Are Poverty Reduction Strategy Papers Associated with Reductions in Poverty and Improvements in Well-being?

Abstract

Should Poverty Reduction Strategy Papers (PRSPs) be the tool for implementing the new Sustainable Development Goals, as they were for the Millennium Development Goals? Surprisingly, despite the controversies around them, there has never been a quantitative evaluation of PRSPs. This paper estimates the impact of having a PRSP on various targets of the Millennium Development Goals. Results suggest that countries under PRSP treatment achieve much greater reductions than control countries, in head count poverty and infant mortality, while also achieving greater improvements in primary school enrolments and gender parity.

Acknowledgements

The authors would like to thank Bob Baulch, Laura Camfield, and Alberto Posso for their helpful comments and advice, as well as conference participants from both the European Association of Development Research and Training Institute (EADI) conference 23–26 June 2014 (Bonn, Germany) and at the Development Economics Forum 4–5 July 2014 (Ho Chi Minh, Vietnam). The data and program code used for the analysis in this paper are available from the authors on request

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes

1. http://siteresources.worldbank.org/INTPRS1/Resources/boardlist.pdf.

2. Leo and Barmeier (2010) use additional measures of under-nourishment prevalence rate and use percentage of the population with access to improved water sources, rather than access to sanitation.

3. For some countries and variables, data are not always available for the years 2000 and 2014. In these circumstances, variables are linearly extrapolated before calculating the change over the sample period.

4. This paper uses the OECD definition of fragility. The OECD defines fragility by assessing countries’ risks across five clusters of indicators: (1) violence; (2) access to justice for all; (3) effective, accountable and inclusive institutions; (4) economic inclusion and stability; (5) capacities to prevent and adapt to social, economic and environmental shocks and disasters (Organisation for Economic Co-opertation and Development [OECD], 2015).

5. The three countries are Grenada, Indonesia and Macedonia, FYR. For more details on the propensity score matching see the Supplementary Materials.

6. To attempt to control for some of the time-varying interventions that may accompany a PRSP we also included Official Development Assistance (ODA) as a control variable. ODA is the best measure of other interventions as it captures foreign aid, budget support and debt relief. These results are available from the authors. ODA was typically statistically insignificant and the other results remained substantially the same. This suggests that the PRSP effect survives controlling for this and other interventions, such as budget support and debt relief, to the extent they are correlated with ODA.

7. These studies find that PRSPs were often built on existing reform processes, further implying that identifying the specific impact of a PRSP is difficult. They also find that a PRSP alone is not enough to reduce poverty and that sustained impacts need to be matched by other public sector reforms and changes in donor behaviours and practices.

8. The results from estimating Equation (2) are more consistent with changes resulting from a discrete change like a PRSP than that resulting from a more gradual change commencing before the PRSP. For three out of the four MDG targets, it is the long-run rather than short-run effect that is statistically significant. Gradual changes due, for example, to technological diffusion are more likely to be controlled for by the time dummies, to the extent they are common across countries.