Title: OECD Forum on Mexico: Policies to Promote Growth and Economic Development Mexico City 3 November 2004
1OECD Forum on MexicoPolicies to Promote Growth
andEconomic DevelopmentMexico City 3
November 2004
- Ray Boshara
- New America Foundation
- Washington, DC
- 202-986-2700 boshara_at_newamerica.net
2What is Asset Building?
- Public and private strategies to enable
low-income persons to save and accumulate
long-term assets a home, post-secondary
education, investments, a small business, and a
nest-egg for retirement - Includes both specific tools and a new
framework - Informed by Amartya Sen (capabilities) and
compatible with Hernando De Soto - Asset Building can mean
- Social Investment
- New Welfare Policy
- Combating Financial Exclusion
- Creating an Ownership or Stakeholder Society
3Why Assets?
- Assets change family balance sheets financial
security, opportunity - Lack of income means you dont get by lack of
assets means you dont get ahead - Assets change heads attitudes, expectations.
Asset effects posited and tested - See Michael Sherraden, Assets and the Poor (1991)
4Social Policy Evolution
- Income -gt Work -gt Assets
-
- Passive -gt Active
- Programs -gt Accounts
- Placed-based -gt Citizen-based (portable)
- - Assets are well-suited to 21st Century economy
and new social contract that combines choice and
responsibility - - Challenge remains to preserve some traditional
social insurance programs, where certain risks
may need to be pooled.
5Assets and Market Failure
- Financial market failure
- Huge gap between the poor and mainstream
financial institutions - 3-78 unbanked households throughout OECD
countries - Institutional failure
- Asset development policies
- Asset denial policies
- Contributes to wealth inequality and social
exclusion - Policy goal
- Inclusion expand institutional
mechanisms/policies to everyone - Must have (1) public subsidies, (2) regulatory
framework, and (3) targeted financial products.
6Assets Building in OECD Countries
United States - Individual Development Accounts (IDAs) - At-birth KidsAccounts proposed
United Kingdom - Child Trust Fund - Savings Gateway
Canada - LearnSave - Learning Bonds
Mexico BANSEFI / microfinance / credit unions Programa de Ahorro y Subsidios para la Vivienda Progressiva (VIVAH) Remittances Youngsters with Opportunities programme
7Asset Building Outside the OECD
Singapore - Central Provident Fund - Child Development Accounts
Taiwan - Family Development Accounts
South Africa - NURCHA savings for homeownership
Uganda - Assets Africa matched savings accounts
Peru and Columbia - Personal Capitalization Account (PCA) for rural women
8Research on Savings
- Developed Countries
- 1. Can the poor save in IDAs?
- Savings by the poor are modest, ranging from
18 to 38 per month in net savings (USA, UK,
Canada, Taiwan) - 2. What effect do IDAs have on savings and asset
accumulation? - Access to the IDA program had a significant
influence on the savings and asset accumulation
of those served by the Tulsa IDA program (USA,
experimental research) - Developing Countries
- Stuart Rutherford, The Poor and Their Money
- Microfinance institutions, credit unions, other
kinds of savings/assets (land, livestock, etc) - Poor save for safety, liquidity, and return
9 Research on Asset Effects(Research organized
and summarized by Sherraden, 2004)
- IDAs (more likely to)
- Work or stay employed, and work more hours
- Make educational plans for self and children
- Feel more economically secure
- Feel confident about the future
- Feel in control of their life
- Create greater future orientation
- See more clearly and better visualize a future
- More likely to save for their future
- Assets
- Better labor market experience, marriages,
health, health behaviors, political interest - Better cognitive development, physical health,
and socio-emotional behavior, even among very
income-poor families - Single mothers assets are positively associated
with childrens educational attainment
10Assets as Social Investment
- Asset policies hold the potential to
- Transform passive welfare and states to active
social investment states - Result in better economies and better
citizens, thus providing a greater return on
scarce public dollars - Reduce inequality and social exclusion, thus
resulting in greater social cohesion
11Questions
- Would assets be the best use of public funds?
Does the evidence thus far justify multi-billion
policies? - Whats the appropriate balance between income
support and asset building programs for the poor?
Between social insurance and individual
accounts? - How can asset programs be effective and
affordable at scale, given the important role
played thus far by community-based organizations? - How can asset policies reduce relative wealth
disparities between whites and non-whites?
12Asset Building in Mexico
- Accounts for all, at birth (Citizen Accounts
proposed by Prof. Clemente Ruiz Duran) - North American Development Accounts (NADA?)
- MFIs
- Expand BANSEFI, Credit Unions, RoSCAs
- Matching deposits saved through BANSEFI
- Partnerships between Caja Solidarias and postal
service offices AND trusted institutions
(commercial banks, Caja Popular Mexicana,
BANSEFI) - Expand homeownership
- Leverage assets into capital (De Soto)
- Develop mortgage finance market (Fannie Mae)
- Define poverty problem in terms of assets, not
just income
13Asset Building Resources
- LEED Programme, OECD, Paris
- Antonella Noya Antonella.NOYA_at_oecd.org
- 33(0) 1 45 24 78 95
- www.oecd.org/els/LEED
- Center for Social Development, Washington
University in St. Louis, USA - 314-935-7433
- http//gwbweb.wustl.edu/csd/
- Asset Building Program, New America Foundation,
USA - 202-986-2700
- www.NewAmerica.net
- Asset Building Clearinghouse www.AssetBuilding.or
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