Bernardo M. Villegas
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Pro-Poor Funding of Social Service (Part 2)

           Relative to the income distribution, the benefit incidence of public spending on all levels of education was progressive (pro-poor) in both 2008 and 2010.  This means that the share of the poorest groups in the benefits of public spending on education was greater than the share of the same groups in the distribution of income.  The analysis of subsidy rates showed that public spending on elementary and secondary education was advantageous to the poor in 2008 and 2010.  The most pro-poor spending on education is that for elementary education.  This stands to reason because the majority of the children in the bottom 20 percent of the income ladder usually drop out before they reach Grade 6.  If they get high-quality elementary education they would  acquire a minimum of literacy to be able make a decent living.

           Finally, public expenditures on water were analyzed.  In absolute terms, the benefit incidence of total public spending on water was poorly targeted in 2008 and 2010.  The poor did not receive a greater share of public spending on water in general.  In 2008 and 2010, however, public spending on public tap and yard/plot was pro-poor in absolute terms.  This was not the case for public spending on water in dwelling places, which was biased in favor of the higher-income groups.  Relative to the income distribution, the benefit incidence of public spending on all types of water connection was progressive (pro-poor) in both years.    Predictably, public spending on public tap water was the most advantageous to the poor.

          The tools of analysis acquired by those who participated in this GDN research initiative can be very useful to local government units (LGUs) that are committing themselves to orient their expenditures on social services and infrastructures towards the bottom quarter of their population in the income ladder.  Governors and mayors who are interested in engaging the CRC economists in helping them design pro-poor programs in education, health and water services may get in touch with  Mr. Ernest Castillo at his email address ernestmarc.castillo@uap.asia

          The CRC team can help LGU heads to partner with business firms or nongovernmental organizations, utilizing the Public Private Partnership (PPP) scheme, to put up infrastructures in their respective localities to improve the delivery of educational, health and water services that are directly targeted to the poorest segments.  These projects can readily obtain financing from private commercial banks or the Development Bank of the Philippines (DBP).  These LGUs may also issue municipal bonds to finance these infrastructures.  With many of the large PPPs at the national level at a standstill  because of “paralysis by analysis,” especially at the Department of Transportation and Communication, our only hope for increasing infrastructure spending to desirable levels may be the PPPs that can be implemented by LGUs.  For comments, my email address is bernardo.villegas@uap.asia