Public spending for poverty reduction

Public spending for poverty reduction

Poverty is a major threat to the existence of humanity in modern times especially in the developing countries. In 2017, an estimated 9.2 percent of the global population still lived below the international poverty line of $1.90 a day, which is based on poverty lines in some of the poorest economies in the world. This amounts to 689 million extreme poor, 52 million fewer than in 2015.

Now, the COVID-19 (coronavirus) pandemic has reversed the gains in global poverty for the first time in a generation. About 120 million additional people are living in poverty as a result of the pandemic, with the total expected to rise to about 150 million by the end of 2021.

Social spending in Uzbekistan

Let us analyze the expenditures on the social sphere and social support of the population for the period 2007-2019, according to the data of the Ministry of Finance. Expenditures for these purposes also include expenditures on education and training, health care, culture, sports and science. Since the primary data are expressed in the form of absolute and nominal values, they have been transformed into real annual growth rates taking into account average consumer prices.

The real growth rate of expenditures on the social sphere and social support of the population in Uzbekistan demonstrates a V-shaped movement, as shown in Figure 1. The maximum decline in expenditures and the beginning of their recovery occurred in 2015, in which they were the lowest for the entire period, amounting to 2%. The next two years indicated a gradual recovery from 3% in 2016 and 6% in 2017. Since 2018, there has been a significant jump to 27% and in 2019 to 36%. This growth is associated with the reforms launched in 2017, which was defined in the Strategy of Actions for the Further Development of Uzbekistan during 2017-2021.

Figure 1. Real growth rates of spending on the social sphere and social support of the population in 2008-2019.

Source: Author's calculations based on data from the Ministry of Finance

In general, the analysis of budget expenditures aimed at the social sphere from 2008 to 2019 shows a gradual decrease until 2016 and a subsequent significant jump for all subgroups of the social sphere. In particular, in 2016-2019, expenditures on the social sphere and social support of the population increased 2.6 times, including on education - 2.4 times, on health care - 2.6 times, on culture and sports - in 5.2 times and in the direction of science - 2.8 times.

Assessment of social impact

It is advisable to assess the effect of government spending on the social sphere. Insufficient data make it difficult to directly assess the impact of government spending on poverty. However, the availability of various other indicative data makes it possible to indirectly assess the efficiency and effectiveness of government spending in this area.

Education is considered to be one of the basic factors of achieving sustainable economic development through investment in human capital. Education improves quality of lives and raises people’s productivity and eradicates poverty rate by being employed with job opportunities. From 2016 to 2019, the number of preschool institutions increased by 1,830 throughout the country, and the number of teaching staff and educational places in these institutions increased by 36.8 thousand and 223.7 thousand, respectively. Over the same period, the coverage of children aged 3-6 with preschool education increased from 23.8 to 40% (60% in 2020). Also, in recent years, the number of educational institutions has significantly increased - from 9,720 in 2016 to 10,090 in 2019, and 49 new higher educational institutions have opened. In 2020, the quotas for admission to universities increased by 2.5 times compared to 2017. As a result, youth enrollment in higher education increased from 9% to 25% over the same period.

The health sector has also seen extensive improvements over the past 4 years. The number of hospitals and beds increased by 99 and 21.4 thousand, respectively. Life expectancy of the population increased from 73.7 in 2017 to 74.6 in 2020. The incidence rate of tuberculosis per 100 thousand people of the population decreased from 46.6 in 2016 to 42.4 in 2020. The increase in the incidence of malignant neoplasms in the population from 66.8 per 100,000 people in 2016 to 71 per 100,000 people in 2020 indicates the results of earlier detection of diseases.

Conclusion

The social policy of Uzbekistan is aimed at the harmonious education of the younger generation, capable of ensuring the future development of the state. At the same time, the goal of social policy is to create conditions for the self-realization of all social groups. Strengthening social justice in Uzbekistan guarantees an increase in the level and quality of life of the population.

Based on all of the above, we can conclude that the role of the state in the fight against poverty is very high. In recent years, government spending on social security has increased. A complete assessment of the efficiency and effectiveness of government spending requires a sufficient and reliable time series of the above data. Nevertheless, the study of indicators show significant changes in the direction of improving the living conditions of the population.

It should be noted that the vector of social policy of the new Uzbekistan has already been set and all resources are used for its implementation. At the same time, one of the key points remains to further improve the efficiency of spending in the social sphere.

You can read the full article via this link.

Feruzbek Davletov, CERR

Journal "Economic Review" №3 (255) 2021


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