There is a wealth of evidence that spending on basic social services (health, nutrition, education) and social protection can be progressive and reach the poor, with particularly high potential returns from expenditures in these sectors reaching poor and vulnerable women and children. In recent years, empirical research has reinvigorated interest in the potential poverty outcomes from government spend in areas such as agriculture, infrastructure and private sector development.
The literature includes a number of recommendations for improving the impact of national budget spend on poverty reduction and pro-poor growth:
- Incorporating a focus on inclusive growth, with a focus on ensuring non-discriminatory participation in the growth process by large segments of the population (Alexander 2015).
- Helping the chronically poor, stopping impoverishment and sustaining poverty escapes: understanding the complex and fluctuating paths people take in and out of poverty leads the Chronic Poverty Research Centre to call for financing for social assistance, education and ‘pro-poorest’ economic growth.
- Refining the application of priority sectors and targets to help focus debate and lobby for resources, while not detracting from a poverty reduction strategy’s inter-sectoral complementarities and trade-offs.
- Improving the transparency and accountability of public financial management through strengthened oversight of the budget process, and participation by beneficiaries.
- Strengthening analytical tools for allocating limited resources: these include: assessing the alignment of the budget with a country’s growth and poverty reduction strategy; understanding the trade-offs and interrelationships between allocations; modelling the macroeconomic impact of alternative policy investment choices; and understanding how public expenditure is consistent with a structural transformation of the economy that overcomes binding constraints to growth.