Contribution of the Poverty Reduction Strategy Papers to the performance of the Millennium Development Goals

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Contribution of the Poverty Reduction

Strategy Papers to the performance of the

Millennium Development Goals

Master thesis

Andrea R. Eggen

Groningen, August 2006

Supervisor: Dr. ir. D.J. Bezemer

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Contribution of the Poverty Reduction Strategy Papers to

the performance of the Millennium Development Goals

Abstract

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Chapter 1 Introduction

In September 2000 the United Nations Millennium Declaration was signed by 189 heads of state and government. This declaration sets the Millennium Development Goals (MDGs) which drive the global agenda of the international development community to reduce poverty and improve life, both in the donor community and within the development countries themselves.1_{For the first time in history, the international community} committed massively to an expanded vision of development, leading to the global consensus that stresses the objective of development—to end global poverty. The MDGs widely recognize that extreme poverty has many dimensions, not only low income but also vulnerability to disease, exclusion from education, chronic hunger and malnutrition, lack of access to basic amenities such as clean water and sanitation, and environmental degradation such as deforestation and land erosion that threatens lives and livelihoods (Sachs, 2005). The MDGs set quantitative targets for poverty reduction and improvements in health, education, gender equality, the environment and other aspects of human welfare (Devarajan et al, 2002). Hence, progress on the key dimensions of development can be measured. The benchmarks and targets of the MDGs, looking back to 1990 and forward to 2015, provide yardsticks for measuring results, not just for developing countries but also for rich countries that help to fund development programs and for the multilateral institutions that help countries implement them.2

Although the MDGs are global, their implementation must occur at the country level, through country-owned poverty reduction strategies or similar national development strategies that respond to local conditions and priorities (World Bank and IMF, 2004). A key vehicle to translate these long-term goals into practice are the Poverty Reduction Strategy Papers (PRSPs), through which the governments of low-income countries set out national policies and programs needed to accelerate growth, improve service delivery and reduce poverty (Harrison et al, 2003). Countries are increasingly reflecting the MDGs in their PRSPs, and the PRSP process itself is being deepened along various dimensions—participatory process, growth strategies, public expenditure management, and poverty and social impact analysis (Qureshi, 2004). Hence, the PRSPs can be seen as the country-level framework for progress towards the MDGs.

The PRSP approach is now widely established and the first lessons are learned from the first generation of the PRSPs. Likewise, the MDGs also have been subjected to research. However, till now not much research has been performed on the relationship between the PRSPs and the MDGs. Therefore, it is interesting to review whether the PRSPs contribute to the performance of the MDGs. In order to tackle this problem, first existing literature is reviewed concerning the MDGs, the PRSPs and the relationship between these two concepts. Thereafter, empirical data analysis is employed to answer the research question.

1.1 Outline

The next chapter describes the concepts of the MDGs, the current status of the goals and information is set out regarding the PRSPs. In chapter three, an overview is given of several studies concerning the concepts. Next, chapter four describes the methodology used in this research. Followed by chapter five with the data analysis and the results. Finally, the last chapter gives a conclusion of the thesis and states some limitations of the study.

1_{Source: http://www.adb.org/MDGs/about.asp}

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Chapter 2 Background

2.1 Millennium Development Goals

Source: http://www.un.org/millenniumgoals

The MDGs define eight specific goals, which are subdivided into eighteen targets with 48 indicators for measuring and monitoring progress towards poverty reduction. The MDGs and the accompanying targets need to have been met in the year 2015, see Appendix I for an overview of the MDGs, its targets and indicators. The MDGs are acknowledged and pursued both by developed and developing countries, and are widely cited as yardstick against which advances in international development efforts are to be judged (Clemens et al, 2004). The MDGs are the world’s time-bound and quantified targets for addressing extreme poverty in its many dimensions (UNDP, 2005). The first seven goals are mutually reinforcing and are directed at reducing poverty in all its forms. The last goal—global partnership for development—is about the means to achieve the first seven goals. Many of the poorest countries will need additional assistance and depend on the rich countries to provide this assistance. Countries that are poor and heavily indebted will need further help in reducing their debt burdens. Next, all countries will benefit if trade barriers are lowered, allowing a freer exchange of goods and services.3

As already stated in the introduction, the international community can measure progress on key dimensions of development through the MDGs. The most important factor for progress in development is the process of economic growth. Hence, the MDGs play two roles in that process. First, the goals are ‘ends in themselves’, in that reduced hunger, improved health and education, and access to safe water and sanitation are direct goals of society. Second, the goals are also inputs to economic growth and further development. When suitably empowered with human capital, infrastructure and core human rights in a market-based economy, women and men can secure productive and decent employment through personal initiative. When infrastructure, health and education are widely available, poor countries can enjoy the global division of labour in ways that promote economic growth, raise living standards, and increase technological sophistication (UNDP, 2005).

In the next chapter, an overview is given of several points of view on the MDGs. Below the history of the MDGs is described, followed by the progress on the MDGs and the status of the goals individually.

3_{Source: http://ddp-ext.worldbank.org/ext/GMIS/gdmis.do?siteId=2&menuId=LNAV01HOME1}

Goal 1 – Eradicate extreme poverty and hunger Goal 2 – Achieve universal primary education

Goal 3 – Promote gender equality and empower women Goal 4 – Reduce child mortality

Goal 5 – Improve maternal health

Goal 6 – Combat HIV/AIDS, malaria and other diseases Goal 7 – Ensure environmental sustainability

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2.1.1 Antecedents of the Millennium Development Goals

The first, second, and third UN development decades (1960s, 1970s, and 1980s) were more focussed on economic transformation and growth and in particular industrialisation (Fukuda-Parr, 2004). Since these decades an evolution has taken place in the field of development aid and research has been conducted which provides better understanding and knowledge of the problems that concern the underdeveloped areas. Consequently, the development policies were reviewed by the international community, leading to a set of international development goals; the International Development Targets (IDTs). The IDTs, adopted by the OECD in 1996, are seven quantifiable goals, divided into the fields of economic well-being, social development and environmental sustainability and regeneration. The IDTs collectively represent a set of goals for poverty reduction, embodying a multidimensional concept of poverty. These targets demonstrate that poverty is about more than just the lack of income (Black and White, 2004).

Resulting from the UN conferences in the 1990s, the MDGs followed as a successor of the IDTs. The MDGs were adopted by 189 countries at the UN Millennium Summit in September 2000 by means of the UN Millennium Declaration, as a foundation for the international recognition of development practice. With the declaration, the members of the UN committed to eliminate poverty and to build a secure and peaceful world conducive to human development (World Bank, 2005). Ever since, poverty alleviation has gained more importance on the global development agenda.

This commitment was not a one-off affair. The partnership between rich and poor countries was reaffirmed at the November 2001 launch of the Doha Round on international trade. Soon after, world leaders met again in March 2002 at the International Conference on Financing for Development in Monterrey, Mexico, establishing a landmark framework for global development partnership with developed and developing countries agreed to take joint actions for poverty reduction. The framework established in the Monterrey Consensus describes the nature and importance of a new global partnership. While the consensus rightly affirmed that poverty reduction is the primary responsibility of developing countries themselves, it also set forth a balanced approach to economic growth that recognises the interwoven nature of individual economies and how some countries need more international support (UNDP, 2005). The Monterrey Consensus is an international point of departure for detailing the specific steps to achieve the MDGs. According to the UN, the Monterrey Consensus proclaimed that a substantial increase in Official Development Assistance (ODA)4_{and other resources will be required if} developing countries are to achieve the internationally agreed development goals (Clemens et al, 2004). The developed countries have agreed to provide 0.7 percent of their GNP to development assistance. However, do far, only Denmark, Luxembourg, the Netherlands, Norway and Sweden have met this target.

Furthermore, in September 2005 the UN Member States gathered at the 2005 World Summit where the MDGs were reviewed, in particular the rate of progress on the goals. Obviously, five years after signing the Millennium Declaration, enhanced action is needed if the targets are to be met at 2015. Therefore all member reaffirmed the Millennium Declaration, stressed their commitment to achieve the MDGs by 2015, promised to increase the flows of aid and agreed to take on action on a range of global challenges.

4_{Flows of loans, grants and technical assistance to developing countries, provided by governments of rich countries. Its main objective is to promote}

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2.1.2 Progress on the Millennium Development Goals

Since the Millennium Declaration took effect, a lot of studies have been conducted regarding the progress towards the MDGs. For both the donors and recipients of development aid it is interesting to see whether the developing world is on track or not. A general conclusion resulting from these studies is that many developing countries are making substantial progress towards the MDGs as a result of improved policies, better governance, and the productive use of development assistance, though progress has varied, both across goals and across countries.

However, most developing countries are not on track to meet the MDGs before 2015.

As a whole, the world is not making progress as fast as it could make. There has been encouraging progress in some regions, but the progress on the MDGs remains very uneven. China and India, have experienced rapid economic growth over the past years. As a result, East Asia has already achieved the goal of halving poverty by 2015, and South Asia is on track to meet the target. Most other developing regions are also making steady progress. The exception is Sub-Saharan Africa, where most countries are off track. Looking at the current trends, most regions will fall short on goals for reducing child and maternity mortality, and the number of people infected with HIV/AIDS continues to grow. Prospects are brighter for education, but the goal of universal primary education will not be met in three of the six developing regions if current trends continue. And although progress has been made on reducing gender disparities, half of the regions will not achieve the goal of gender equality in primary and secondary education by the target year (Berg and Qureshi, 2005). This is attributable to the fact that for many countries, the rates of progress required to meet the MDGs by 2015 is extremely high compared to historical experience.

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Table 1 - Regional Progress in Achieving Selected Millennium Development Goals

Region Poverty Hunger Primary

Education Mortality Child Access to water sanitation Access to

Arab States Achieved Reversal On track Lagging N.A. N.A.

Central/ Eastern

Europe and CIS Reversal N.A. Achieved Lagging Achieved N.A.

East Asia/ Pacific Achieved On track Achieved Lagging Lagging Lagging

Latin America/

Caribbean Lagging On track Achieved On track On track Lagging

South Asia On track Lagging Lagging Lagging On track Lagging

Sub-Saharan Africa Reversal Reversal Lagging Lagging Lagging Reversal

WORLD On track Lagging Lagging Lagging On track Lagging

Source: The Worldwatch Institute.

To sum up, developing countries fall into three broad groups in terms of their progress towards the MDGs (OECD, 2005):

• Most of Asia and northern Africa are largely on track to meet the target of halving extreme poverty by 2015 and to achieve many of the social goals

• West Asia, Latin America and the Caribbean are making good progress towards some individual goals, such as achieving universal primary education, but have been less successful in reducing poverty • Sub-Saharan Africa and the least developed countries in other regions are far from making adequate

progress on the most of the goals

2.1.3 Status per goal

Below an overview per goal will be given, based on the Millennium Development Goals Report 2006 of the United Nations.

Goal 1. Eradicate extreme poverty and hunger

Progress on income poverty remains uneven and in many countries there has been deterioration. In 1990, 1.2 billion people lived in extreme poverty. Extreme poverty means that the people live of less that $1 a day. Recently, rates of extreme poverty fell rapidly in much of Asia, which is merely due to the economic progress in India and China. Progress was not so rapid in Latin America and the Caribbean. Poverty rates in Western Asia and Northern Africa remained almost unchanged between 1990 and 2002 and increased in the transition economies of South-Eastern Europe and the Commonwealth of Independent states (CIS). In Sub-Saharan Africa although the poverty rate declined marginally, the number of people living in extreme poverty increased by 140 million. Many sub-Saharan countries are now showing potential for long-term growth that could bring up standards of living.

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Goal 2. Achieve universal primary education

Net enrolment ratios in primary education have increased to 85 percent in the developing world, ranging from 95 percent in Latin America and the Caribbean to 74 percent in Sub-Saharan Africa. Although the sub-Saharan region has made significant progress since 1990, in Burkina Faso, Djibouti, Eritrea, Ethiopia, Mali and Niger, fewer than half the children of primary-school age are enrolled in school. Faster progress will also be needed if Oceania and Western Asia are to achieve universal primary education. Southern Asia, in contrast, has made great strides, especially over the period 1999-2004, when enrolment rose from 72 to 89 percent − largely as a result of progress in India.

Goal 3. Promote gender equality and empower women

Globally more than one in five girls of primary-school age are not in school compared to about one in six boys. Oceania, Western Asia and Southern Asia are the regions where the gender gap is most evident. Of particular concern is the wide gender gap in Sub-Saharan Africa and Southern Asia, where almost 80 percent of the world’s out-of-school children live.

Women represent an increasing share of the world’s labour force—over a third in all regions, except Southern and Western Asia and Northern Africa. However, women remain at disadvantage in securing paid jobs. Wage differentials, occupational segregation, higher unemployment rates and their disproportionate representation in the informal and subsistence sectors limit women’s economic advancement. Sociocultural attitudes, employment policies and a lack of options for balancing work and family responsibilities or for controlling the timing and spacing of births contribute to further inequality in the labour market. On the other hand, women’s political participation has increased significantly since 1990. One in five parliamentarians elected in 2005 are women, bringing the percentage of parliamentary seats held by women in 2006 worldwide to almost 17 percent.

Goal 4. Reduce child mortality

Though survival prospects have improved in every region, 10,5 million children died before their fifth birthday in 2004—mostly from preventable causes. The vast majority of these children lived in 60 countries. Sub-Saharan Africa, with only 20 percent of the world’s young children, accounted for half of the total deaths, a situation that has shown only modest improvement. In contrast, child survival has improved noticeably in Latin America and the Caribbean, South-Eastern and Eastern Asia and Northern Africa, where child mortality rates have declined by more than 3 percent annually.

Immunisation is essential in reducing child mortality. Measles is among the leading causes of child mortality that are vaccine preventable, but immunisation coverage stagnated in the 1990s at about 70 percent. The coverage has to reach at least 90 percent to reduce measles deaths effectively. That level was reached only in Latin America and the Caribbean and in East-Asia, whereas coverage actually decreased in Sub-Saharan Africa to about 50 percent (Vandermoortele, 2004).

Goal 5. Improve maternal health

Though the issue has been high on the international agenda for two decades, ratios of maternal mortality seem to have changed little in regions where most deaths occur—Sub-Saharan Africa and Southern Asia. Unreliable data and wide margins of uncertainty make it difficult to tell for sure. Adequate reproductive health services and family planning are essential in improving maternal health and reducing maternal mortality.

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South-Eastern Asia and Northern Africa have made the most headway, with increases in attended births of between 55 and 80 percent.

Goal 6. Combat HIV/AIDS, malaria and other diseases

Several countries report success in reducing HIV infection rates, through interventions that promote behaviour change. However, rates of infection overall are still growing. The number of people living with HIV continued to rise, from 36.3 million in 2003 to 38.6 million in 2005. The number of AIDS-related deaths also increased that year, to 2.8 million—despite greater access to antiretroviral treatment and improved care in some regions. The epidemic remains centred in Sub-Saharan Africa. With just over 10 percent of the world’s people, the region is home to 64 percent of HIV-positive people and to 90 percent of children of the age of under 15, living with the virus. Twelve million Sub-Saharan African children are orphans due to this virus. Around 59 percent of HIV-positive adults in sub-Saharan Africa—a total of 13.2 million people—are women.

A growing awareness of malaria’s heavy toll has been matched with greater commitment to curtail it. Annualy, 1 million people die from malaria. Increased financial flows from several sources are expected to spur key malaria control interventions, particularly insecticide-treated net use and access to effective anti-malarial drugs. The number of new tuberculosis cases is growing by about 1 percent per year, with the fastest increases in sub-Saharan Africa. Tuberculosis kills 1.7 million people a year.

Goal 7. Ensure environmental sustainability

Deforestation, primarily the conversion of forest to agricultural land, continues at an alarmingly high rate. The net decrease in forest area over the period 2000-2005 is about 7.3 million hectares per year, down from 8.9 million hectares per year from 1990 to 2000. On the other hand, the protection of the ozone layer is a global success story. And the ratio of energy used per $1,000 of GDP decreased by about 10 percent globally with transition economies and Eastern and Southern Asia showing greatest gains in efficiency. This has helped keeping the rate of increase of CO2 emissions, which are associated with global climate change, slightly lower than the overall growth of energy consumption. Per capita CO2 has remained fairly constant between 1990 and 2003, but due to population and economic growth, overall CO2 emissions continue to rise, especially in the developing world, where growth had been most rapid.

Between 1990 and 2000, sanitation coverage in the developing world increased 35 to 50 percent. This meant that 1.2 billion people gained access to sanitation during this period. The share of using drinking water from improved sources has continued to rise in the developing world, reaching 80 percent in 2004, up from 71 percent in 1990. However, there are wide disparities among countries and between rural and urban areas. In 2007, for the first time in history, the majority of people will live in urban areas. Throughout most of the developing world, this will result in larger slum populations. Sub-Saharan Africa is the world’s most rapidly urbanising region, and almost all of this growth has been in slums, where new city residents face overcrowding, inadequate housing, lack of water an sanitation. Northern Africa is the only developing region where the quality of urban life is improving.

Goal 8. Develop a global partnership for development

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The number of young people, and their share in the population, has increased dramatically in developing countries. Many face grim job prospects: youth unemployment has risen from 72.8 to 85.7 million since 1995. Young people now represent close to half of the world’s 192 million jobless people. In many countries, they are more than three times as likely as adults to looking for a job.

Access to essential drugs, especially those for treating HIV, has expanded in the developing world. Prices of antiretroviral drugs have decreased significantly and generic drugs have become more widely available and drug procurement systems have improved.

Access to information and communication technologies continues to outpace global economic growth. The number of subscribers to fixed and mobile telephones rose from 530 million in 1990 to almost 3 billion (about half the world’s population) in 2004. By the end of 2004, over half of the population in developed regions had access to internet, compared to 7 percent in developing regions and less than 1 percent in the 50 least developed countries.

2.2 Implementation of the Millennium Development Goals

Although the MDGs are global, their implementation occurs at country level

.

Developing countries are supposed to design a plan in order to reduce poverty. These plans come about in national poverty reduction strategies, and are the vehicle through which country policies, programs, and resources requirements are linked to the MDGs (World Bank and IMF, 2004). This is illustrated in the table below.

Table 2

Source: Global Monitoring Report 2005, World Bank

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strategies take the form of a Poverty Reduction Strategy Paper (Brown, 2004). The UN strongly support the PRSP as a powerful tool for achieving the MDGs, but it needs to be employed for that purpose, including both targets and time horizons.

2.3 Poverty Reduction Strategy Paper

A PRSP describes the macroeconomic, structural and social policies and programmes that a country will pursue over several years to promote broad-based growth and reduce poverty, as well as external financing needs and the associated sources of financing (IMF, 2005). The conceptual framework provided by a PRSP attempts to integrate poverty analysis, public policy, macroeconomic policies, budgetary processes and monitoring systems and attempts to do so in a participatory way (Caillods and Hallak, 2004). The PRSP addresses acute problems encountered in the course of development, with a particular focus on poverty.5_{According to Harrison et al.} (2003), PRSPs are based on country-owned development plans and are expected to reflect a consensus of views on national priorities. A focus on results is an important element of the PRSP approach, although there is no required set of indicators or goals that must be included in a PRSP. The indicators and targets should be appropriate to national conditions, in particular the assessment of poverty and the institutional capacity to monitor, as well as being consistent with policy choices in the strategy.

There is no blueprint for building a country’s PRSP. Rather, the process should reflect a country’s individual circumstances and characteristics. However, there are five core principles that underlie the PRSP approach. Hence, poverty reduction strategies should be6_:

• country-driven, promoting national ownership of strategies through broad-based participation of civil society;

• result-oriented and focused on outcomes that will benefit the poor; • comprehensive in recognizing the multidimensional nature of poverty;

• partnership-oriented, involving coordinated participation of development partners (government, domestic stakeholders, and external donors); and

• based on a long-term perspective for poverty reduction.

This country-based strategy for poverty reduction creates a link between national public actions, donor support and development outcomes needed to meet the MDGs. It is a framework of objectives, priority sectors and measures in order to achieve a higher level of development. Moreover, the PRSP approach is a participatory process involving all stakeholders, from domestic partners to external development partners. Consequently, this approach ensures that the developing countries implement monitored poverty reduction strategies and these are in turn internationally supported and institutionalised through the PRSPs (Black and White, 2004). The PRSP approach was inspired on the one hand by the national poverty reduction strategy documents produced in Uganda and Tanzania in the late 1990s, and on the other by the World Bank’s Comprehensive Development Framework (CDF)7_{approach to development support, which was originally applied only to} countries in the HIPC programme8_{(Roberts, 2005). In 1996 the World Bank and the IMF launched the Heavily} Indebted Poor Country (HIPC) Initiative to provide debt relief to 41 developing countries. In 1999, the HIPC Initiative was significantly expanded and became the enhanced HIPC Initiative. Since then, there is a link between the initiative and the poverty reduction strategies. Country-owned poverty reduction strategies should provide the basis for all World Bank and IMF concessional lending, and should give the use of resources freed

5_{Source: National Strategy for Socio-Economic Development of Albania, 2001} 6_{Source: http://www.imf.org/external/np/exr/facts/prsp.htm}

7_{The Comprehensive Development Framework (CDF) is an approach of the co-operation for development by which countries can achieve more}

effective poverty reduction.

8_{The HIPC Initiative is a framework for all creditors, including multilateral creditors, to provide debt relief to the world’s poorest and most heavily}

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by debt relief under the enhanced HIPC initiative. This strategy is reflected in the PRSP prepared by country authorities with broad participation of civil society. Ever since, several multilateral and bilateral donors, in addition to the World Bank and IMF have indicated that they will only support activities that are clearly spelled out and given priority in the PRSP documents. PRSP has thus become one of the most important documents for national planning and communicating priorities to development partners (Swallow, 2005).

The main dimensions of the PRSPs shared by most countries, both HIPC and non-HIPC are: (i) a sustained macroeconomic growth framework based on increasing the strength of public sectors, improving fiscal revenues boosting the private sector, expanding sectors of comparative advantage for the country, promoting rural development and developing infrastructure. The framework also emphasises the development of pro-poor activities, by promoting economic activities from which the poor derive direct benefit, and by developing their productivity and focusing on areas which they inhabit in disproportionate numbers (ii) human development, mostly with explicit reference to social development (health education and training), (iii) institutional development and good governance—including capacity-building of the public and private sectors. Finally, the measures and actions to be implemented are discussed in detail (Caillods and Hallak, 2004).

2.3.1 PRSP Process

In general, countries undertake several steps in the PRSP approach. The majority of the countries start the PRSP process with an Interim PRSP (I-PRSP). Countries seeking assistance under the enhanced HIPC Initiative should have a poverty reduction strategy in place at the decision point—the point at which debt relief is committed by participatory creditors.9_{An I-PRSPs is sufficient to start the process of debt relief as a country} shows commitment.10

An I-PRSP is meant to outline a country’s existing poverty reduction strategy and to provide a road-map for the development of the full PRSP—a timeline for poverty diagnostics, recognition of policy areas that need evaluation and reform envisaged participatory process, etc. It is expected that a full PRSP should be completed within 12 months of an I-PRSP, though more time can be taken if needed. If a country requires more than a year between its I-PRPS and the full PRSP, reports on progress toward PRSP preparation need to be submitted for continued assistance.11_{This comes in the form of a PRSP Preparation Status Report. Finally once the full} PRSP has come into effect, it will be succeeded by a PRSP Progress Report. Logically, this report describes the progress during the years of poverty reduction and the progress strategy is being updated. Eventually after three or four years, countries have to submit an updated and new PRSP.

All the documents published are revised by the World Bank and IMF by meanings of Joint Staff Advisory Notes (JSAN), the JSANs replaced the Joint Staff Assessments (JSA) in 2005. The JSANs are submitted by the World Bank an IMF as feedback on a member country’s PRSP related documents. It contains an analysis of the strengths and weaknesses of the poverty reduction strategy and identifies priority areas for strengthening the poverty reduction strategy during complementation. Furthermore, it links more explicitly the lending operations of the IMF and the World Bank to the PRSP's own strategy and priorities.12_{The final approval of PRSP by the} boards of the World Bank and IMF is basically a formal procedure that marks the end of an iterative process involving several stakeholders at different stages. It is not easy to say who has the final say in the approval, but the International Financial Institutions (IFIs) and the national ministries of finance have the greatest capacity to determine the outcome of the process (Calloids and Hallak, 2004).

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Figure 1- PRSP process

JSA(N) JSA(N) JSA(N) JSA(N)

Despite the limited evidence of the formula’s success, the PRSP approach is by now well established in a substantial number of countries and has been associated with major advances in country ownership, making poverty reduction more prominent in policy debates, and facilitating a more open dialogue. As of the end of August 2005, 49 full PRSPs have been circulated and an additional 10 countries have completed I- PRSPs (Burundi, Central African Republic, Congo DR, Republic of Congo, Côte d’Ivoire, Dominica, Guinea-Bissau, Indonesia, Macedonia and Uzbekistan). The focus in these countries is now on moving ahead to effectively implement the strategies.13_{Countries have been implementing their strategies, on average, for just over two} and a half years. Several countries are in process of revising their original strategies and Burkina Faso, Nicaragua, Uganda and Vietnam have already submitted their second PRSP (World Bank and IMF, 2005). Furthermore, there are some countries that immediately submitted a PRSP, these countries are: Burkina Faso, Mauritania, Nigeria, Timor-Leste, Bhutan, Nepal and Sri Lanka.

The PRSP Review of the World Bank and IMF of 2005 encourages continued support for a country-based development model, recognizing that this requires medium- to long-term commitment to institutional changes and capacity building—including efforts to strengthen governance and accountability. PRSP processes and content need to be customized to country circumstances in order to support a balance in accountabilities between governments (to their domestic constituents for improved policies, governance, and development results) and donors (to provide more and better aid in ways that support rather than detract from domestic accountability).14

Table 3 - Countries with PRSPs

Early PRSPs Later PRSPs Recent PRSPs

May 2000-June 2002 July 2002-December 2003 January 2004-December 2005

Albania* Armenia Bangladesh

Bolivia Azerbaijan* Bhutan

Bolivia Benin Bosnia and Herzegovina

Burkina Faso*** Cambodia Cape Verde

Gambia Cameroon Djibouti

Guinea* Chad Kenya

Guyana* Ethiopia PDR Lao

Honduras* Georgia Lesotho

Malawi* Ghana* Moldova

Mali* Kyrgyz Republic* Nigeria

Mauritania** Madagascar Pakistan

Mozambique** Nepal* Sierra Leone

Nicaragua** Pakistan

Niger* Sao Tome and Principe

Rwanda* Serbia and Montenegro

Senegal* Sri Lanka

Tajikistan* Tanzania*** Timor-Leste Uganda*** Vietnam* Yemen

Zambia* *,** and*** indicate one, two or three Annual Progress Reports (APRs)

Based on the World Bank and the International Monetary Fund (2004) Poverty Reduction Strategy Papers – Progress in Implementation.

13_{Source: http://www.imf.org/external/np/exr/facts/prsp.htm}

14_{Source:http://web.worldbank.org/WBSITE/EXTERNAL/TOPICS/EXTPOVERTY/EXTPRS/0,,contentMDK:20343412~pagePK:210058~piPK:210062~th}

eSitePK:384201,00.html

I-PRSP PRSP Preparation

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Chapter 3 Literature Review

This section will discuss several articles which studied the MDGs, the PRSPs and the relation between the PRSPs and MDGs. Despite their political salience and prominence in the current development practice, a number of questions have been raised around the MDGs and PRSPs, as well as their interrelation. All the papers approach the subjects from different points of view. Hence, this literature review gives a broad picture of the different matters in current development practice.

3.1 Millennium Development Goals

Evidently, given the current situation the MDGs will not be reached by 2015. Despite this negative prospect the MDGs have brought a significant change to the development practice as a whole. Looking at a global level, development progress has been occurring at exceptional levels over the past years. Given the impact of the MDGs on the development agenda, several people analysed the concept of the MDGs from different perspectives. Some are positive about the MDGs, but of course the MDGs are not without critics and sceptics either.

The MDGs have made themselves relevant. The prominence of the MDGs has resulted in a consensus around a particular set of indicators for monitoring poverty reduction, paving the way for an unprecedented degree of co-ordination amongst donor agencies, and facilitating a harmonisation of performance monitoring which has proved difficult to achieve (DAC, 2000).

Fukuda-Parr (2004) gives three reasons why MDGs matter. First, the goals put human development ― poverty, people and their lives ― at the centre of the global development agenda for the new millennium. Second, MDGs are not just aspirations, they also provide a framework for accountability; they do not simply state ideals but go on to define concrete goals that can be monitored. Third, they address not only development outcomes but also inputs from rich countries, thus forming a compact that holds both rich and poor governments accountable for opening markets, giving more aid and debt relief, and transferring technology. The MDGs are not in themselves a paradigm, but they are benchmark indicators of how we are progressing in human development and social and economic rights.

According to Roberts (2005), the MDGs will be most helpful in achieving poverty reduction if they are well-chosen in the sense of being: familiar to the main actors and stakeholders, unambiguous, readily monitored and SMART (Specific, Measurable, Achievable, Relevant and Time-bound). It is not obvious that these characteristics are fully satisfied by all the MDG targets in the social sectors. Targets were at best based on extrapolations of past achievements made by agency secretariats; they were not based on any country-by-country assessment of feasibility. Another source of ambiguity about current global target setting, concerns the status of the MDGs themselves. Some targets can be met, globally, by good performance on the part of a few large countries like China, India and Brazil.

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and improving results. Just like Roberts claims, for goals to be useful, they must be well defined and measurable; they must be agreed by those who set the strategies and appropriate the resources to pursue them; and they must be attainable under some plausible scenario.

Another point of view on the MDGs is found in the article of Clemens et al (2004). This article states that the MDGs may better be viewed not as realistic targets but as remainders of the stark contrast between the world we want and the world we have, and a call to double our search for interventions to close the gap. As a result of a review of some of the historical evidence regarding progress the MDGs, the paper makes three arguments. First, it argues that many of the MDGs are simply unrealistic for a lot of countries. Second, the paper argues that the costing studies are frequently misinterpreted and have contributed to an excessive focus on donor resources. Third, the paper posits a real risk that the MDGs, as currently conceived and promoted, could turn successes into failures. Creating targets such as the MDGs may help to rejuvenate the aid debate and energize the development community. But there is also a danger that the MDGs, by creating unrealistic expectations of what can be achieved in a short time period, will create unnecessary impressions of failure throughout the world.

Moreover the authors claim that the MDGs can be understood in two ways. One interpretation is to take the specific goals of the MDGs literally—accepting them as the real targets of the development community—and take the costing study estimates as the amount of aid needed to reach those goals. This view sees the MDGs as important mechanism for raising aid flows and ensuring accountability for donor promises. It also believes that a big push of aid can accelerate progress beyond historical norms and meet the MDGs. A second understanding of the MDGs is that the goals are a symbol of the kinds of outcomes toward which the development community should strive. Similarly, new aid flows are considered just one of several necessary conditions for progress on development indicators. By themselves, new aid flows are insufficient. This second interpretation takes the MDGs as a tool, not a practical target.

White (2004) states that the MDGs are not balanced, in that for most of them the target date is 2015, with one for 2005. This is definitely a long-term goal. Although progress can be measured with respect to being on track, it is preferable to set explicit short-term goals. Another lack of balance in the indicators is that they are mostly outcome measures. Some are output indicators, but not in a consistent manner of a set of indicators capturing inputs, process, outputs and outcomes for a single target, where outputs are the products of the ‘investment’ and outcomes are direct measures of welfare. Hence, they do not provide a basis for monitoring performance or taking the steps necessary to achieve the outcomes they contain.

In the same article, it is mentioned that most of the MDGs are clearly defined, but four exceptions may be noted. First, access to reproductive health is not measured by any existing indicator and the proxy for contraceptive prevalence is problematic. Second, the targets are loose, with child survival terminology used in a way that would upset demographers. Third, the environment target speaks of reversing current trends in resource use. Taken literally, this means that the available quantity of environmental resources should begin to increase rather than decrease. Finally, it may be questioned whether equality in school enrolments is an adequate proxy for gender equality. A defence of the measure is that equality in education is a necessary starting point for achieving other forms of equality.

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intermediate variable in the process of learning to read, write, and so on. For each of the other MDGs that were considered from this critical point of view, the available evidence tends to show a no less striking variation between the goals and their ultimate impacts on human functionings (such as gender equality or freedom from illness).

Finally, Vandermoortele (2004) questions whether the MDGs are feasible. Progress in over 130 developing countries regarding the many dimensions of human development is difficult to summarise. Monitoring can be done at different levels, from the global to the local. The level of assessment will influence the outcome regarding the feasibility of the MDGs. If the MDGs appear feasible at the global level, it does not necessarily imply that they will be feasible in all nations or at all locations. In the article, the global progress towards the MDGs during the 1990s is reviewed based on the best data that are currently available. The picture that emerges shows a very uneven pattern across regions and countries and between different socioeconomic groups within the same country. Although the picture is mixed, the overall conclusion is that none of the agreed targets for 2000 were met at the global level. This is also discussed in the previous chapter.

Vandermoortele also states that there are different ways of reaching a global or a national target. At one extreme, it can be achieved by improving the situation that already better-off segments of society- that is, a top-down approach. At the other extreme, a target can be achieved by improving the situation of the worse off population- that is, the bottom-up approach. Of course, many combinations in between are also possible. The evidence suggests that most countries come closer to following the top-down rather than bottom-up approach. Frequently, the poor are not fully taking part in national progress; evidence suggests that disadvantaged groups are often bypassed by ‘average’ progress.

3.2 Poverty Reduction Strategy Papers

The PRSP approach has widely spread over the last years; consequently, research is performed specifically on the PRSPs. It is obvious that the PRSP initiative has stimulated much debate. Moreover, as we are heading towards the second round of the PRSP, thorough analyses take place to learn lessons from past experiences and to see whether revisions are needed. Additionally, there is a quite some criticism on the current PRSP approach.

The PRSP process is widely considered to represent a real paradigm shift in development partnership (Booth and Lucas, 2003)―one which is succeeding in putting pressure on donors as well as recipients to alter their approaches, practices and procedures. It has turned the spotlight, domestically and internationally, on poor developing countries’ policies and strategies from poverty reduction, away from a preoccupation with the details of structural and institutional reforms. It has forged a higher level of consensus between development partners on country-level strategies and priorities. It had spawned a major upgrading in a number of countries of their statistical and performance monitoring capabilities. Moreover it requires donor organisations to justify the content and manner of their support in terms of their consistency with the PRSP.

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performance and results, and which crystallise these in Medium Term Expenditure Frameworks (MTEFs) (Roberts, 2005).

Booth (2003) starts from the belief that the PRSP initiative represents, at least potentially, a non-trivial change in the way international support to poverty reduction in developing countries is framed and delivered. He believes that it provides an opportunity to address some critical problems in both the governance of poor countries and the institutional framework of development assistance. It is by no means a foregone conclusion that it will work in this way. On the contrary, the aid business will surely require more than greater understanding and better intentions at the top to really transform it in the required ways. Moreover, the PRSP initiative may prove momentary, a passing fashion in the ever-changing world of international development. There is also a distinct possibility that PRSPs will make a real difference ― that they will have a greater impact on development practice and outcomes than the debt relief with which they were initially associated.

Furthermore, the PRSP challenge arises from the observation that the world remains very much as it was. It stems from the almost unreserved failure of all previous instruments and processes to achieve significant breakthroughs in the field of poverty reduction in the poorest countries, especially Africa. It raises the possibility that, against this background of failure, small adjustments in ways of doing certain things might make a significant difference. It is claimed that a shift in the emphasis of conditionality, focusing more on policy processes oriented to particular sorts of outcomes, and less on specific preconditions, just might make a crucial difference.

Based on the three years or so of experience with PRSPs, they have made a difference for the better. The major conclusions found by Booth (2003) are:

• PRSPs have mainstreamed and broadened national poverty reduction efforts.

• Complementary reforms are essential, especially in the area of public sector governance. • New spaces for domestic policy dialogue have been created.

• Monitoring processes may improve the quality of poverty reduction strategies. • PRSPs invite a more substantial transformation of the aid relationship.

Swallow (2005) points out that analysts generally agree on two major achievements of the PRSP. First, poverty reduction has been brought to the centre of national planning processes, so that sector investments need to be clearly justified in terms of their impacts on poverty. Second, the PRSP processes have generally been more transparent and participatory than other national planning processes. On the other hand, two general concerns regarding the PRSP process stand out. One concern is that the interim and finalised PRSP documents give relatively low priority to sectors that many development specialists regard as important for reducing poverty ― agriculture, human health, environmental conservation and water supply. Another concern is that poverty reduction strategies are implemented in a top-down, technocratic manner, while governments in most countries are decentralising administration and devolving authority to lower levels of government and public administration. This is also supported by Vandermoortele (2004).

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Caribbean region that qualify for the enhanced HIPC initiative. On the whole, the results prove to be disappointing, implying that it is doubtful whether the PRSP process will improve aid effectiveness.

Aid can only be effective if the donors are serious about enhancing ownership and promoting partnership. The PRSP approach and the accompanying drive toward budget support can be seen as a desperate flight forward on the part of donor agencies in order to achieve both ownership and more donor co-ordination under recipient government leadership. However, this article has shown that the results are disappointing. PRSPs are written because donors want them to be written, and domestic ownership of the strategies is limited. Participation processes are held because the donors want them to be held, but the elected parliaments are barely involved, the agenda is restricted to technical issues and the participation process exercises hardly any actual influence. Besides, this article has also shown that donors are creating virtual realities in which planning via PRSPs is dominant, but which bear little resemblance to the actual realities in which politics dominate. Limitations of the PRSP approach and in particular the lack of ownership have also been revealed by other studies.

Oxfam (2004) studied the first lessons learnt of the PRSP participation with relation to four strategic content areas: Macroeconomics, Trade, Gender and Education. If poor countries are to reach the MDGs, it is vital to learn the lessons from the first round of PRSPs, at both national and global levels. Unfortunately, in the experience of Oxfam’s staff and partners around the world, the promise of the PRSPs’ contribution to poverty reduction remains largely unfulfilled. For both process and content, although the overall picture is discouraging, it is important to note that the experience varies greatly from country to country. On the PRSP process Oxfam recognises the fact that PRSPs have been a step forwards. New spaces for dialogue on policy have been opened in almost every country. However, the spaces remain very small and are not guaranteed. ‘Consultation’ is a more appropriate description than ‘participation’ in almost all cases. Donors maintain far too much control over policy content, employing conditionality and ‘backstage’ negotiation to the detriment of participation processes. McGee and Brock (2001) argue that the adoption of the PRSP framework by the World Bank and IMF in 1999 can be interpreted on the one hand as an indication of the international creditor institutions’ increased commitment to poverty reduction after harsh critiques of the structural adjustment model, as concession to organisations campaigning for debt forgiveness in the interests of poverty reduction. On the other hand, it can be perceived as a way for the international financial institutions to increase and diversify the conditions attached to their new lending instruments. Anyway, the PRSP framework embodies a sharper focus on desired results that previous models. Moreover, it combines the promotion of pro-poor policy reform with ‘process’ conditionality of a sort entirely novel in relationships between the IFIs and borrower governments. It seeks to construct multi-stakeholder partnerships for poverty reduction which bring together IFIs, donors, governments and civil society. Besides the framework also presents new and complex information needs.

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To better realise the potential of the PRSP approach, sustained efforts on the part of countries and their development partners are, therefore, needed to: (i) reinforce the PRSPS as a country-driven approach; (ii) enhance the analysis that underpins a PRSP, (iii) strengthen the institutional capacity for successful implementation; and (iv) enhance aid effectiveness. Given the scope of these challenges, expectations need to be ambitious yet realistic, while capacity building and analytical support must be appropriately prioritized and sequenced at the country level.

3.3 Poverty Reduction Strategy Papers and the Millennium Development Goals

As mentioned in the previous chapter, the PRSP is seen as the country-level operational framework for progress towards the MDGs. This thesis examines the relationship of the contribution of the PRSPs on the performance of the MDGs. Unfortunately not many studies have been performed regarding the relationship between the MDGs and PRSPs. Below two articles will be discussed that study the relationship between PRSPs and the MDGs, though using another point of view.

Roberts (2005) for example states that most PRSPs do not take as their explicit starting point the need to reach MDG targets on time ― earlier or later. They are driven by shorter term domestic agendas and current aid relationships and, for the most part, they incorporate existing sector objectives and strategies, often already under implementation with external donor support and, at least as far as the action plans outlined in the documents are concerned, the planning horizon is limited to the medium term. Nevertheless, the policy aspirations expressed and outcomes sought in PRSPs extend well beyond the medium term. It is not surprising that in the social sectors at least, the outcomes sought are usually consistent with the MDGs for three reasons. First, the historical roots and high international profile of the goals. Second, developing country governments’ longstanding and ostensible commitment to them. And third, the growing involvement of donors, with their recently renewed insistence that their aid should demonstrably reduce poverty, in the underlying sector programmes, notably in education and health, which were building blocks for PRSPs. It is thus no coincidence that most strategies give priority to primary education, girls’ education, tackling communicable diseases and the causes of infant, child and maternal mortality etc.

Poverty reduction strategies focus, understandably, at the strategic level of policy making and intended development outcomes. This is a necessary signal of commitment for audiences both domestic and international. It sets benchmarks of development and poverty reduction achievement, and criteria against which to judge the effectiveness of policies and of implementation. However it is also a weakness in strategies’ ability to promote MDG-conducive or MDG-consistent results because PRSPs are only spottily specific about the activities and processes whereby policies will seek to bring about outcomes. There can be a ‘missing middle’ of outputs and intermediate outcomes which are for the most part not defined. According to Booth and Lucas (2004), the ‘missing middle’ of a PRSP means that PRSPs do not spell out how the identified activities can be expected to result in the achievement of the identified goal. This is not surprising as to the extent improvements are possible, they will arise from the social and political dynamics of the planning process in the medium term. It is unrealistic to expect PRSPs to bring immediate improvements. The ‘missing middle problem explains a lot about current approaches to the monitoring of PRSPs, such as the focus on final outcome/impact measurement. Roberts (2005) claims that the ‘missing middle’ is being bridged in a growing number of countries by the processes of results-oriented expenditure management. This has turned the spotlight on the processes leading to producing the outputs which support PRSP objectives.

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capture the aspirations of developing countries. Because the MDGs were set by a political process conducted through a series of global conferences and summits, there has been a concern that some of the goals and the specific, quantified targets and the indicators used to monitor progress toward the MDGs were not, in fact, “owned” by the citizens and policy makers in developing countries. Nor is there any clear consensus as to whether the MDGs apply only to global and regional aggregates or to every country regardless of starting point, population size, and income level. On the other hand, there have also been doubts expressed about the extent of ownership of the policies and programs in PRSPs, at least in part due to the fact that the papers are considered and discussed by the executive boards of the World Bank and International Monetary Fund.

In principle, major development agencies have agreed that although there is no required set of indicators or goals that must be included in PRSPs, targets are expected to be framed against the backdrop of the MDGs while taking into account initial conditions and national priorities. There is nonetheless a natural tension between the clear development needs and aspirations of low-income countries and the international community, against the need to formulate concrete plans and policies that can feasibly be implemented in the context of the annual national planning cycles. In practice there have been diverse criticisms levelled against the targets set out in PRSPs. One concern expressed by a range of stakeholders during a comprehensive review of the PRSP approach in 200215_{, is that PRSP targets are too ambitious and raise expectations that are likely to} be disappointed. Another, more recent criticism has been that PRSPs are not sufficiently ambitious with respect to the MDGs.

The objective of this empirical review of Harrison et al. is to test the hypothesis that PRSPs are systematically undercutting the MDGs. This is tackled in several, complementary ways. First, the coverage of the MDGs against the targets and indicators in PRSPs is mapped. Second, by comparing the rates of progress implied by the MDGs to the quantitative targets set out in the PRSPs, light is cast on the issue of their relative ambitiousness. Third, the PRSP targets are reviewed against recent historical progress in order to inform discussion about realism and feasibility. Finally how national targets have been adjusted in the light of implementation experience is analysed, with examples drawn from two cases, Burkina Faso and Nicaragua. The conclusion of the review is that the MDGs and the PRSP approach both underline the very substantial poverty reduction agenda in low-income countries. The potential synergies around the MDGs and PRSPs are large, bringing together national and international commitment. This review has shown that many of the MDGs do resound in national priorities expressed in PRSPs, and that the targets laid out in PRSPs are often at least as ambitious as the international commitments set by the MDGs. Yet it is important for countries to continue to experiment and adapt to strike a balance between ambition and realism in setting medium-term goals and objectives.

3.4 Conclusion

Important findings on the MDGs are that since the introduction of the MDGs poverty alleviation moved to the very top of the development agenda. They provide a framework for accountability, since the indicators are benchmarks for the progress on poverty reduction. However, a flaw is that the targets are extrapolations of past achievements, which may not be totally realistic. Moreover, since the goals have a long-term focus and are based on outcomes rather than explaining how to achieve the targets. Nevertheless, they provide result orientation, a cross-sectoral approach in development and emphasis is put on the importance of quantitative data. Vandermoortele (2004) shows that there is an very uneven pattern across regions and countries on the progress of the MDGs and between different socioeconomic groups within the same country. Besides, the

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author states that there are two approaches of reaching the targets; the top-down approach or the bottom-up approach, and many combinations are possible in between. According to Swallow (2005) the poverty reduction strategies are implemented in a top-down, technocratic matter, which is judged as a concern for the approach, given the core principles that underlie the PRSP approach identified in the previous chapter.

Looking at the articles which discuss the PRSPs, it seems that the PRSPs also have led to a shift in development partnership. There is not only focus on the recipient countries, but there is also attention for the donors, which in turns leads to a consensus between development partners. It increases the commitments of the countries engaged in the PRSP process as poverty reduction is brought to the centre of national planning. It is a consultative, transparent and multi-stakeholder participatory approach to enhance aid effectiveness. However, some authors claim that it is doubtful whether is does improve aid effectiveness, since the experiences varies greatly from country to country. Furthermore, it has been questioned if the PRSP do actually make a real difference, reasoning that it might just be a temporary instrument. Finally, in order to explore the potentials of the PRSPs, sustained and enhanced efforts are needed, both from developing and developed countries. Regarding the relationship between the two concepts, two papers were discussed. The difference between the MDGs and the PRSPs is that the former has a long-term focus and the latter is driven by shorter-term targets. The building blocks for the PRSPs are mainly the social sectors, and the outcomes sought are consistent with the MDGs. But a weakness is that the PRSP does not focus explicitly on MDG-consistent outcomes, rather it specifies the activities and processes necessary to achieve poverty reduction not how they result in the achievement of the goals set. This is called the problem of the ‘missing middle’. Harrison et al. (2003) tested whether the PRSPs are undercutting the MDGs. There seem to be synergies around the MDGs and PRSPs and many of the MDGs do resound in PRSPs. Furthermore, arguments on the ambitiousness of the PRSPs with respect to the MDGs have been brought forward by several researchers. Some argue that the targets in the PRSPs are too ambitious and another argument is that they are not sufficiently ambitious with respect to the MDGs. This has been contradicted by Harrison et al. looking at their results.

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Chapter 4 Methodology

Approximately 60 countries have been involved in the PRSP Process since 1999, when the PRSP approach was introduced by the World Bank and the IMF. A year later, in September 2000 the MDGs were acknowledged by the UN Member states. Since then, PRSPs are considered as the key means of translating the MDGs into reality. Consequently, several studies—qualitative studies mainly—are published which focus on either the PRSPs or on the MDGs, these are discussed in the previous chapter. However, till now no empirical research has been performed specifically on the relation between PRSPs and the performance of the MDGs. Hence, it would be interesting to look at this relationship as the PRSPs are the key means of translating the MDGs into reality. This leads to the following research question:

Does the PRSP approach has a positive contribution to the performance of the MDGs?

To answer this research question, the ideal situation would be that all MDGs are included in the research. Unfortunately, given the limited availability of usable data on the indicators of the MDGs, this research is confined to only three out of the eight MDGs. Respectively, goal 2: achieve universal primary education, goal 3: promote gender equality and empower women, and goal 4: reduce child mortality.

To examine the relationship between the PRSP approach and the performance of the MDGs, first it has to be explained how the PRSP approach is measured. For this research, two determinants of the PRSP approach are dentified, based on the position of each country individually in the PRSP process. As mentioned in the previous chapter on PRSP, each country deals according its own planning with the PRSP. Hence, each country started the process on different points in time and each country has a different time-line between the I-PRSP and the PRSP. Therefore, each country is marked on the basis of its starting period (PRSP Start) and on the amount of months it took between its I-PRSP and the full PRSP (PRSP Speed). In Appendix II, an overview is given of the marks on these two variables for each country, including the marking system.

4.1 Research design

The analysis includes 60 countries which are engaged in the PRSP process (the countries are listed in Appendix II). Both on the websites of the World Bank and the IMF an overview is given of the PRSP related documents published per country, in sequence of the date of publication. For this study, the information of the World Bank is used, as at January 2006. An overview of all the documents per country is given in Appendix III.

Originally, the dataset was constructed from four different sources: World Development Indicators 2005, UN Millennium Development Goal Indicator Database16_{, MDG Reports per country}17_{, National Statistics Offices}18 and the (I-)PRSP per country. However, looking critically at the data, only the data of the World Development Indicators 2005 and of the UN Millennium Development Goal Indicator Database could be used for the empirical analysis. These two sources have the most observations for the different MDG indicators over time per country. Hence, the dataset was revised.

4.2 Dependent variables

The indicators of each MDGs are taken as the dependent variable. For these variables the growth rate of the indicators during the PRSP process is taken. The following formula is used to express the growth rate of the variables:

16_{Source: http://unstats.un.org/unsd/mi/mi_goals.asp} 17_{Source: http://www.undg.org/content.cfm?id=79}

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ΔYG.I = [(Zj,tn – Zj,t0) / Zj,to] x 100

Where ΔYG.I is the growth rate for MDG “G” and indicator “I”, Zj,tn is the observation of a variable “Z”, for an individual country “j”, in a year “tn” and Zj,t0 is the observation of the same variable “Z”, for the same country “j”, in a period before “t0”

For t0 the preferable period is 1999, however this was not possible for all variables. Then another year was taken which is specified when discussing the individual dependent variable. For tn the latest available year was taken, in the majority of the cases this is 2003, otherwise 2002.

4.3 Independent variables

The two determinants of the PRSP approach identified for this research are PRSP start (P_start) and PRSP speed (P_speed). This implies that for each dependent variable two regression equations are estimated, one with P_start as the independent variable and another with P_speed as independent variable. The earlier a country started with the PRSP process, the higher the mark on P_start. The fewer months needed to come from an I-PRSP to a I-PRSP, the higher the mark on P_speed. The assumptions made for P_start is that the earlier a country started with the PRSP process, the better a country will perform on the MDGs. Considering P_speed, the assumption is that the fewer months a country needs to arrive at a full PRSP, the more intensively a country is engaged in the PRSP process. Obviously the country sets great store to the PRSP process, so it is expected that this leads to a good performance of the MDGs.

The reason for choosing two independent variables separately instead of taking these variables together is based on the following reason. It appears that most countries only write an I-PRSP to get access to debt relief and further international loans (Calloids and Hallak, 2004). Hence, they may score high on P_start, but it is possible that after submitting the I-PRSP a country is less actively involved in the PRSP process. Therefore the number of months a country needs to submit the full PRSP must also be measured, as it is assumed that this indicates the value an individual country attaches to the PRSP process and in turn a more active participation in the PRSP process. To state it differently. PRSP speed indicates how hard a country is working to reach the targets outlined in the strategies, therefore this is expected to have more impact on the performance of the indicators of the MDGs. The starting period on the other hand is only expected to benefit the target attainable on a short-term basis. Given this assumptions, it is assumed both predictors lead to different effects, hence they are measured separately.

4.4 Control variables

Looking at various studies, for each indicator of the MDGs other explanatory variables are relevant as well. Therefore, if the data for these control variables are available, these are included in the model. Unfortunately, even though there are several determinants identified for the indicators, there is quite a lack of data availability. Hence, in most cases, there are less control variables in included than would be desirable. The observations of one year will be used in the statistical analysis, preferably 1999, as this is the starting value at the beginning of the PRSP process. Per goal, the control variables will me mentioned.

Contribution of the Poverty Reduction Strategy Papers to the performance of the Millennium Development Goals

Contribution of the Poverty Reduction

Strategy Papers to the performance of the

Millennium Development Goals

Master thesis

Andrea R. Eggen

Groningen, August 2006

Supervisor: Dr. ir. D.J. Bezemer

Table of contents

Contribution of the Poverty Reduction Strategy Papers to

the performance of the Millennium Development Goals

Abstract

Chapter 1

Introduction

Chapter 2

Background

.

Chapter 3

Literature Review

Chapter 4

Methodology