Have Poverty Reduction Strategy Papers actually reduced poverty in poor countries?

Abstract

Throughout the past 15-20 years, poor countries have been implementing so-called Poverty Reduction Strategy Papers (PRSPs) under the guidance of the International Monetary Fund and the World Bank. Despite their enormous importance for national development efforts around the globe, the aggregate performance of PRSPs remains understudied. One previous study, however, found that PRSPs were successful in reducing poverty and should therefore act as the ‘mechanism to operationalise’ the Sustainable Development Goals (SDGs) (Elkins et al 2018., 388). Here, the robustness of these findings is tested in a panel data regression analysis which estimates the effect of PRSP implementation on five primary SDG-indicators.1 Based on the assumption that the ‘Washington Consensus’ development paradigm has been (partially) abandoned, it is hypothesized that PRSPs successfully reduced multidimensional poverty, and that this success was conditioned on increased economic growth. While PRSP implementation did not yield a statistically significant effect on most outcome variables, it was associated with small reductions in extreme, chronic undernourishment. It is acknowledged that the results have a relatively weak empirical foundation and that they may suffer from omitted variable bias. The author stresses the need for further research and calls for an increase in resources allocated to the collection of well-developed data on multidimensional poverty.