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Social Security in Developing Countries$

Ehtisham Ahmad, Jean Drèze, John Hills, and Amartya Sen

Print publication date: 1991

Print ISBN-13: 9780198233008

Published to Oxford Scholarship Online: September 2011

DOI: 10.1093/acprof:oso/9780198233008.001.0001

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(p.vi) (p.vii) Preface

(p.vi) (p.vii) Preface

Social Security in Developing Countries
Oxford University Press

In the literature on development issues, it has often been assumed (explicitly or by implication) that developing countries are too poor to be able to ‘afford’ social-security systems. There are good reasons, however, to question this assumption. It is true that the complex and expensive programmes of social insurance and income maintenance that now form the backbone of social-security systems in the richer countries would be difficult to replicate in poorer countries. But there is no reason why these particular schemes should be seen to represent a universally relevant model of social-security provision. Public involvement in direct support to the vulnerable sections of the population (going beyond simple reliance on economic growth and market mechanisms) can take a wide variety of forms, and many of them have already been used with considerable success in some of the poorest countries of the world. The collection of papers included in this book explores the scope for immediate expansion of social-security systems in developing countries.

In this book, a broad view is taken of what ‘social security’ is about. We have not attempted to provide a ‘new’ definition of the term, nor is there a rigidly uniform characterization of the notion of social security in the different contributions. It may, however, help to clarify what we see as the common concern of the collection of papers included in this book, and how this concern relates to conventional notions of social security.

In attempting to define the scope of our subject, we have to guard against two distinct dangers. One danger is that of excessive specificity. ‘Social security’ has often been defined in terms of the specific instruments of intervention that have been found important in the historical experiences of particular developed countries, including, inter alia, unemployment insurance, old-age pensions, and invalidity benefits. While the general relevance of these means of intervention is a topic of great importance (and there is a substantial literature on this question), this approach to the definition of social security is not altogether useful when developing countries are the centre of our interest. We have to go into the objectives underlying these instruments, rather than concentrating on their specific and contingently chosen forms.

The other danger is that of excessive generality. Instead of seeing social security as being concerned with specific means, for instance, we could simply define social security in terms of the broad objective of removing deprivation, and regard anything that contributes to that objective as being—by definition—part of the social-security system. This alternative approach would not seem satisfactory either. Indeed, human well-being is influenced by many economic and social factors that have little to do with ‘social security’ in any plausible sense of the term. For instance, it would be absurd to describe a reduction of (p.viii) poverty in a particular country due to a change in world prices or to a discovery of natural resources as the result of social-security measures.

In this book, social security is viewed neither exclusively in terms of means, nor exclusively in terms of objectives. Broadly speaking, our concern is with the direct role that public action can play in reducing human deprivation and eliminating vulnerability in developing countries. The focus is on the use of a class of means (broadly, public action) to pursue a category of objectives (broadly, the reduction of deprivation and vulnerability). It is important to take a fairly comprehensive view of the means that are relevant to the pursuit of social security in this sense, and the different contributions to the book investigate a wide range of possibilities—including employment generation, public provisioning of health care and education, land reform, food subsidies, social insurance, among others. We should also stress that ‘public action’ does not exclusively refer here to the activities of the State. It also includes the role that other social institutions can play, both in directly providing some important forms of public support and in influencing State action in the direction of greater involvement in social-security measures.

For convenience, the term ‘formal social security’ is occasionally used in this book to refer to the conventional notion of social security, covering State-administered schemes of social insurance and social assistance (Mesa-Lago discusses the content of this conventional notion in greater detail). The paper by A. B. Atkinson and John Hills explicitly focuses on the experience of ‘formal social security’ in developed countries, and similarly Carmelo MesaLago’s discussion of social-security systems in Latin America deals specifically with the ‘formal’ components of these systems. The other chapters explore a broader range of avenues of action.

The book is divided into two parts, respectively devoted to ‘general issues’ and ‘case-studies’. We shall not attempt, in this brief introduction, to provide anything like a ‘summary’ of the chapters included in the book. However, it may be helpful to underline some of the more important themes that emerge from these investigations.

The introductory chapter by Jean Drèze and Amartya Sen addresses some foundational and strategic issues of social security, including the nature and forms of human deprivation, the distinction between ‘protective’ and ‘promotional’ objectives, the interconnections between economic growth and public support, the influence of the market mechanism, and the relationship between State action and public action. They also argue, on the basis of economic analysis as well as empirical evidence, that public support has an irreplaceable role to play in removing deprivation and vulnerability, and that this role can be played quite effectively even at an early stage of development.

A similar conclusion is reached, along somewhat different lines, by Robin Burgess and Nicholas Stern. Building on the insights of modern public economics, Burgess and Stern provide a systematic analysis of the content of (p.ix) social security, the motivation for public support, the possible contributions of different agents, and the dilemmas that public action has to face. The authors find strong grounds for extensive public involvement in the field of social security, and attempt to sort out some of the strategic issues that arise in devising practical programmes of action.

A. B. Atkinson and John Hills investigate the relevance of the experiences of developed countries to the strategy of social security in developing countries. They bring out how the social-security systems of developed countries have evolved along quite different routes, in response to country-specific objectives, constraints, and pressures. The authors argue that, given the significantly different circumstances applying in developing countries, the relevance of these experiences does not take the form of providing rigid blueprints for policy. Rather, they see the main ‘lessons’ as being related to methods of analysis, and their chapter contains a rich discussion of what can be learnt in this respect from past research on social security in developed countries.

Aside from the experience of developed countries, one may also ask whether there are lessons to learn from ‘traditional’ systems of social security. This is the theme of Jean-Philippe Platteau’s contribution to the book, which extensively draws both on anthropological studies and on economic reasoning. As Platteau argues, guaranteed access to productive resources and mutual insurance have been the chief ingredients of social security in traditional societies. But the author also notes some important limitations of these mechanisms, connected inter alia with problems of population pressure, incentives, and covariate risks. An effective system of social security must go beyond an exclusive reliance on traditional institutions, without neglecting the contributions they can make.

In the last chapter of the first part of the book, Bina Agarwal investigates some aspects of the relation between public action and family relations in the provision of social security. This takes her into an examination of the survival strategies of vulnerable households (drawing largely on empirical material relating to India), with special attention to issues of intrahousehold inequalities. Among other things, her analysis brings out the close connection between the ‘external’ and ‘internal’ vulnerabilities of the members of a household. The greater the ‘external’ vulnerability of particular household members (specifically women) to deprivation in the event of a breakdown of family relations, the greater their ‘internal’ vulnerability to inequitable treatment. This insight suggests that public action to support more vulnerable individuals may, in some ways, strengthen rather than weaken the support that these individuals get from the family. This possibility, throws important new light on the contrasting—and more common—view that social-security measures have adverse effects on family support.

The second part of the book deals with regional experiences in the provision of social security. It begins with an investigation of China’s historical experience, by Ehtisham Ahmad and Athar Hussain. This analysis clearly reveals the main (p.x) ingredients of post-revolutionary China’s outstanding success in substantially protecting the population from deprivation in spite of a relatively low level of aggregate opulence. Guaranteed access to land in the rural areas, guaranteed employment in urban areas, and public provisioning of basic commodities and services appear to have been the pillars of this success. The ‘reforms’ initiated at the end of the 1970s have posed major new challenges to this foundation of China’s social-security system, which Ahmad and Hussain discuss in some detail.

Land reform, employment generation, and public provisioning are also the main instruments of action considered in Siddiq Osmani’s study of social security in South Asia. In sharp contrast with China, the experience of this region with each of these three routes to the reduction of insecurity has been, so far, rather unproductive. The author also considers the prospects for guaranteeing minimal living standards to be severely limited by economic constraints and political circumstances. He takes a particularly sceptical view of what is likely to be achieved through land reform, and also regards the provision of greater security through generation of employment to require a radical transformation in the conception and planning of employment schemes. However, there seems to be much greater scope for enhancing living conditions through the public provision of basic needs, and in this field there have, in fact, already been remarkable achievements in some parts of the region (notably Kerala and Sri Lanka).

While China and South Asia already have a rich experience of State involvement in social security and public support, it is fair to say that so far the involvement of African States in this field has been more limited. This relates partly to the relative weakness of administrative and political structures in that region. As Joachim von Braun emphasizes, however, sub-Saharan Africa is rich in community institutions, and the potential contribution of some of these institutions to social-security programmes is by no means negligible. This makes it particularly important to study the interconnections between State-based and community-based social-security systems, and von Braun’s contribution brings some interesting empirical material to bear on this question. Inter alia, the author highlights the contrasting nature of social-security problems in land-scarce and land-abundant economies within sub-Saharan Africa.

A more detailed study of part of sub-Saharan Africa is contained in Richard Morgan’s paper on the nature and impact of social-welfare programmes in the nine ‘Southern African Development Co-ordination Conference’ (SADCC) countries. The author examines policy responses in these countries in relation to both persistent deprivation and short-run crises (resulting from climatic or economic shocks). A particular focus of study is the effect which war and destabilization—military and economic—have had on living standards within the region.

(p.xi) While ‘formal’ social-security systems similar to those existing in developed countries have tended, in the greater part of Africa and Asia, to cover only a minor (and rather privileged) proportion of the population, the situation is quite different in the relatively urbanized economies of Latin America and the Caribbean, where such systems are comparatively well developed. In his contribution to the book, Carmelo Mesa-Lago describes and assesses the functioning of formal social-security systems in these countries, and also discusses the prospects for reform. The author emphasizes the limitations of the ‘Bismarckian model’ based on contributory and occupation-specific social insurance provisions, and shows in particular how this model has often led to huge financial deficits as well as to a regressive pattern of public support strongly biased in favour of the more vocal and influential sections of the population. Achieving greater ‘uniformity’ and ‘universality’ of provisions is a major challenge to face if these systems are to play a more effective role in preventing deprivation. While some countries have already made substantial progress in that direction, the prospects for reform appear to be severely constrained in many others. This points once again to the need for innovative departures from the models of social security that have developed in industrialized countries.

The chapters of this book were initially presented as papers at a Workshop on Social Security in Developing Countries, held at the London School of Economics in July 1988 with the joint sponsorship of STICERD and WIDER. We are grateful to both institutions for their support. The encouragement and advice of Lal Jayawardena and Nicholas Stern have been especially useful. The organizational assistance of Kerrie Beale and Jacky Jennings has also been extremely helpful.

The contributions to this book have been extensively revised after the workshop, and the revisions have been greatly helped by the comments and suggestions of the participants and discussants, including Pranab Bardhan, Christopher Bliss, Robert Cassen, Angus Deaton, Meghnad Desai, S. Guhan, Margaret Hardiman, Barbara Harriss, Akiko Hashimoto, Lal Jayawardena, Emmanuel Jimenez, Julian Le Grand, Gus Ranis, Shlomo Reutlinger, Bernt Schubert, Chris Scott, Max Steuer, and Frances Stewart. We are especially indebted to Michael Lipton for very detailed comments on each of the presentations.

October 1989