ent that is privately financed <span class="highlight">com</span> es from taxpayers or end users. As discussed earlier, infrastructure projects are underwritten by a governm ent <span class="highlight">com</span> m itm ent to pay for a fixed output at a price agreed on in foreign exchange. W here construction is carried out by the private sector, the governm ent still has to pay &ndash; although paym ent m ight be deferred or fall under an
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term s of quantity of docum entation, but in term s of accessibility to regular citizens. Contrary to popular slogans, inform ation is not always power. Service providers that do not wish to be scrutinized m ight respond to inform ation requests by dum ping m ountains of data on the public, which can confuse or intim idate citizens and m ake action difficult. Inform ation about utilities in its purest form &ndash; raw data &ndash; will not be <span class="highlight">com</span> prehensible to m ost people. Efforts to synthesize, abridge and
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or private, there is no substitute for political <span class="highlight">com</span> m itm ent to dedicate public resources toward these groups. Perhaps m ore im portantly than their econom ic weaknesses, <span class="highlight">com</span> m ercialisation and privatisation reduce the political pressure on governm ent leaders to take seriously the need to equitably allocate budgetary resources. W hen user fees contribute to self-financing or a long-term concession sim ply transfers responsibility from the State to a private <span class="highlight">com</span> pany, politicians are no longer
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NOTES 1. For a detailed update on progress toward each of the M D G s broken down by geographic region, see D FID (2005). 2. A <span class="highlight">com</span> m on exam ple is a &lsquo;pass-through&rsquo; on costs, under which a pre-set form ula adjusts tariffs autom atically so that specified cost changes, e.g., oil prices, key inputs, and exchange rate fluctuations, are im m ediately reflected as increases in the tariff, typically without regulatory review. The purported goal of autom atic tariff adjustm ent is to provide a secure
 Linkages between Pro-Poor Growth, Social Programmes and Labour Market: The Recent Brazilia...
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36 International Poverty Centre W orking Paper nº 26 Sim ilarly, we can calculate the contribution of each incom e com ponent to the growth rate of total per capita incom e: ( ) ( ) ( ) ( )4321 CCCC ttttt γγγγγ +++= (A.3) Subtracting (A.3) from (A.2) gives...
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36 International Poverty Centre W orking Paper nº 26 Sim ilarly, we can calculate the contribution of each incom e com ponent to the growth rate of total per capita incom e: ( ) ( ) ( ) ( )4321 CCCC ttttt γγγγγ +++= (A.3) Subtracting (A.3) from (A.2) gives the contribution of each incom e com ponent to the inequality of total per capita incom e. ( ) ( ) ( ) ( )4*3*2*1** CgCgCgCgg ttttt +++= (A.4)
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Grow th rates by non-labour <span class="highlight">com</span> ponents Non-labour income Period Labour income Social security Other non-labour Non-social income Total income Actual growth 1995-2004 -1.49 3.25 5.77 -2.43 -0.63 1995-2001 -1.30 4.69 0.73 -1.23 -0.30 2001-2004 -2.05 0.86 13.26 -3.69 -1.35 Pro-poor growth 1995-2004 -0.73 3.12 29.94 1.43 0.73 1995-2001 -0.97 2.56 25.50 4.41 0.10 2001-2004 0.97 3.90 35.21 -1.97 3.07 Inequality 1995-2004 0.76 -0.13 24.17 3.86 1.36 1995-2001 0.32 -2.13 24.77 5.64 0.40 2001-2004
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28 International Poverty Centre W orking Paper n&ordm; 26 contribution is particularly high in the latter period 2001-04. W hile non-social incom e appears to play a sm aller role in reducing inequality, the net im pact of social security has been quite im portant. D uring the first period (1995-2001), the net effect of social security resulted in an increase in inequality. Its net contribution on inequality was greater than the net contributions by the other two <span class="highlight">com</span> ponents. Nevertheless, the sum of the
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Nanak Kakwani, M arcelo Neri and H yun H . Son 33 APPEND IX SH APELY D ECOM POSITION TO EXPLAIN CONTRIBU TIONS OF INCOM E <span class="highlight">COM</span> PONENTS FOR PRO-POOR GROWTH Suppose there are four incom e <span class="highlight">com</span> ponents which include: X1t: Per capita labour incom e at year t X2t: Per capita social security incom e at year t X3t: Per capita cash transfers at year t X4t: Per capita non-social incom e at year t Total per capita incom e at year t is thus the sum of the four individual incom e <span class="highlight">com</span> ponents
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36 International Poverty Centre W orking Paper n&ordm; 26 Sim ilarly, we can calculate the contribution of each incom e <span class="highlight">com</span> ponent to the growth rate of total per capita incom e: ( ) ( ) ( ) ( )4321 CCCC ttttt &gamma;&gamma;&gamma;&gamma;&gamma; +++= (A.3) Subtracting (A.3) from (A.2) gives the contribution of each incom e <span class="highlight">com</span> ponent to the inequality of total per capita incom e. ( ) ( ) ( ) ( )4*3*2*1** CgCgCgCgg ttttt +++= (A.4)
 Assessing the pro-poorness of government fiscal policy in Thailand
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Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of θ w ith respect to iµ as ( ) ( ) � == z ii i i dxxfxg x P 0 1 ∂ ∂ θθ µ ∂µ ∂θηθ (9) For the Foster, G reer and Thorbecke (1984) class of poverty...
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Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of θ w ith respect to iµ as ( ) ( ) � == z ii i i dxxfxg x P 0 1 ∂ ∂ θθ µ ∂µ ∂θηθ (9) For the Foster, G reer and Thorbecke (1984) class of poverty m easures, the ith incom e com ponent elasticity is derived from (8) as � − � � � � � � − −= z ii dxxfxg z xz z0 1 )()(1 α α α θ αη (10) for α ≠ 0 , w hich can easily be com puted given data on incom e com ponents and the net incom e x. The m ean incom e com ponent
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4 International Poverty Centre W orking Paper n&ordm; 15 w hich is the percentage of poor w ho w ill cross the poverty line as a result of 1 percent of grow th in the m ean incom e of the society. Substituting &alpha;)(),( z xz xzP &minus;= into (4) gives the elasticity of &theta;&alpha; w ith respect to &micro; as ( ) &alpha; &alpha;&alpha; &alpha; &alpha; &alpha; &theta; &theta;&theta;&alpha; &theta; &micro; &part;&micro; &part;&theta;&eta; &minus;&minus;== &minus;1 (5) for &alpha; &ne; 0 , w hich w ill alw ays be negative because &theta;&alpha; is a m onotonically decreasing function of &alpha;. 2.3 G ROW TH ELASTICITY OF INCOM E <span class="highlight">COM</span> PONENTS The total (or net) incom e
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Hyun H. Son 5 D ifferentiating (1) and using (8) gives the elasticity of &theta; w ith respect to i&micro; as ( ) ( ) &#65533; == z ii i i dxxfxg x P 0 1 &part; &part; &theta;&theta; &micro; &part;&micro; &part;&theta;&eta;&theta; (9) For the Foster, G reer and Thorbecke (1984) class of poverty m easures, the ith incom e <span class="highlight">com</span> ponent elasticity is derived from (8) as &#65533; &minus; &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; &minus; &minus;= z ii dxxfxg z xz z0 1 )()(1 &alpha; &alpha; &alpha; &theta; &alpha;&eta; (10) for &alpha; &ne; 0 , w hich can easily be <span class="highlight">com</span> puted given data on incom e <span class="highlight">com</span> ponents and the net incom e x. The m ean incom e <span class="highlight">com</span> ponent
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increase in i&micro; redistributes incom e in favor of the rich or the poor individuals. In this case, w e m ust <span class="highlight">com</span> pute the redistribution effect of an incom e <span class="highlight">com</span> ponent on poverty. This is accom plished by decom posing the poverty elasticity i&theta;&eta; into tw o <span class="highlight">com</span> ponents: &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; &minus;+= &theta;&theta;&theta;&theta; &eta;&micro; &micro;&eta;&eta; &micro; &micro;&eta; iiii (12) The first term on the right-hand side is the incom e effect, and the second term is the redistribution effect. It is the redistribution effect that tells us w hether an increase in
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Hyun H. Son 7 To derive the elasticity, let us w rite the dem and equations of k <span class="highlight">com</span> m odities as q = q (x, p) w here p and q are the k &times; 1 vectors of prices and quantities of k <span class="highlight">com</span> m odities, and x is the disposable incom e. It is reasonable to assum e that all individuals face the sam e price vector, w hich m eans that the prices are fixed across individuals. Thus, w e w rite the dem and equation as q = q(x), w hich are the quantities consum ed by an individual w ith disposable incom e x.1 U
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8 International Poverty Centre W orking Paper n&ordm; 15 w here &micro; is the m ean incom e of the disposable incom e and p qi i is the m ean expenditure of the ith <span class="highlight">com</span> m odity. The first term in (17) is the incom e effect of the price increase, w hich is alw ays positive because &theta;&eta; , given in (4), is negative. The second term is the redistribution or inequality effect of price change. It is the redistribution effect that tells us w hether an increase in price pi hurts the poor proportionally m ore than
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Hyun H. Son 11 4 D ATA ANALYSIS 4.1 D ATA SOURCE The data source <span class="highlight">com</span> es from the Socio-Econom ic Surveys (SES) conducted in 1998. The SES data are unit record household surveys conducted every tw o years by the National Statistics Office in Thailand. The survey is nationw ide and covers all private, non-institutional households residing perm anently in m unicipal, sanitary districts, and villages. How ever, it excludes part of the population living in transient hotels or room ing houses
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12 International Poverty Centre W orking Paper n&ordm; 15 4.2 ANALYSIS OF EM PIRICAL RESULTS Table 3 presents the values of poverty elasticity and the pro-poor index for different incom e <span class="highlight">com</span> ponents. Public policies can be assessed for different m easures of poverty. The head-count ratio is a crude m easure of poverty because it <span class="highlight">com</span> pletely ignores the gap in incom es from the poverty line and the distribution of incom e am ong the poor. The severity of the poverty index has all the desirable
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Hyun H. Son 13 FIG U RE 1 Pro-Poor index for incom e <span class="highlight">com</span> ponents, poverty gap ratio 0.00 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Wa ge &amp; sa lar y En tre pre ne ur ial inc om e Fa rm inc om e Re nt fro m bo ar de rs La nd re nt fro m far m ing Ot her re nt fro m no n- far m ing Int er es t &amp; div ide nd s Re m itta nc es Pe ns ion s &amp; an nu itie s Te rm ina l p ay &amp; ot her s Fo od as pa rt o f p ay Re nt re ce ive d a s p ay Ot her go od s a s p ay Ho m e pro
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NOTES 1. Note that w riting the dem and equations in the form q=q(x) does not im ply that all ow n-price and cross-price elasticities of dem and are zero. It only im plies that prices do not vary across individuals. 2. CV= [e(u,p*)-e(u,p)] is the <span class="highlight">com</span> pensation variation, the <span class="highlight">com</span> pensation that should be given to an individual to m aintain his or her utility level the sam e as before the price change. 3. The poverty threshold is set using the calorie requirem ents of individuals that differ by age
 The Fiscal Implications of Scaling up ODA to Deal with the HIV/AIDS Pandemic
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International Poverty Centre 33 available evidence dem onstrates that the response in the m edium term can be very elastic. In addition, aid can and should be directed at raising productive capacity and im proving accountability. The donor com m unity is culpable in this area. Overly tig...
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International Poverty Centre 33 available evidence dem onstrates that the response in the m edium term can be very elastic. In addition, aid can and should be directed at raising productive capacity and im proving accountability. The donor com m unity is culpable in this area. Overly tight and inappropriate conditionalities, adm inistrative com plexity, and lack of donor co-operation and co-ordination seriously im pede the ability of recipient countries to m ake effective use of aid inflow s. In
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aid <span class="highlight">com</span> m itm ents and disbursem ents, w ith prom ises of further large increases in the near future. This aid is urgently required to address the em erging hum anitarian crisis and im plies im m ediate, large-scale increases in public expenditure. The central question that this paper exam ines is w hether such increases can effectively address the epidem ic w ithout inducing m acroeconom ic disturbances, especially for those countries, particularly in sub-Saharan Africa, w here there is already high
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is needed for sub-Saharan Africa (U N AID S, 2006, p. 229). D espite the rapid rise in <span class="highlight">com</span> m itm ents and disbursem ents in recent years, these funding requirem ents are still considerably larger than the present level of <span class="highlight">com</span> m itm ents, estim ated to be U S$8.9 billion in 2006 and U S$ 10 billion in 2007 (U N AID S, 2006, p. 224). H ow ever, Lew is (2005, Figure 2, p.7)) provides evidence of recent, sharp increases in <span class="highlight">com</span> m itm ents and disbursem ents to sub-Saharan African countries w ith the highest
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evidence provided by Bul&iacute;&#345; and H am m an (2006) is that predictability, in term s of the relationship betw een <span class="highlight">com</span> m itm ents and disbursem ent, has also deteriorated in the recent past. They report that &ldquo;during 2000-03 average <span class="highlight">com</span> m itm ents grew by about 4 percent, relative to 1995-98, w hile average disbursem ents fell by som e 5 percent during the sam e period&rdquo; (Bul&iacute;&#345; and H am ann, 2006, p.16). In addition, the predictability of aid appears to be w orse for the low -incom e countries, w ith countries
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designed policies m ay trigger an inflationary spiral. In particular, if the aid is spent but the m onetary authorities fail to absorb the aid then there is clearly an injection of excess dem and into the system and, depending on the pre-existing balance of aggregate dem and and supply, a danger of inflation. A variation on this occurs w hen the fiscal deficit rises m ore than the absorption in term s of the rise in net im ports (see IM F, 2005a for exam ples of this policy <span class="highlight">com</span> bination in sub-Saharan
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28 Conference Paper the case of South Africa, it is estim ated that disbursem ents from bilateral donors m ay be below 50 per cent of <span class="highlight">com</span> m itm ents (N dlovu, 2005, quoted in U N AID S, 2006). In these circum stances, it is extrem ely difficult for the Finance M inistry and the H ealth M inistry to plan scaled up responses to H IV/AID S. As noted by Lew is (2005b) scaling up to deal w ith H IV/AID S w ill require large-scale additional hiring, w ith little ability thereafter to dow nsize should
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International Poverty Centre 33 available evidence dem onstrates that the response in the m edium term can be very elastic. In addition, aid can and should be directed at raising productive capacity and im proving accountability. The donor <span class="highlight">com</span> m unity is culpable in this area. Overly tight and inappropriate conditionalities, adm inistrative <span class="highlight">com</span> plexity, and lack of donor co-operation and co-ordination seriously im pede the ability of recipient countries to m ake effective use of aid inflow s. In
 Conditional Cash Transfers in Brazil, Chile and Mexico: Impacts upon Inequality
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including som e unconditional cash transfers. CCT incom e is the com ponent under scrutiny, and is the incom e received by the fam ilies registered in the program m es. This com ponent exists, how ever, only for 2003-2004. The category of ‘other incom e’ includes every form...
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including som e unconditional cash transfers. CCT incom e is the com ponent under scrutiny, and is the incom e received by the fam ilies registered in the program m es. This com ponent exists, how ever, only for 2003-2004. The category of ‘other incom e’ includes every form of incom e registered by the survey that w as not classified in any of the other three categories. This last com ponent is com prised m ainly of rents, investm ent earnings and private transfers (donations and dom estic or international
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6 International Poverty Centre W orking Paper n&ordm; 35 The transfer has three basic <span class="highlight">com</span> ponents, tw o of w hich are conditional and one non- conditional. H ouseholds benefiting from O portunidades receive an unconditional transfer in the am ount of 250 pesos ($ 32 PPP) per elderly adult in the household. Additionally, households receive a food support transfer of 189 pesos ($ 24 PPP) conditional on attending training sessions on nutrition and health. The m ore substantive transfer, though, is the
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including som e unconditional cash transfers. CCT incom e is the <span class="highlight">com</span> ponent under scrutiny, and is the incom e received by the fam ilies registered in the program m es. This <span class="highlight">com</span> ponent exists, how ever, only for 2003-2004. The category of &lsquo;other incom e&rsquo; includes every form of incom e registered by the survey that w as not classified in any of the other three categories. This last <span class="highlight">com</span> ponent is <span class="highlight">com</span> prised m ainly of rents, investm ent earnings and private transfers (donations and dom estic or international
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8 International Poverty Centre W orking Paper n&ordm; 35 of recipient (e.g., w age em ployee or self-account w orker). The inform ation available in Chilean datasets m akes it very difficult, how ever, to reverse this adjustm ent. Also, this adjustm ent cannot be reproduced for the other countries. The third challenge w as related to the construction of total incom e.6 This involved questions about w hat should be <span class="highlight">com</span> puted, and w hat should not. In Chile and Mexico, it is custom ary to im pute the
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Sergei Soares; Rafael G uerreiro O s&oacute;rio; F&aacute;bio Veras Soares; Marcelo Medeiros and Eduardo Zepeda 9 W here G is the G ini index, ck represents the coefficient of concentration of factor <span class="highlight">com</span> ponent k relative to total incom e and &phi;k is the w eight of factor k in total incom e. D ifferencing [1] w e have: ( )k k k k k G c c&#981; &#981;&#8710; = &#8710; + &#8710; &#65533; [2] The first term in the sum m ation represents the <span class="highlight">com</span> position effect and the second the effect of the change in the coefficient of concentration. If w e
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rounded. Source: Pnad 1995, 2004; Casen 1996, 2003; Enigh 1996, 2004. Incom e from social security also had an im portant contribution to the dynam ics of inequality. It raised inequality in Brazil and Mexico but not in Chile. In Brazil and Mexico, a <span class="highlight">com</span> bination of greater concentration and a larger share of this m ore concentrated incom e <span class="highlight">com</span> ponent in the total overturned one sixth of the equalizing effect of the im proved distribution of labour incom es in Mexico and over-turned one quarter in Brazil
 Cash Transfer Programmes in Brazil: Impacts on Inequality and Poverty
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17. Note that to m ake the data from 2004 com patible w ith the data from 1995, it w as necessary to discard the inform ation that referred to the Rural North (w ith the exception of the state of Tocantins) since only after 2004 did this region begin to be included in the PNAD sam ple. 18....
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17. Note that to m ake the data from 2004 com patible w ith the data from 1995, it w as necessary to discard the inform ation that referred to the Rural North (w ith the exception of the state of Tocantins) since only after 2004 did this region begin to be included in the PNAD sam ple. 18. Recent studies on Brazil inequality (Soares(2006) and H offm an(2005)) have concentrated on the fall in inequality betw een 2001-2004 as the latter year indicate the start of the continuous fall in inequality
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interest paid on federal governm ent bonds and, therefore, can be understood as a form of governm ental transfer to the richest segm ent of the population at a m agnitude w hich is m uch greater than that of the transfers targeted on the poor.1 M ost of the prelim inary investigations that have been released up to now have only called attention to the great change verified in the <span class="highlight">com</span> ponent &ldquo;other incom es&rdquo; in term s of the volum e of resources m easured, as w ell as in its distribution: from the m ost
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10 International Poverty Centre W orking Paper n&ordm; 21 2.3 DISAGG REGATING TH E &ldquo;O TH ER INCO M ES&rdquo; 2.3.1 Separating the Incom e <span class="highlight">Com</span> ponents D eclared in &ldquo;O ther Incom es&rdquo; To separate the <span class="highlight">com</span> ponent &ldquo;other incom es&rdquo;, the idiosyncrasies of each program m e m ust be taken into consideration. In m onetary term s, the BPC is clearly differentiated from the other cash transfer program m es. O f the eight cash transfer program m es investigated by the 2004 PNAD supplem ent, it is the only one that is
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biases the results of the incidence analysis. Nonetheless, it is im portant to observe that w hen one refers to the existence of m ore than one BPC beneficiary per household, the Elderly Persons Act11 perm its the exclusion of the incom e of the BPC for the elderly in the <span class="highlight">com</span> putations of the value of the fam ily incom e per capita if an elderly person in the sam e household requests the benefit, w hich can result in the accum ulation of BPCs in the sam e household (M edeiros, Diniz &amp; Squinca, 2006). The
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12 International Poverty Centre W orking Paper n&ordm; 21 <span class="highlight">com</span> prise a series of transferences w ith rules that are distinct for each program m e and unknow n unidentifiable from the PNAD dataset, and there is no inform ation about the presence of disabled persons in the household, w hich is a problem for BPC. This does not m ean that there is no clear prevalence of typical values from the different cash transfer program m es: R$ 7&mdash;Cooking G as Stipend (per m onth); R$ 15&mdash;Bolsa Fam&iacute;lia and Bolsa Escola
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confused w ith that of another cash transfer program m e. 3 INCID ENCE AND EFFECTS O N INEQ U ALITY AND PO VERTY 3.1 INCIDENCE O F TH E CASH TRANSFER PRO GRAM M ES In order to analyze the incidence of the incom e of the cash transfer program m es, w e w ill analyze the concentration curves and the concentration indices of the incom e that <span class="highlight">com</span> es from the BPC, from the incom e that <span class="highlight">com</span> es from the other cash transfer program m es (Bolsa Fam&iacute;lia and others), and from the incom e that <span class="highlight">com</span> es from the
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age. For this reason, w e analyze pensions that are below or equal to the m inim um w age in order to capture those non- contributory pensions w hich are also an im portant <span class="highlight">com</span> ponent of the cash transfers in Brazil. Figure 5 show s that sim ilar to the BPC and to the Bolsa Fam&iacute;lia, pensions linked to the m inim um w age seem to be w ell targeted in an ex-ante analysis: 64% of the reported incom e in this <span class="highlight">com</span> ponent goes to fam ilies that w ould be living below the poverty line w ithout this
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Fabio Veras Soares, Sergei Soares, M arcelo M edeiros and Rafael G uerreiro O s&oacute;rio 21 Returning to the concentration of the different <span class="highlight">com</span> ponents, it is interesting to observe that the m ost concentrated <span class="highlight">com</span> ponent is the one that refers to the incom e from rents w ith a concentration index of 77.80, follow ed by the pensions and retirem ent funds that are above the social security floor, w ith a concentration index of 75.78, and by the residual incom e <span class="highlight">com</span> ponent that w e associate w ith
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0.149 0.244 0.056 - 0.025 -0.137 0.203 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 3.2 RO BUSTNESS ANALYSIS O F TH E DISAGGREGATIO N O F TH E &ldquo;O TH ER INCO M ES&rdquo; CO M PO NENT In order to analyze the robustness of the disaggregation of the &ldquo;other incom es&rdquo; <span class="highlight">com</span> ponent, w e w ill use the distribution of this <span class="highlight">com</span> ponent in 1995 (at 2004 values) as our reference param eter.16 Let us assum e that the average real incom es from &ldquo;interest&rdquo; (the original 2004 other incom es) appropriated by each
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24 International Poverty Centre W orking Paper n&ordm; 21 3.3 DECO M PO SITIO N O F TH E EFFECTS O N INEQ UALITY The recent reduction in inequality in Brazil is already a know n fact. Soares (2006) show s that the 2004 G ini Index (0.568) is the low est since the National H ousehold Survey started in the m id-1970&rsquo;s.18 Despite the trem endous w eight of the labor incom e w hich <span class="highlight">com</span> prises 73% of the total incom e, an im portant part of the reduction in inequality can be attributed to the &ldquo;other incom
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transfer&ecirc;ncias n&atilde;o s&atilde;o a causa principal da redu&ccedil;&atilde;o da desigualdade&rdquo;. Econ&ocirc;mica. V.7 N.2. Dezem bro. IBG E (2006) &ldquo;Aspectos <span class="highlight">Com</span> plem entares de Educa&ccedil;&atilde;o e Acesso a Trasfer&ecirc;ncias de Renda de Program m eas Sociais. PNAD. M edeiros, M .; Diniz, D.; Squinca, F. (2006)&ldquo;Cash Benefits to Disabled Persons in Brazil: an analysis of the BPC &ndash; Continuous Cash Benefit Program m e&rdquo;. IPC W orking Paper 16. Brasilia. International Poverty Centre. M DS &ndash; M inist&eacute;rio do Desenvolvim ento Social (2006) &ldquo;M anual de O rienta&ccedil;&atilde;o do
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17. Note that to m ake the data from 2004 <span class="highlight">com</span> patible w ith the data from 1995, it w as necessary to discard the inform ation that referred to the Rural North (w ith the exception of the state of Tocantins) since only after 2004 did this region begin to be included in the PNAD sam ple. 18. Recent studies on Brazil inequality (Soares(2006) and H offm an(2005)) have concentrated on the fall in inequality betw een 2001-2004 as the latter year indicate the start of the continuous fall in inequality
 Distinguishing Chronic Poverty from Transient Poverty in Brazil: Developing a Model for Ps...
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PN AD data and Rocha (2003). 4 MODEL SPECIFICATION AND DATA SOURCES Our Transient-Chronic analysis (henceforth T-C) is based on the com ponent approach (e.g., com paring constant versus fluctuating com ponents of a poverty index). It considers the distinction betw een a station...
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PN AD data and Rocha (2003). 4 MODEL SPECIFICATION AND DATA SOURCES Our Transient-Chronic analysis (henceforth T-C) is based on the com ponent approach (e.g., com paring constant versus fluctuating com ponents of a poverty index). It considers the distinction betw een a stationary or perm anent com ponent and a transient com ponent, both of w hich contribute to the propensity to poverty of each cohort. In contrast to the em pirical analysis proposed by Ravallion (1988) and Jalan and Ravallion (1998
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PN AD data and Rocha (2003). 4 MODEL SPECIFICATION AND DATA SOURCES Our Transient-Chronic analysis (henceforth T-C) is based on the <span class="highlight">com</span> ponent approach (e.g., <span class="highlight">com</span> paring constant versus fluctuating <span class="highlight">com</span> ponents of a poverty index). It considers the distinction betw een a stationary or perm anent <span class="highlight">com</span> ponent and a transient <span class="highlight">com</span> ponent, both of w hich contribute to the propensity to poverty of each cohort. In contrast to the em pirical analysis proposed by Ravallion (1988) and Jalan and Ravallion (1998
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Rafael Perez Ribas and Ana Fl&aacute;via M achado 11 and the dow nw ard m obility rate can be calculated as follow s: [ ] ( )( )1 1,2212 1 ;, 1)1(|0Pr &minus; &minus;&minus; &minus; &minus; &prime; &minus;&Phi; &minus;+&prime;&minus;&prime;&minus;&Phi; ==&minus;&gt;= dj djdj jdjdjd z xz PPe &micro;&beta; &rho;&omega;&gamma;&micro;&beta; . (13) In this M arkov m odel, chronic poverty, w hich is identified in Equation (7), depends not only on individual characteristics, represented by vectors jz and jx , but also on a state dependence <span class="highlight">com</span> ponent. This state dependence is pronounced w hen the probability to be poor in d is
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18 International Poverty Centre W orking Paper n&ordm; 36 Finally, 73 per cent of total observed poverty from 1993 to 2003 (0.2013 in Table 2) is derived from a chronic condition, or a &lsquo;stationary&rsquo; propensity to poverty (0.1468/0.2013) w hile the rem aining 27 per cent is derived from transient poverty (0.0545/0.2013). W hen different poverty lines are <span class="highlight">com</span> pared, the deprivation w ith the highest chronic <span class="highlight">com</span> ponent is that of absolute indigence (82 per cent) w hile the other absolute poverty m easures
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Rafael Perez Ribas and Ana Fl&aacute;via M achado 19 vulnerable to changes in their state. Those w ho have <span class="highlight">com</span> pleted m iddle school show ed the low est chronic poverty level, 7.5 per cent, and w ere less subject to fluctuations in incom e. W ith regard to race, nonw hites exhibit the w orst poverty indicators, regardless of sex. In contrast, the characteristics that differentiate m en from w om en are sim ilar across races. M en present higher persistence (s) and dow nw ard m obility (e) rates: as a
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20 International Poverty Centre W orking Paper n&ordm; 36 Sim ulations (1) and (5), w hen <span class="highlight">com</span> pared, show that the <span class="highlight">com</span> pletion of m iddle school education by the household head reduces the probability of chronic poverty and generates significant transient gains. This result is sim ilar to that regarding individual features analyzed in Table 3. The differences observed in the indicators reveal that education goes a long w ay in explaining not only the relative position of individuals in the incom e
 The Post-Apartheid Evolution of Earnings Inequality in South Africa, 1995-2004
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Phillippe G. Leite, Terry McKinley and Rafael Guerreiro O sorio 7 location. According to Ferreira, Leite and Litchfield (2006), the inability to control for such correlations is one reason w hy these types of inequality decom positions are m erely suggestive of the causal factors underlying distri...
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Phillippe G. Leite, Terry McKinley and Rafael Guerreiro O sorio 7 location. According to Ferreira, Leite and Litchfield (2006), the inability to control for such correlations is one reason w hy these types of inequality decom positions are m erely suggestive of the causal factors underlying distributional dynam ics. 3 IN COM E IN EQ U A LITY IN SOU TH A FRICA : A N OVERVIEW A. TRENDS IN IN COME IN EQ UALITY AND O THER WELL-BEING MEASURES South Africa is one of the m ost unequal countries in
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Phillippe G. Leite, Terry McKinley and Rafael Guerreiro O sorio 5 C. DECOMPO SITIO N S O F THE GEN ERALIZED EN TRO PY MEASURES 1. STATIC D ECOM POSITION Generalized Entropy inequality indexes have the advantage&mdash;<span class="highlight">com</span> pared to the Gini coefficient&mdash;of being decom posable (statically) into sub-groups. For this study, w e use nine characteristics of the heads of households to differentiate the population into the follow ing sub-groups: Age of household head i) under 25, ii) 25-34, iii) 35-44, iv) 45
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Phillippe G. Leite, Terry McKinley and Rafael Guerreiro O sorio 7 location. According to Ferreira, Leite and Litchfield (2006), the inability to control for such correlations is one reason w hy these types of inequality decom positions are m erely suggestive of the causal factors underlying distributional dynam ics. 3 IN <span class="highlight">COM</span> E IN EQ U A LITY IN SOU TH A FRICA : A N OVERVIEW A. TRENDS IN IN COME IN EQ UALITY AND O THER WELL-BEING MEASURES South Africa is one of the m ost unequal countries in
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ensional inequality, one should highlight the large <span class="highlight">com</span> ponent of between-group inequality by race. This has contributed to the low level of hum an developm ent am ong Africans. The World D evelopm ent Report 2006 highlights the im pact of such inequalities by <span class="highlight">com</span> paring the life chances of tw o hypothetical new borns in South Africa, one African and poor and the other White and rich: &ldquo;the opportunities that these two children face to reach their full hum an potential are vastly different from the outset
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14 International Poverty Centre Working Paper n&ordm; 32 allow us to split self-em ployed incom e from em ployer incom e. This is a distinct disadvantage because the self-em ployed are likely poorer than em ployers. Social insurance transfers <span class="highlight">com</span> prise all types of regular receipts from pensions, social w elfare and other governm ental grants. O ther regular incom es <span class="highlight">com</span> prise item s such as royalties, interest, dividends, alim ony, and allow ances received from fam ily m em bers living elsew here. N
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Phillippe G. Leite, Terry McKinley and Rafael Guerreiro O sorio 15 The decom position of changes in inequality yields three term s: one for the changes in the w eight of the incom e <span class="highlight">com</span> ponent in total incom e; another for the changes in the concentration (i.e., relative distribution) of the incom e <span class="highlight">com</span> ponent; and a third for the interaction betw een the tw o. Table 4 show s that the Gini coefficient of total incom e rose 2.7 per cent from 1995 to 2000 as a result of these factors. The first
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30 International Poverty Centre Working Paper n&ordm; 32 APPEN D IX PO VERTY DECOMPO SITIO N PRESEN TED IN TABLE 1 Datt and Ravallion (1992) have proposed a decom position technique for Foster, Greer and Thorbecke poverty indices19 that identifies a grow th <span class="highlight">com</span> ponent (w hich is calculated by holding the Lorenz curve constant and allow ing the m ean to change), a redistribution <span class="highlight">com</span> ponent (w hich holds the m ean constant and allow s the Lorenz curve to change) and a residual term .20 Mathem atically
 The Impact of Unconditional Cash Transfers on Nutrition: The South African Child Support G...
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Jorge M . Agüero; M ichael R. Carter and Ingrid W oolard 15 ( ) � � � � � � −−= iii XDR ' 22 ˆ ˆ2 1 exp ˆ2 1 ˆ ψ σσpi In the second stage, w e use a flexible function for ( )rd ,β . A s suggested b...
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Jorge M . Agüero; M ichael R. Carter and Ingrid W oolard 15 ( ) � � � � � � −−= iii XDR ' 22 ˆ ˆ2 1 exp ˆ2 1 ˆ ψ σσpi In the second stage, w e use a flexible function for ( )rd ,β . A s suggested by H irano and Im bens (2004) w e use a quadratic approxim ation: ( ) [ ] iiiiiiiiiii RDRRDDRDYERD 52432210,|, ααααααβ +++++== The set of param eters ( )50 ,, ααα � = can be estim ated using ordinary least squares. G iven the estim ated param eters, w e can com pute the average potential
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8 International Poverty Centre W orking Paper n&ordm; 39 H oddinott 2005), then evaluation of treatm ent effects by <span class="highlight">com</span> paring the treated and the not- treated w ould be relatively sim ple. H ow ever, the South African CSG w as not im plem ented w ith an experim ental design. As show n in the table, non-treated children can be grouped into three categories: those w ho received the child support grant only after they w ere three years old (321 children); those w ho had applied for CSG support but had their
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12 International Poverty Centre W orking Paper n&ordm; 39 The <span class="highlight">com</span> m unity questionnaire also asked about the m ain im provem ents in the <span class="highlight">com</span> m unity since 1999. Corroborating the evidence that health services have not been generally im proving over the period of the CSG grant, only six per cent of <span class="highlight">com</span> m unities identified hospitals and clinics as the m ost im proved service since 1999, and another 4.7 per cent and 6.4 per cent listed them as the second and third m ost im proved service. These num bers
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Jorge M . Ag&uuml;ero; M ichael R. Carter and Ingrid W oolard 15 ( ) &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; &minus;&minus;= iii XDR ' 22 &circ; &circ;2 1 exp &circ;2 1 &circ; &psi; &sigma;&sigma;pi In the second stage, w e use a flexible function for ( )rd ,&beta; . A s suggested by H irano and Im bens (2004) w e use a quadratic approxim ation: ( ) [ ] iiiiiiiiiii RDRRDDRDYERD 52432210,|, &alpha;&alpha;&alpha;&alpha;&alpha;&alpha;&beta; +++++== The set of param eters ( )50 ,, &alpha;&alpha;&alpha; &#65533; = can be estim ated using ordinary least squares. G iven the estim ated param eters, w e can <span class="highlight">com</span> pute the average potential
 New Global Poverty Counts
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NEW GLOBAL POVERTY COU NTS ∗ Nanak Kakwani and Hyun H. Son ABSTRACT The m ain objective of this study is to com pute an international poverty threshold based on the food requirem ent to ensure an adequate calorie intake for the world’s poorest. The study proposes a new m ethodo...
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NEW GLOBAL POVERTY COU NTS ∗ Nanak Kakwani and Hyun H. Son ABSTRACT The m ain objective of this study is to com pute an international poverty threshold based on the food requirem ent to ensure an adequate calorie intake for the world’s poorest. The study proposes a new m ethodology based on consum er theory to provide a caloric based international poverty threshold. U sing this m ethodology, the international poverty line is estim ated to be equal to $1.22 in 1993 PPP exchange rates. According
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NEW GLOBAL POVERTY COU NTS &lowast; Nanak Kakwani and Hyun H. Son ABSTRACT The m ain objective of this study is to <span class="highlight">com</span> pute an international poverty threshold based on the food requirem ent to ensure an adequate calorie intake for the world&rsquo;s poorest. The study proposes a new m ethodology based on consum er theory to provide a caloric based international poverty threshold. U sing this m ethodology, the international poverty line is estim ated to be equal to $1.22 in 1993 PPP exchange rates. According
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Nanak Kakwani and Hyun H. Son 3 The international poverty threshold developed on the basis of 19 countries is used to produce global poverty counts utilizing the W orld Bank data base consisting of over 450 surveys for about 100 counties covering 93 percent of the population of low and m iddle- incom e countries in the world. 2 PU RCH ASING POWER PARITY The purchasing power parity (PPP) exchange rates are the essential ingredients of determ ining internationally <span class="highlight">com</span> parable poverty lines. The
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and, which is m easured by a utility level denoted by u*. Anyone whose actual enjoym ent of utility is less than u* is identified as poor. If u* is fixed for all countries, then such estim ated poverty counts will obviously be internationally <span class="highlight">com</span> parable. W e m ay define a utility function as: &#65533; &#65533; &#65533; &#65533; &#65533; &#65533; = n , r uu n f qq (1) where fq and nq are the quantity vectors of food and non-food item s of consum ption, respectively
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Nanak Kakwani and Hyun H. Son 13 11 CONCLU D ING REM ARKS Every society has its own views on what constitutes a m inim um standard of living. Strictly speaking, we should not be able to m ake cross-country <span class="highlight">com</span> parisons of poverty rates since it would be virtually im possible to agree on a <span class="highlight">com</span> m on poverty basket that is acceptable in every country. In spite of this, global estim ates do play an im portant role in m onitoring the level and change in poverty around the world. They can be used
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16 International Poverty Centre W orking Paper n&ordm; 29 Lemma 1: If the people in tw o countries have the sam e calorie cost in food PPP dollars, then they w ill enjoy the sam e level of utility. As pointed out in Section 2, Lem m a 1 tells us that we can obtain internationally <span class="highlight">com</span> parable food poverty lines if we determ ine the food poverty line in each country by using a constant calorie cost in food PPP dollars across all countries. Thus, the internationally <span class="highlight">com</span> parable food poverty line (denoting
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