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 SDG 10 but most importantly, by the need to evaluate the contribution of development towards achieving this goal. However, measuring the distributional impacts of development cooperation projects is a challenging task due to a myriad of factors, including the effects that domestic redistributive policies, the structure of labour markets and other factors, such as institutions, have on inequality. The methodology developed by Morabito et al. enables the analysis of the potential contributions of development projects on inequality by looking primarily at the extent to which they disproportionally benefit the most vulnerable through a mix of analytical tools (a scoreboard, a statistical analysis of development projects based on the Equity Tool, a fiscal incidence analysis).

This methodology has first been tested on three development projects funded by AFD in Cameroon, Colombia and Tunisia as part of the first phase of the Research Facility on Inequalities. 

 

This project was 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.

A second phase of the research project was launched in 2022 with the aim to extend the initial phase, to further test the validity of the methodology with respect to income and other forms of inequalities and to develop the guidelines for an inequality marker.

The initial phase of the  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 Small- and Medium-Sized Enterprises in Cameroon;
• A budget support operation aimed at supporting a health sector reform in Colombia.

The objective was to test the methodology and evaluate the relevance of its results, and, based on these findings, to review and adjust the methodology itself.

The second phase of the project aimed:

• To develop the guidelines for an inequality marker for development cooperation ;
• To further test the methodology on four AFD and EU development programmes:
  • A programme promoting sustainable access to electricity for the unserved poor rural populations in Benin;
  • A programme improving the health and living conditions of the inhabitants of the rural district of Isingiro (Uganda) and its refugee camps;
  • A programme facilitating trade between Ethiopia and Djibouti and enabling businesses and producers, as well as the most vulnerable populations, to benefit from these improvements;
  • A programme contributing to the adaptation of the communities to climate change in Vietnam. 

The initial study identified whether programmes’ beneficiaries of the three selected interventions belonged to the bottom 40% of the wealth distribution, through a mix of analytical tools:

• First, a scoreboard that assessed whether or not inequality reduction was a central objective of development programmes; 
• Second, the Equity Tool, which helped assess the position of direct beneficiaries within the national (urban or rural) wealth distribution;
• Third, the Commitment for Equity Tool, which helped estimate the distributional impact of general or sectoral budget support.

The methodological steps of the second phase of the research project were the following:

• Refining and upgrading the inequality markers and the scoreboard to provide clear benchmarks and indicators, aligned with evaluation approaches used by the European Commission, to assess whether development interventions focus on the poorest bottom 40% individuals, households or vulnerable groups that are targeted by specific development policies;
• Extending the scope of the Equity Tool questionnaire to include questions that capture the distribution of projects beneficiaries among vulnerable groups (women, ethnic, religious minorities, etc.);
• Applying the revised methodology to the four case studies.

Results of the first phase of the project:



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: The distributional impacts of development cooperation projects

 

Results of the second phase of the project:



The second phase of this project resulted in :

• The elaboration of guidelines for the implementation of the methodology, which were used to develop the European Commission's Inequality Marker. The I-Marker assesses whether, and to what extent, inequality reduction is an objective of development intervention. For this purpose, a set of criteria has been developed to establish if: - I-0: Inequality reduction is not targeted; - I-1: Inequality reduction is a significant objective; - I-2: Inequality reduction is the principal objective. The I-Marker focuses on the bottom (poorest) 40% or socio-economically disadvantaged individuals, households or groups. Watch the video on the Inequality Marker for more information ;
• A report on the testing of the methodology on the four case studies (available soon).

This project highlighted the importance of identifying direct and indirect beneficiaries of the projects, but also, more broadly, of 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.

Contact:

• Anda David, Research Officer, AFD

Contacto:

• Anda David, encargada de investigación, AFD

Despite a significant progress in Vietnam in terms of growth, poverty reduction and even inequality reduction, efforts on inequality and human development issues still need to be done.

In Vietnam, nearly 30 million people have been lifted above the official poverty line over the last three decades, and the country's human development index (HDI) has risen significantly. However, data shows that income inequality in Vietnam has increased over the last two decades. According to the World Bank, the Gini index rose from 35.7 to 38.7 from 1992 to 2012. Besides, in 2014, there were 210 super-rich individuals in the country whose combined wealth stood around $20bn, which is equivalent to 12% of the country's GDP. In fact, according to Oxfam-Vietnam calculations, the richest man in Vietnam earns more in a day than the poorest Vietnamese earns in 10 years.

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.

The goal is to adopt a multidimensional approach to provide convincing analysis on inequality. This will focus especially on inequality of opportunities and voice in order to use this as a process to engage with relevant stakeholders, especially in the debates on policy options to tackle inequality, and in mid-term to use the MIF as a way to influence monitoring of SDG 10 in the country.

The specific goals are as follows:

• The "Oxfam Vietnam Inequality Framework" is developed, piloted and adopted to the Vietnamese context;
• The OVIF is used as a tool to enhance in-depth understanding on multiple dimensions of inequality (paying special attention to inequality in voices and opportunity) and identify concrete policy gaps to tackle inequality in Vietnam;

The OVIF research findings and methodology are shared with policy makers, research institutes, and other development institutions.

The Multidimensional Inequality Framework is designed to capture the multidimensional nature of inequality, which is experienced across a number of 7 life domains, and that there are many different forms of inequality (such as concentrations of wealth, pay gaps, dispersion of income, social gradients in mortality, and greater social isolation experienced by the elderly). Within each of the 7 life domains, the framework offers a series of sub-domains and a number of indicators and measures which can be used to measure and monitor multidimensional inequality in a given context. Many of the indicators and measures suggested under each subdomain are related to the SDGs framework, which governments are already committed to monitor. This can be a useful element to guarantee at least a minimum level of data availability in all countries. Besides, the Oxfam Inequality Toolkit, which is a key companion for the practical implementation of the MIF in a given context, suggests several global databases, aside from national household surveys, to be used by teams willing to implement the framework.

The research findings point at persisting, critical inequalities across several life domains.  After conducting quantitative and qualitative analysis, the research identifies large gaps between subpopulation groups across spatial, socio-economic, and ethnic axes of inequality in their capability to enjoy the right to a proper, quality education and to experience a life free of illness and access to quality healthcare facilities. People belonging to ethnic minorities (EM), women, and people living in rural provinces are more affected by inequalities in health and education than the Kihn, men, and higher-income households living in predominantly urban areas. 

Furthermore, inequality in the capability to participate, raise one’s voice, and influence public matters is extremely acute between men and women and the poorest households, with a lower level of education, compared to the richest, urban, highly educated households. 

You may find the research paper and the policy brief here:

• Research paper: Multidimensional inequality in Vietnam
• Policy brief: Multidimensional inequality in Vietnam

 

Please find the presentation of the report "Multidimensional Inequalities in Vietnam” by Vu Thi Quynh Hoa (Head of Campaign & Advocacy in Oxfam Vietnam) and Dr. Phuong Duc Tung (Director of the Mekong Development Research Institute) during the second webinar of the AFD Research Conversations:

Contact:

• Anda David, Research Officer, AFD