Addressing persistent inequalities in income and other dimensions of wellbeing is a key policy objective of the Sustainable Development Goal 10. Multilateral and bilateral donor agencies have been directing their efforts towards promoting good governance, human and economic development, fighting hunger and reducing inequality.
The increase in development funding towards inequality reduction is accompanied by a need to monitor progress on the SDGs but most importantly, by the need to evaluate the contribution of development towards achieving these goals. However, changes in inequality are due to a myriad of factors, from redistributive policies to change in international market prices, and that is why a research team from EADA Business School has developed a methodology to identify potential distributional impacts of development cooperation projects.
This project is part of the first phase of the Research Facility on Inequalities, coordinated by AFD and funded by the European Commission's Directorate-General for International Partnerships over the 2017-2020 period. The first phase of the Facility has led to the conduct of 22 research projects and the publication of around 100 research papers and policy briefs.
This project aimed at piloting the application of the methodology developed by the researchers on three projects funded by the AFD: a programme supporting urban housing improvements in Tunisia, a programme focusing on capacity-building of SMEs in Cameroon, and a budget support operation aimed at supporting a health sector reform in Colombia.
The objective was to test the methodology in order to find out how relevant the information it provides is and, based on these findings, to review and adjust the methodology itself.
The methodology consists of four analytical steps:
- Analysis of inequality levels in the country, and its drivers
- Analysis of whether inequality reduction is a focus of national or sectoral strategies or plans, donors’ agreements, and countries’ programmes
- Analysis of potential inequality reducing effects of programmes or projects, or
- Analysis of potential inequality reducing effects of budget support operations.
Overall, the results underscore the importance of considering a pro-poor targeting ex-ante when designing development cooperation interventions that explicitly (or implicitly) aim to contribute to the reduction of inequalities in partner countries. The main strength of the methodology is that it allows an assessment of the potential reach of interventions for the bottom 40 percent of the income distribution. Therefore, the information provided thanks to this methodology can be critical to fine-tune policies before they are implemented and maximize their redistributive impact.
You may find the research paper here:
This project highlighted the importance of identifying direct and indirect beneficiaries of the projects, but also, more broadly, having a complete understanding of the development cooperation interventions, which are being analyzed, especially their objectives and conditionalities.
Equally important is the involvement of key stakeholders to communicate the objectives, scope and limitations of the studies. In some cases, the inclusion of a qualitative component in the form of interviews, consultations, or eventually field missions, may be required to ensure the successful implementation and completion of studies.
This project is carried out with the support of the European Union
The content of this project information sheet falls under the sole responsibility of the AFD and does not necessarily reflect the opinions of the European Union.