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Macroeconomic policy, external shocks and social protection

UN Photo/Eric Kanalstein: Afghan farmer gathers wheatIn the context of the Millennium Development Goals (MDGs), extreme poverty should be eradicated if there is sustained and broad-based economic growth. The greatest impediments to achieving this are poor economic management and external shocks.

In Latin American and the Caribbean, countries have enacted stabilization policies and deep structural reforms to achieve sustained growth with some success. However, these gains have been undermined by periodic financial and macroeconomic instability. Some of the failures can be blamed on weak domestic institutions and on problems coping with external shocks. In addition, social protection systems have not been readily available to counteract such macroeconomic instability for the poor in most cases. As a result, inequality, poverty, and economic vulnerability have remained serious problems in the region.

UN-DESA and the Sub-regional Office in Mexico of the United Nations Economic Commission for Latin America and the Caribbean (UN-ECLAC) joined forces to support national experts and policymakers in learning and implementing newly-developed analytical tools to better formulate macroeconomic and social protection policies in reaction to shocks that would otherwise undermine ongoing efforts to reduce poverty and economic vulnerability. 

Implications of Macroeconomic Policy, External Shocks and Social Protection Systems for Poverty, Inequality, and Social Vulnerability in Latin America and the Caribbean (2006-2010)

  • Objectives
  • Activities
  • Countries
  • Outputs
  • Partners

This project aimed to increase the skills and knowledge of policymakers and policy-shapers from seven Latin American countries to design more effective macroeconomic and social protection policies to reduce poverty and eradicate extreme poverty. Rigorous analyses were conducted to shed light on the ability of more deliberate and effective social protection policies to alleviate the impact of external shocks on poverty. This resulted in an improved understanding of the relationship between macroeconomic policies, external shocks, and social protection policies, on the one hand, and the impact on inequality, poverty, and economic vulnerability on the other.

Three regional workshops (Ecuador, Costa Rica, and Nicaragua) were held to engage country teams formed by national government officials, academics, and local experts with two goals:

  1. To better understand the national realities of the countries participating in the study (economic policy and external shocks, social protection systems, poverty, inequality, and vulnerability conditions, and the interaction of all these).
  2. To initiate the process of capacity building on the use and transfer of an integrated macro-micro modelling framework to conduct rigorous policy analyses.

The regional workshops were followed by a final seminar organized in Mexico in which country teams presented and discussed the results of their analytical work.
Special in-country workshops and missions were organized in July 2009 to intensify the training as requested by national teams.  Local presentations of the finalised country case studies were carried out by most country teams in their respective countries between April and June in 2010.

Link to workshops page

To implement the project’s activities, national teams in each of the 7 cases studies were established: Bolivia, Costa Rica, Ecuador, Guatemala, Nicaragua, Colombia and Mexico. The teams were composed mostly of government officials but also included national experts.

Link to Country Case Studies page

The project’s outputs are divided in four categories.

  • Comparative analysis - Compares the results of all the country case studies and serves as a good summary of the entire results of the project.
  • Case studies - Individual country case studies with detailed analysis and policy insights.
  • Books - Publications that synthesize the project’s outputs and are a reference to methodologies and conclusions.
  • Other outputs - Include datasets, toolkits, and other material.

Most funding of this project was provided through the Development Account’s allotment to UN-ECLAC. The project was a collaborative work of UN-ECLAC’s sub-regional Headquarters in Mexico and UN-DESA’s Development Policy Analysis Division (DPAD). The Inter-American Development Bank (IDB) and the Mexican Federal Ministry of Social Development (SEDESOL) provided financial support to conduct the studies of Colombia and Mexico, respectively. An agreement was signed with the Facultad Latinoamericana de Ciencias Sociales/ Ecuador (FLACSO Ecuador) for editing, printing and distribution of the project’s final book.

The project was also implemented in close collaboration with teams of local experts and policymakers, who were the main beneficiaries of training activities. The main government and non-governmental organisations involved in the respective country studies were:

  • Bolivia: Unidad de Análisis de Políticas Sociales y Económicas (UDAPE), an autonomous unit of the Ministry of Development Planning in Bolivia.
  • Colombia: Departamento Nacional de Planeación (DNP), an institution in charge of design and control of public policies for economic, social and environmental development, in cooperation and coordination with other line ministries and decentralized territorial institutions.
  • Costa Rica: Ministry of Planning and Economic Policy (MIDEPLAN) and the Central Bank of Costa Rica.
  • Ecuador: Facultad Latinoamericana de Ciencias Sociales/Ecuador (FLACSO/Ecuador), a post-graduate education institute within social science; and Sistema Integrado de Indicadores Sociales (SIISE), a government unit.
  • Guatemala: Instituto Centroamericano de Estudios Fiscales (ICEFI), a regional research centre; and Secretaría de Planificación y Programación de la Presidencia (SEGEPLAN), the planning entity of Guatemala’s government.
  • Mexico: Secretaría de Desarrollo Social (SEDESOL), an institution with ministerial status which is running many of the most important social programs targeted on poverty and inequality reduction.
  • Nicaragua: Central Bank of Nicaragua, National Institute of Statistics and Censuses, Ministerio de Fomento a la Industria y el Comercio (MIFIC) and Ministry of Finance.


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