Programs for mitigating adverse social impacts during adjustment : the A.I.D. experience

Following an introduction, Section 2 briefly discusses the definitional problems involved in categorizing safety net programs and presents an overview of the countries in which A.I.D. has implemented or is planning to implement such programs; this discussion is organized by region and emphasizes issues specific to each region. The heart of the study, Section 3, presents case studies of the Mali Voluntary Early Departure Program, the Tunisia Rural Works Program, and the Madagascar Food for Progress (FFP) Program. The final section identifies implications for future A.I.D. programming. (1) The major finding is that social safety net programs are often political; while this does not necessarily detract from their efficiency, A.I.D. must remain aware that it can lose control of a program if political criteria overwhelm economic and equity considerations in host government decision making. (2) The decision whether or not to implement a social safety net program should be made on a case-by-case basis. Missions should use a decision tree approach to guide them in identifying target groups and appropriate programs and in assessing feasibility. (3) Severance programs should no longer be dismissed as purely political. Lump-sum payments may be a cost-effective way to stimulate entrepreneurial activity while providing a safety net for displaced public workers; credit and retraining programs, by contrast, have had less success. (4) It is usually impossible for labor-intensive public works programs to serve as both a short-term safety net and a means of long-term job creation. Program design should be based on one or the other objective and should include a monitoring component. Missions should be wary of supporting national public works programs if they feel that geographic targeting for cost-effectiveness and equity is important. (5) Food aid, while a useful safety net, does not offer as much flexibility for promoting policy dialogue as do other forms on nonproject assistance. For one thing, the usefulness of food aid varies annually, depending on local production levels; for another, Missions may be reluctant to stop food aid when policy conditions are not met. The study concludes by identifying several areas that need further research.