American policymakers rarely take their cues from Mexico: advice usually flows the other way. So it must have been gratifying for those running Oportunidades,a welfare programme serving 5m poor Mexican families,when the city of New York turned to them in 2006 for help with Opportunity NYC,a new social-welfare programme promoted by the city’s mayor,Michael Bloomberg.
Oportunidades is one of the best-known examples of an increasingly popular kind of social assistance called conditional cash-transfer (CCT) programmes. Unlike traditional welfare schemes,which dole out money without demanding anything in return,CCTs will only pay out if the recipients ensure their children regularly attend school and health facilities or schools alone.
These programmes have swept across the developing world. In 1997 Mexico was one of only three countries to have a CCT programme. By 2008,as the World Bank documents in a new report,virtually every country in Latin America had one. So did Indonesia,Nigeria,Burkina Faso,the Philippines,Bangladesh,India,Turkey,Cambodia,Pakistan and Kenya. Some of these programmes are huge: Brazil’s Bolsa Familia serves 11m families.
Part of their attraction stems from the fact that making transfers conditional makes them more palatable to the middle class whose taxes finance them. It also helps their credibility that most CCT programmes have rigorous evaluations built in (by their nature,they need to know whether recipients have kept their side of the bargain). Governments like them because they make recipients more likely to support the ruling party (though so,probably,do conventional transfers).
CCTs do an excellent job of getting money to the poor. Children covered by them get more schooling and use health facilities more often than they would otherwise have done. Some fears have proved unfounded: poor people have not responded to cash payments by cutting back on paid work. Unfortunately,there is little evidence that CCTs raise educational standards (as opposed to attendance); and while children may go to clinics more,that does not mean their nutrition or immunisation rates improve.
The programmes may not be to blame. The problem may lie with the dire quality of schools and clinics. A study led by Michael Kremer of Harvard University found that a quarter of Indian schoolteachers were absent on any given day. CCTs,for all their advantages,cannot do much about that.
© The Economist Newspaper Limited 2009