Inter-American Development Bank Sustainable Development Department Marco FERRONI, Deputy Manager Social Capital and Social Cohesion: Definition and Measurement Taller de Consulta sobre MEDICION DE LA CALIDAD DE VIDA IDB, Washington DC December 8, 2006

The strategic importance of the social agenda The Latin American social reality is one of persistent poverty, deep inequality, economic polarization, and, frankly, frustration. Improvements in living conditions worldwide, democratization, urbanization and globalization are –Rendering more visible the problems of exclusion and desprotección. –Strengthening many citizens’ perception of being disenfranchised and betrayed. The economic and political costs are widely felt.

The relevance of the concepts of social capital and social cohesion In this context, social capital and social cohesion, as cumulative societal concepts to be defined below, and as both means to attain certain desired results and ends in themselves, clearly are relevant dimensions of the standard of living anywhere. They are increasingly invoked as desiderata in the evolving discussion of the social agenda and social rights in LAC.

This presentation The purpose of this presentation is to propose a definition specifically of the concept of social cohesion and an approach to measuring it. We proceed in two parts: Part I:Cumulative definition and measurement. Part II:Exploration and measurement of key contributing dimensions: Solidarity, social protection, citizenship.

Part I Cumulative definition and measurement

Definition of social cohesion Social cohesion is the capacity for cooperation in society based on the set of positive effects accruing from social capital, in addition to the sum of factors promoting equity in the distribution of opportunities among individuals.

Why an index of social cohesion? To synthesize the state of cohesion in different countries. To enable a systemic view, not limited to the individual components observed in isolation. To permit examination of the relationships between levels of cohesion and variables of choice.

Social cohesion index

Issues and challenges Theory and architecture of index. Choice of variables flowing from definition. Data and observations. Soft (i.e., perception) vs. hard data. Standardization. Weights. Sensitivity analysis, robustness. Future directions.

Social cohesion vs. growth Source: IDB, 2006.

Social cohesion vs. innovation Source: IDB, 2006.

Part II Key contributing dimensions: Solidarity (revenue and spending). Social protection (employment, social programs, social security and pensions). Citizenship (trust, institutions, and more).

The tax burden today Source: ECLAC, 2006.

Social expenditure trends Source: ECLAC, 2006.

Solidarity: The agenda ahead Revenue: –Improve equity and revenue-raising potential of tax systems. –Reduce informality. –Reduce corruption. Expenditure: –Basic universalism. –Effective and transparent targeting where appropriate. –Break the vicious cycle of:  Insufficient contributions  weak institutions  low delivery performance  citizen dissatisfaction.

Unemployment and growth

Social programs: In health, high out-of-pocket spending a key source of vulnerability for the poor Source: ECLAC, 2006.

Pension reform has not addressed the needs of women, informal workers, and the poor Source: Crabbe (ed), 2006.

Social protection: The agenda ahead Labor market reform. Technology and human capital for enhanced “labor market capability.” Pro-poor, inclusive systems of services and protection (health, disability, unemployment, old age). Comprehensive advances in social assistance based on broadly framed risk analysis, an understanding of fuerzas potenciables at the family and community level, and evaluation.

Interpersonal trust

Trends in support for democracy and satisfaction with democracy Source: Latinobarometer,

Confidence in institutions Source: Latinobarometer,

Confidence in institutions Source: Latinobarometer,

Confidence in institutions Source: Latinobarometer,

Confidence in institutions Source: Latinobarometer,

Citizenship and institutions: The agenda ahead Promote political inclusiveness through better institutions of representation and participation. Make legal rights accessible and effective for all citizens. Build open and inclusive markets that work for the poor. Design policies and service delivery institutions to provide access to the poor. Voice and the right incentives for key actors. Intelligent regulation.

Inter-American Development Bank Sustainable Development Department Social Capital and Social Cohesion Taller de Consulta sobre MEDICION DE LA CALIDAD DE VIDA IDB, Washington DC December 8, 2006