High levels of income and other forms of economic and social inequalities are well-established factors that constraint the development process of nations. This is captured by the internationally agreed Sustainable Development Goal 10 (SDG10), and its targets that aim to address persistent inequalities within and among countries. Addressing forms of social inequalities stem from two considerations. The first one is instrumental: The global goal of eradicating extreme poverty by 2030 cannot be reached without substantial reductions in income inequality in a number of countries. In addition, driven by the strong correlation between poverty and inequality through the actual distribution of incomes, poverty in any country can be reduced more effectively when accompanied by policies that reduce inequality. The second reason is that current within-country inequalities are very high, and even raising in many countries and world regions, and this is detrimental not only for the social pact and its necessary notions of social justice, but also for social development and political stability. Indeed, evidence shows that high income inequalities are associated with increased social instability, political and economic elite capture, and even shorter growth periods, among other societal ailments. It is therefore critical to assess how, and the extent to which, projects and programmes supported by development agencies contribute to the goal of reducing within country inequalities. This is a challenging task due to a myriad of factors, including the effects that domestic redistributive policies, the structure of labour markets, and other factors, have on inequality. However, it is possible to analyse the potential contributions of development projects on inequality by looking primarily at the extent to which they disproportionally benefit the most vulnerable.
This project builds on and expands on a previous project in which a mix of analytical tools were used to assess the distributional impacts of three development cooperation projects (in Tunisia, Cameroon, Colombia). The tools which will be further expanded under this project include: i) scoreboard that assesses whether or not inequality reduction is a central objective of development programmes; ii) the Equity Tool, which helps assess the position of direct beneficiaries within the national (urban or rural) wealth distribution, and iii) the commitment for Equity Tool, which helps estimate the distributional impact of general or sectoral budget support. The development projects being assessed under this project have been implemented in Benin, Djibouti-Ethiopia, Uganda and Viet Nam.