1) How long have you been involved with PSIAs, the PSIA MDTF, and have things improved over the years?
I’ve been involved in the PSIA since 2002/2003 when we created it, when we came up with the idea that we wanted to encourage our colleagues to do a more systematic analysis of distributional impact of policy reforms. At that point it became part of the OP8.60 DPLs, part of the policy DPLs, and we decided to put together a series of tools and methodologies, but also trust funds, so people would be encouraged to apply the methodology. I’ve been involved in setting up the initial trust fund but mostly since then as a user of it. In fact, I’ve used it at least in five countries and completely different contexts. I am a great user of the MDTF, what I think the trust fund has been great about and why it has worked so well is that it focuses on results and supporting people in doing an analysis, it doesn’t focus on the details of how you do it, what you pay, or how you spend the money necessarily in detail, but it focuses on getting them to the results. So it’s a very “light” trust fund in a way to use, but it’s a very intelligent way of doing it and it goes very much with the spirit of the PSIA which is to say to people “We trust you, your judgment, do the analysis”. It’s not over-defined, it’s a very open trust fund.
2) Are PSIAs relevant to the new World Bank Group? What role can it play with the new twin goals?
I think PSIA is of course as relevant as it has always been, and will continue to be relevant to any development institution because its core principle is to help you think through the impact of the reforms you’re putting together, so whatever the structure of the institution, it makes no difference. As long as the institution will support reforms that are likely to have distributional impacts PSIA will continue to be relevant. I think the twin goals give a bit more focus on inequity in distribution, so it kind of strengthens further the relevance of PSIA, but at the same time it’s a bit diminutive, because PSIA is about any group that’s potentially affected. It is not only about the poor or the extreme poor, it’s also about any other potential group that might lose in a particular reform. I think it’s broader than twin goals in a way.
3) What are the top three reasons you would recommend a PSIA to a TTL?
First of all because it’s good practice. Our job is to promote development and do it in a way that sounds, and I think that it’s criminal not to do thorough distributional analysis of the impact of policy reforms. This is our “bread and butter”, this is our “do no harm approach”, there’s no way around it. Then as a tool, what I like about the approach is that it allows you to combine different tools, quantitative but also qualitative. I think it makes it a tool that is comprehensive, it’s not only about simulating the economic impact, but also about understanding the position of stakeholders. It’s a much more thorough analysis of a reform, it’s political economy, and it’s potential impact. So I think it’s been very helpful for economists to become more familiar with tools that maybe the political scientist know a bit better, and it also helps the non-economist use and become more familiar with some of the tools that are typically used to estimate impacts. PSIA is pluridisciplinary in nature, and therefore it’s an intelligent look at distributional impacts that looks at all different aspects of it.
4) You have worked on PSIA projects before, so from a technical perspective, what is exciting about the PSIA approach and what are the main challenges?
The most exciting part is, as I said, that it’s pluridisciplinary in nature. The main challenges: PSIA is an approach, then the challenge is that there are situations and policy reforms which are extremely hard to analyze with that lens. There are cases in which policies are very easy to simulate maybe because they touch part of the economy, or just a segment, or a particular sector. Some other reforms, like the reform of procurement processes, are much broader and maybe harder to simulate. It would be difficult to estimate the potential impact they would have on distribution because they have much more complex roots through which they impact the poor or any other group. The beauty of it is that it’s open and it’s an approach not a methodology, the limitation is that it can’t be applied to every single type of policy reforms.
Aline Coudouel is a Lead Economist, currently working in the Social Protection and Labor Global Practice in Western Africa. She was part of the team which initially developed the PSIA approach 10 years ago, and promoted the inclusion of the distributional analysis of reforms for all DPLs supported by the Bank (OP8.60). Since then, she has applied the PSIA approach to numerous sectors and countries –analyzing reforms of labor markets in Colombia, reforms of energy subsidies in the Dominican Republic, etc. Prior to her current assignment, she worked in the social protection and labor sector in Latin America and the Caribbean, in the Poverty Global Practice, and in the PREM network in Southern Africa in the Bank. Prior to the Bank, she worked on children and women’s policies and programs in Central Asia, Eastern and Central Europe and the Caucasus with UNICEF.