BIG Pilot Project - Assessment Report - BIG Coalition Namibia

3.3 Cash transfers and economic development193.3 Cash transfers and economicdevelopment 19An emerging evidence base demonstrates that cashtransfers promote economic growth. Policy makers donot necessarily face a trade-off pitting social againstgrowth objectives – but rather have the opportunity toengineer a virtuous circle of increased equity promotinggrowth supporting further improvements in equity.There are at least nine paths through which cash transferspromote economic growth. Most of these mechanismswork by increasing overall economic efficiency—through better policies and strategies, improved resourceallocation (increasing employment, human capitaldevelopment and other investment and reducingdiscrimination), and by more effectively taking advantageof the economy’s capacity.An emergingevidencebase demonstratesthatcash transferspromoteeconomicgrowth.1. Cash transfers can generate gains for those groupswho might otherwise be disadvantaged by specific elementsof a pro-poor growth strategy, providing a balancingfunction that can enlist stakeholder support forthe reforms necessary to sustain long-term growth. Labourunions in Nepal, for example, have identified effectivecash transfers as a prerequisite for necessary labourmarket reforms, the combination of which wouldenhance both equity and growth. Cash transfer initiativeshave compensated the poor for reduced price subsidiesin Mexico and Indonesia.2. Cash transfers promote human capital development,improving worker health and education and raising labourproductivity. Studies in South Africa and LatinAmerica repeatedly document significant responses ofhealth and education outcomes, particularly in responseto both conditional and unconditional cash19 This section is based on a forthcoming paper by Samson et alfor POVNET, please refer to the POVNET publication for the referencesCash transferspromotehuman capitaldevelopment,improvingworkerhealth andeducationand raisinglabour productivity.89