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Social Protection in Fiscal Stimulus Packages: Some Evidence

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... For context, social protection is a collection of public measures provided by society to its members to safeguard them from economic and social suffering caused by the dearth or substantial drop in income from labour as a result of various events (Zhang et al., 2010). In other words, social protection aims to safeguard the most vulnerable members of society. ...
... Therefore, social protection programmes should not only assist the poor in escaping poverty but also encourage their engagement in social and political life so as to foster growth and development (Zhang et al., 2010). Thus, the scope of social protection extends far beyond managing risks or economic protection. ...
... In their examination of social assistance budgets and fiscal spending on social protection, the UNDP and World Bank found that African nations devote less than 2% of their national GDP to social policy on average. Although fiscal spending varies among and within nations, data show that higher-income countries spend less on social safety (Zhang et al., 2010). ...
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Social protection programmes aimed at alleviating poverty, inequality, and vulnerability in conflict-affected areas in Nigeria have been implemented by national and international organisations, including the Nigerian government. Against the backdrop of Nigeria's complex socio-political landscape, marked by recurring religious, ethnic, and resource-based conflicts, this study seeks to investigate the causal relationship between social protection programmes and African Journal of Peace and Conflict Studies ISSN (Print) 2634-3657 (Online) 2634-3665 Indexed by: IBSS, EBSCO, ProQuest, COPERNICUS, J-Gate and Sabinet Volume 13, Number 1, April 2024 Pp 209-231 Social Protection and Peacebuilding … 210 conflict reduction in Nigeria, throwing the spotlight on their effectiveness and implications for peacebuilding initiatives. Using a qualitative desktop research approach, secondary data were sourced from a variety of sources, including national surveys, programme evaluations, and conflict databases. These data sources provide information on the implementation of social protection Programs and conflict dynamics in Nigeria over time. The study findings show that, by addressing socioeconomic grievances, social protection programmes not only influence conflict dynamics in Nigeria but also reduce the propensity for conflict in general. The finding also shows that while social protection programmes are intended to reduce conflict, they may encounter difficulties. This study sheds light on these unintended consequences by providing a balanced view of the impact of social protection programmes on conflict dynamics in Nigeria. The study concludes by providing policymakers and development practitioners with evidence-based recommendations on how to design, implement, and evaluate social protection programmes that contribute to conflict reduction and peacebuilding in Nigeria.
... In many cases, both outcomes are likely occurring at the same time. Zhang, Thelen, and Rao (2009), writing for the United Nations Development Program (UNDP), define social protection as "policy interventions that are intended to reduce poverty and vulnerability (including transitory poverty and vulnerability due to economic or other shocks) and to improve human welfare". In addition to social protection, the elevated MPC of subsidy recipients likely led to a strong positive effect on GDP. ...
... The high level of expenditures on food, housing, and healthcare showed that the subsidies helped on all these fronts and reduced the significant economic shock and transitory poverty caused by the pandemic. The policies enacted in Peru, and the resulting high MPC, demonstrate how fiscal policy can simultaneously stimulate the economy and provide social protection (Zhang et al., 2009), as even a modest multiplier effect would have to lead to a positive impact on Peruvian GDP. ...
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The COVID-19 pandemic has led to unprecedented economic challenges across the world. To combat these challenges, the government of Peru used fiscal stimulus in the form of direct subsidies paid to vulnerable populations for social protection and to stimulate the economy. Using 514 survey responses collected both in-person and online, the objectives of this study were to calculate the marginal propensity to consume (MPC) for Peruvian subsidy recipients and to evaluate the heterogeneity amongst beneficiaries based on four individual factors: pre-pandemic savings, financial inclusion (bank account ownership), survey response type (online vs in-person), and domicile location (residing in Lima Metro or not). Overall, survey responses showed an average MPC of 0.89, which was greater than subsidy-inspired MPC studies from high-income countries like the United States, United Kingdom, and Japan. There was a statistically significant relationship between MPC and liquidity, which corroborated previous studies on MPC from other countries. Relationships between similar programs in Peru and high-income countries for the impact, effectiveness, and purpose of direct stimulus payments are discussed.
... The fourth issue concerns the measures taken during both crises. During both crises, many governments have taken immediate comprehensive actions to limit their contagion through implementation of several expansionary monetary and fiscal measures aimed at stabilizing financial markets and ensuring the flow of credit, and therefore, during the GR, the stimulus packages of 48 countries -20 of them developing countries (DCs) -collectively accounted for 3.9 percent of world GDP (as measured in 2008) and 4.8 percent of their national GDPs (Zhang et al. 2010). Moreover, an ILO (2009) report comparing the composition of interventions in 54 developed and DCs concluded that some measures, such as support for small and medium enterprises (SMEs) and additional public expenditure on infrastructure, were more popular than others, in boosting income, protecting employment, particularly for the vulnerable groups like informal economy workers, young people, and migrant workers. ...
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The relevant literature shows that populists come to power through various rhetorics by exploiting the incumbent orders and the problems they have caused. However, failures and disappointments in fulfilling their promises push them to employ increasingly authoritarian measures to silence society to stay in power by gradually changing the system, manipulating citizens through controlling media, and undermining fundamental institutions. By emphasizing the overall performance of populist governments during the COVID-19 pandemic crisis, this article explores the future course of populist politics and governments after the pandemic. The paper concludes that although the pandemic has clearly shown the limits and capacity of many populist governments, the political and economic conjuncture in the post-pandemic era, coupled with the high tension of power transition, might bring new "opportunities" for the use of populists. With several defects and structural weaknesses of the existing liberal multilateral order, populism is here to stay with different implications for the multilateral liberal order and globalization. As a dangerous external shock to the global economic and political system, the COVID-19 pandemic arrived at a stage when the negative repercussions of the Global Recession (GR) had not fully subsided, exacerbating existing problems, such as unemployment, loss of income, and inequality, with further political and social repercussions. With the advent of other "horses of the
... Furthermore, the social protection measures may contribute to addressing the pandemic's immediate issues while also building on long-term SDG commitments [39]. According to Zhang [40], the scope of social security policies has both direct and indirect effects in terms of preventing individuals from losing their jobs and properties, as well as indirect effects in terms of providing opportunities for the vulnerable to rise out of poverty, resulting in a more prosperous and resilient economy. ...
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The implications of the ongoing COVID-19 pandemic have stretched far beyond human health and wellbeing, causing serious setbacks for the achievement of the Sustainable Development Goals (SDGs). Although governments worldwide have implemented different fiscal stimulus measures to mitigate the implications of COVID-19, it is important to develop a precise understanding of their focus areas to ensure if the progress of SDGs is on track. For a specific case of Indonesia, this study establishes a thorough understanding of the COVID-19 implications on SDGs, and its fiscal stimulus package through a literature review and semi-formal interviews with the core stakeholders in Indonesia. The study results highlighted that COVID-19 has varyingly affected the progress of all SDGs in Indonesia. Amongst the four pillars of sustainable development in Indonesia, the SDGs on the social and economic development pillars are stated to be the most impacted. As for the fiscal stimulus, it is perceived that it can help maintain the SDGs’ attainment progress to a certain extent, although there are several concerns on its implementation. Deriving lessons from the conducted research, the study puts forward key suggestions for the effective implementation of SDGs in the post-COVID-19 era.
... After the insolvency of the Lehman Brothers investment bank in the United States in 2008, most countries provided unprecedented bank rescue packages in order to keep the financial system from collapsing. Moreover, most countries also provided fiscal stimulus Prascad and Sorkin 2009;Zhang, Thelen, and Rao 2010). Finally, collective bargaining systems and minimum wage legislation helped the nominal unit labor cost and price levels to remain roughly constant instead of severely dropping, as they did during the Great Depression and as would be the normal reaction if labor markets and collective bargaining systems were as flexible as perpetually demanded by mainstream economists. ...
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The Great Recession after 2008 did not turn out to be as deep and severe as the Great Depression of the 1930s. According to the European Commission, this positive result is due to the fact that economic policy-makers around the world learnt their lessons from the Great Depression in stabilizing their financial systems and, moreover, that particularly the European Union and its economic governance system has become a shelter against negative external shocks in coordinating stabilization policies to maintain aggregate demand. This paper argues that the claim of the European Commission needs some qualifications: on the one hand, the lessons have not been applied appropriately in all EU and, particularly, Eurozone Member States. This is, on the other hand, not merely the result of mismanagement of individual governments but the systematic outcome of an ineffective and even counterproductive European economic governance system. Although, in the wake of the Euro Crisis some crisis control and emergency measures have been established, crisis resolution has failed as the core of the inefficient governance system - the European Stability and Growth Pact (ESGP) - has not been reformed adequately. --
... Higher growth in Asia represents increased external demand for the rest of the world and leads to a cut in China's current account surplus relative to GDP (Von Arnim, 2010Prasad and Sorkin, 2009). Some studies forecast that the Chinese fiscal stimulus package had the potential to boost domestic demand sufficiently to raise internal job creation by as much as 17 to 20 million new jobs in non-farming sectors (He, Zhang and Zhang, 2009). 10. ...
Article
Economic recovery from the crisis triggered by the collapse of Lehman Brothers in 2008 remains both weak and uneven across countries. The result is persistently high unemployment in some countries, and growing job precariousness almost everywhere. In the countries where the crisis originated, the financial system remains dysfunctional, thereby affecting enterprise investment and further delaying a job recovery. This report shows that a sustainable, job-rich recovery is possible – provided that the factors that led to the crisis are tackled.
... The scenario was completely different during the recent crisis. Indeed, Zhang, Thelen, and Rao (2010) show that additional social protection measures constituted about one-quarter of the total cost of the stimulus packages and close to 50 per cent in some countries (e.g. South Africa, Singapore, and Taiwan). ...
... Size of Social Protection Component of Stimulus Packages (in percent of total announced amount)Sources: UNICEF staff calculations based onZhang et al. (2010) ...
Article
The 21st century starts with vast inequalities for children in terms of income, access to food, water, health, education, housing, or employment for their families. Half of the world’s children are below the poverty line of $2 a day and suffer from multiple deprivations and violations to basic human rights. More than 22,000 children die each day, and most of their deaths are preventable. This volume presents some of the critical acknowledged voices to move a necessary agenda forward. It explains multidimensional poverty measurements, describes current trends and presents policies to reduce poverty and inequality.
... Measures popular elsewhere, such as direct cash transfers to low income families, enhanced social assistance programs or subsidized education loans were categorically ruled out. In fact, a UNDP report finds that within a sample of 35 economies Turkey's fiscal plan scored the lowest on the social protection front, with less than 1.5% of its stimulus funds allocated to social spending(Zhang et al. 2009). A likewise tendency marked infrastructure investment. ...
Article
Full-text available
With its dilatory and piecemeal fiscal activism and uncharacteristic aversion to IMF assistance, the Turkish government's response to the global economic crisis of 2008–9 diverged considerably from prevalent trends in other major emerging market countries. Underlying this intriguing pattern were Turkey's pre-existing policy and macroeconomic constraints, cognitive lapses on the part of policymakers, and the conjunctural dynamics of domestic politics. The interplay of these factors progressively narrowed the policy space for vigorous action, leading to a motley combination of reactive initiatives that neither offered sufficient protection to vulnerable social groups nor promised sustainable growth in the long run despite rapid short-term recovery.
... The implications of these trends, both in terms of the overall impact on levels of social assistance, as well as the potentially adverse impacts associated with policy choices taken to achieve the steep contractions, are discussed in the following sections. General increases in social spending during 2008-09 were largely facilitated by an overall expansionary fiscal stance and reflected a greater policy emphasis on protecting vulnerable populations from the negative shocks of the crisis (Zhang et al. 2010 and Clements et al. 2011). For example, on average about 24 percent of the total announced fiscal stimulus amounts by developing countries was directed at social protection programmes (Figure 4). ...
Article
In the wake of the food, fuel and financial shocks, a fourth wave of the global economic crisis began to sweep across developing countries in 2010: fiscal austerity. Serving as an update of earlier research by UNICEF, this working paper: (i) examines the latest IMF government spending projections for 128 developing countries, comparing the three periods of 2005-07 (pre-crisis), 2008-09 (crisis phase I: fiscal expansion) and 2010-12 (crisis phase II: fiscal contraction); (ii) discusses the possible risks for social expenditures; (iii) assesses the most common adjustment measures being considered by developing countries in 2010-11 and their potentially adverse impacts on vulnerable populations; and (iv) summarizes a series of alternative policy options that are available to governments to expand fiscal space and ensure a Recovery for All, including children and poor households. While most governments introduced fiscal stimuli to buffer their populations from the impacts of the crisis during 2008-09, premature expenditure contraction became widespread beginning in 2010 despite vulnerable populations’ urgent and significant need of public assistance. Our analysis confirms that the scope of austerity is severe and widening quickly, with 70 developing countries (or 55 percent of the sample) reducing total expenditures by nearly three percent of GDP, on average, during 2010, and 91 developing countries (or more than 70 percent of the sample) expected to reduce annual expenditures in 2012. Moreover, comparing the 2010-12 and 2005-07 periods suggests that nearly one-quarter of developing countries appears to be undergoing excessive contraction, defined as cutting expenditures below pre-crisis levels in terms of GDP. Regarding austerity measures, the scope of options under consideration in developing countries seems to have widened considerably since a pioneer expenditure analysis was carried out by UNICEF in October 2010 (“Prioritizing Expenditures for a Recovery for All”). An updated review of the latest IMF country reports shows that governments are weighing various cost-saving policies, including: (i) wage bill cuts/caps, including salaries of education, health and other public sector workers; (ii) elimination or reduction of subsidies, including for basic food items; and (iii) rationalizing social protection schemes by reforming pensions or further targeting social safety nets. Also widely discussed is the introduction or broadening of taxes, such as VATs, on basic products consumed by vulnerable populations. The paper questions if the projected fiscal contraction trajectory – in terms of timing, scope and magnitude – as well as the specific austerity measures considered are conducive to the objective of adequately protecting children and poor households and the achievement of development goals such as the MDGs. The paper encourages policymakers and development partners to evaluate the potential human and development costs of foregone social expenditures and to consider alternative policy measures to ensure a Recovery for All.
... While the causes and effects of the price-induced crisis remains matter of debate, 5 at its peak virtually all existing recommendations included, among the most urgent and cogent priorities, the introduction or expansion of social protection programs (Timmer, 2010;UN, 2009;HLT, 2008;von Braun, 2008;World Bank, 2008). These measures were eventually implemented in various countries although, as documented in ex-post reviews, resulting in different levels of performance (Mousseau, 2010;Zhang et al., 2010;Wodon and Zaman, 2009). In the current era of food price volatility as well as political turmoil in some regions, social protection is likely to stay relevant and rank high in international recommendations (Ahmed, 2011;Zoellick, 2011;Fan, 2010). ...
Article
This paper reviews the growing literature on social protection. While not new, the concept evolved remarkably in recent years. It is approached from a multitude of perspectives, and intersects with broader bodies of literature - particularly around public policy, pro-poor growth, rights, humanitarian strategies, and aid effectiveness - as well as feeding into specific programmatic issues (e.g. conditionality, targeting and transfer selection). This blend of challenges and approaches has often made debates elusive and polarized. The paper examines the evolution and definitions of social protection, and unbundles critical policy, institutional and implementation quandaries. Taken together, these considerations shape a set of context-specific models of social protection. The paper's five core conclusions may help chart future directions for social protection research and practice.
... La résistance de ces trois pays à la crise, et surtout de la Chine qui est un partenaire commercial important, voire le principal, de la majorité des pays d'Asie, explique la chute beaucoup moins brutale de la croissance dans « l'Asie en développement » que dans les pays développés et dans le reste du monde (figure 1). de dollars, 6,56 % du PIB), la Malaisie (12,12 milliards de dollars, 5,67 % du PIB) pour ne citer que les principaux (Zhang, Thelen, Aparna, 2009). Ces annonces sont parfois exagérées car elles incluent des dépenses déjà prévues avant la crise et elles sont effectivement réalisées sur deux ou trois années. ...
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The Economic Crisis in East Asia : Rebalancing Growth Without Income Hike ? This article analyses the impact of the international crisis in Asia. We show that the main channel of contagion was trade and not finance. We then question the nature of the recovery which is getting steam since the spring of 2009 thanks to the success of the Chinese stimulus plan. This recovery is not sustainable. Without an increase of the income labour share, there can be no rebalancing of growth in favour of the domestic market.
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The South Asia region faced extremely difficult economic challenges from the Coronavirus (COVID-19) pandemic. Almost two billion people living in South Asia were affected by the pandemic. The unprecedented shock in South Asia disturbed the pace and pattern of development and increased the vulnerabilities of the region. The region faced the problems of inequality, high inflation, rising fiscal deficit, disrupted growth, and environmental challenges further increasing the region’s vulnerabilities. Traditional macroeconomic policies are not enough to cope with this problem. In the face of these shocks, South Asian countries need to build robust fiscal and monetary policies and efficient use of remaining resources to build a more resilient economy for the protection of the population. Economic resilience might be effective to overcome such external shocks and support the recovery of all countries especially South Asian countries. Post-pandemic action in South Asian countries thus has become more important, especially with restrained scope of fiscal and monetary stimulus. This examines the impact of COVID-19 on South Asian countries. The paper addresses the economic challenges faced by South Asian Countries in the pre- and post-pandemic period. It also briefly discusses the fiscal stimulus packages released by the South Asian countries to build stronger economies.
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Chapter
While Asian governments have for some time pursued high rates of growth as their primary economic goal, provision of social protection tended to be viewed as an expensive luxury that only rich economies can afford. Most Asian governments, while maintaining a few social programs to assist very poor and disadvantaged groups, have generally considered social protection as the responsibility of one’s self, family, and close community. The chapter examines the status and trends of social protection policies in Asia and the Pacific. It also links social protection and social policy discussion with post-global financial crisis concerns over growth rebalancing. The chapter also discusses long-term policy challenges in this area and provides conclusion and recommendations. The authors argue that Asian countries should capitalize on the opportunity presented by the recent global financial crisis to reform and build up their social protection systems in a financially sustainable manner. In the case of pensions, governments should take actions to ensure the sustainability and adequacy of benefits for the elderly. In low-income countries, governments should concentrate limited resources on social assistance programs that address extreme poverty and basic health and nutrition needs, giving special attention to pregnant women, new mothers, and young children.
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With its dilatory and piecemeal fiscal activism and uncharacteristic aversion to IMF assistance, the Turkish government's response to the global economic crisis of 2008–9 diverged considerably from prevalent trends in other major emerging market countries. Underlying this intriguing pattern were Turkey's pre-existing policy and macroeconomic constraints, cognitive lapses on the part of policymakers, and the conjunctural dynamics of domestic politics. The interplay of these factors progressively narrowed the policy space for vigorous action, leading to a motley combination of reactive initiatives that neither offered sufficient protection to vulnerable social groups nor promised sustainable growth in the long run despite rapid short-term recovery.
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The global financial crisis has had a devastating effect on poverty levels in developing countries, and the social protection response to date, in the form of social assistance, has been limited, constrained by the weak systems and low coverage of pre-existing provision. Developing countries have struggled to honour pre-crisis social protection policy commitments due to declining revenues, and in this context the potential for expanding coverage to assist those further impoverished and the “new poor” are remote. Despite the expansionary fiscal stance adopted by many developing countries, the focus of policy responses to the crisis has been on protecting and stimulating growth. The focus has not been on social protection provision to assist the poor directly. Where social protection interventions have been made they have, in many cases, been limited to ad hoc and often regressive interventions such as generalized food or fuel subsidies, rather than more systemic and pro-poor interventions. However, there may be some scope for optimism, as the crisis has stimulated a number of initiatives to promote donor coordination and programming coherence, which may result in improvements in the efficiency and impact of future social protection programming.
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[Introduction]. In December 2008, the European Council agreed on an EU‐wide economic stimulus of “around € 200 billion”. However, this agreement is not very specific in two important respects. First, it is unclear which country is to contribute how much to the roughly €170 billion part of the fiscal stimulus that is to be effected by member states, with the remaining €30 billion to be contributed at the EU level. Second, there is no clear timeline detailing which part of the stimulus is to be delivered by when. However, both the geography and the timing of the European stimulus are important dimensions when trying to assess the likely economic impact of the pact and the progress towards it implementation. In order to contribute to the debate on the geography and timing of the stimulus, we presented a first estimate of the size of fiscal stimuli that had recently been proposed by member states (and had, in some cases, already been adopted) just in time for the European Council. The present update of that earlier paper simply presents the latest breakdown of the fiscal stimuli in member states using thesame methodology as before. In addition, an heroic attempt is made to compare the total European package for 2009 to the stimulus packages set to be implemented in theUS and China. To keep the complexity of the EU side of the exercise manageable, we only take into account the 13 largest economies in the EU that make up more than 90 percent of the EU’s GDP, plus the planned boost at the Community level. Despite this simplification, the task of estimating the size of the different programmes remains challenging, not least because of the great variety of different instruments used and the rapid evolution of national debates.
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This paper proposes a new definition and conceptual framework for Social Protection grounded in Social Risk Management. The concept repositions the traditional areas of Social Protection (labor market intervention, social insurance and social safety nets) in a framework that includes three strategies to deal with risk (prevention, mitigation and coping), three levels of formality of risk management (informal, market-based, public) and many actors (individuals, households, communities, NGOs, governments at various levels and international organizations) against the background of asymmetric information and different types of risk. This expanded view of Social Protection emphasizes the double role of risk management instruments—protecting basic livelihood as well as promoting risk taking. It focuses specifically on the poor since they are the most vulnerable to risk and typically lack appropriate risk management instruments, which constrains them from engaging in riskier but also higher return activities and hence gradually moving out of chronic poverty. Copyright Kluwer Academic Publishers 2001
Article
The article reviews announced fiscal stimulus packages in 43 countries. In March 2009, the total announced for stimulus plans is US$ 2.18 trillion, or 3.5% of world's GDP, mostly in higher income economies. The majority of these recovery packages contain measures to stimulate firms, consumers, and public investment in infrastructure. The article argues that a country approach is inadequate: a global crisis requires global responses. Developing countries will be hit hard, there is a need for increased ODA, so they are able to engage in countercyclical stimulation. Reviewing the content of stimulus packages, it is argued that stimulating global demand (and reducing poverty) will require further redistributive measures. Responses have been slow. There is an urgent need for a coordinated expansionary global stimulus package.
World Economic Situation and Prospects
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Social Protection: Reducing Risks, Increasing Opportunities.’ Manila: ADB
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Policy Basics: Introduction to the Food Stamp Program
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The Reactions of the Governments of the Americas to the International Crisis: An Overview of Policy Measures up to 31
  • ECLAC
Enhancing Social Protection and Reducing Vulnerability in a Globalizing World: Report of the Secretary-General
  • ECOSOC
Fiscal Stimulus Packages in Selected Asia-Pacific Countries
  • ESCAP