Friday, 15 June 2012

Anatomy of coping: evidence from people living through the crises of 2008-11

nice paper on the topic.
This paper surveys qualitative crisis monitoring data from sites in 17 developing and transition countries to describe crisis impacts and analyze the responses and sources of support used by people to cope. These crises included shocks to export sectors as a result of the global financial crisis, as well as food and fuel price volatility, in the period from 2008 to early 2011. Respondents reported the crisis had resulted in significant hardships in the form of foregone meals, education, and health care, food insecurity, asset losses, stress, and worsening crime and community cohesion.
Although the export-oriented formal sector was most exposed to the global economic downturn, the crises impacts were more damaging for informal sector workers, and some of the adverse impacts will be long-lasting and possibly irreversible.

There were important gender and age differences in the distribution of impacts and coping responses, some of which diverged from what has been seen in previous crisis coping responses. The more common sources of assistance were family, friends, and community-based and religious organizations; formal social protection and finance were not widely cited as sources of support in most study countries. However, as the crisis deepened, the traditional informal safety nets of the poor became depleted because of the large and long-lasting shocks that ensued, pointing to the need for better formal social protection systems for coping with future shocks.

The idea is macro indicators alone do not tell you whether people are fine:
This study has shown that the analysis of macroeconomic indicators alone can conceal important aspects of the process of economic recovery. In particular, the resumption of GDP growth in late 2009 or 2010 in many developing countries gave optimism to governments and the donor community that the impacts of the crises were relatively short-lived and that the livelihoods of the poor were not strongly affected. The findings of this study do not support this argument. Despite the narrow employment base of export production in developing countries, formal sector workers fuel the rural economies through remittances and provide a customer base for a large number of informal sector workers.

Therefore, even temporary labor shocks to the formal economy have long-lasting impacts on the urban and rural poor. The reason is that often the first wave of coping responses adopted by poor people (incurring debt, forgoing health care, diversification) led to the second wave of impacts (selling assets or increased competition in the informal sector). In many surveyed countries, poor people were living through this second round of negative impacts at the same time the national economies were showing strong signs of economic recovery.


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