WIDER Studies in Development Economics Social Provision Low Income Countries

The papers gathered together in this collection show that neither the market nor the state alone offers solutions to efficiency and equity problems commonly encountered in social sectors in poor nations. Innovative ways to address these important problems are explored, favouring an integrative approach to social provision. During recent years, provision of key social services in low-income countries has been affected by adverse macroeconomic conditions and by radical changes in economic thinking. For example, the welfarist approach, which gives prominence to the state in delivering and financing social services, has been challenged by the neoliberal approach, which limits the role of the government to that of residual provider for the very poor. According to the neoliberal approach, the private sector could, by relying on price mechanisms, achieve more efficient provision. However, this approach relies on a rather narrow definition of efficiency which ignores social externalities in the delivery and use of services. "Social Provision in Low-Income Countries" analyses the merits and limitations of both welfarist and neoliberal approaches to the provision of key social services in terms of the outcomes and sustainability of the two approaches. The volume proposes an alternative model of social provision, characterized by multiplicity in service delivery and financing. The new model, in which households, civil society, and government play important roles, avoids the inefficiencies of state provision and the exclusion and fragmentation of market-based systems. The authors argue for an integrative approach which encourages the equity and efficiency gained from a synergistic relationship between various service providers. They further argue that the well-known market and government failures in social provision are due to undesirable extremes in policy design, rather than to inherent characteristics of market or government institutions. The strengths of this new approach are illustrated with case studies from Chile, China, Tanzania, and Zimbabwe. The volume also describes how social services in Finland were organized in the early stages, and draws policy lessons for present day developing countries.