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Nicaragua Poverty Assessment Public Disclosure Authorizedpublic Disclosure Authorized (In Three Volumes) Volume I: Main Report

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Nicaragua Poverty Assessment Public Disclosure Authorizedpublic Disclosure Authorized (In Three Volumes) Volume I: Main Report Report No. 39736-NI Nicaragua Report No.39736-NINicaragua Assessment Poverty I Vol. Report No. 39736-NI Nicaragua Poverty Assessment Public Disclosure AuthorizedPublic Disclosure Authorized (In Three Volumes) Volume I: Main Report May 30, 2008 Central America Country Management Unit Poverty Reduction and Economic Management Sector Latin America and the Caribbean Region Public Disclosure AuthorizedPublic Disclosure Authorized Public Disclosure AuthorizedPublic Disclosure Authorized Document of the World Bank Public Disclosure AuthorizedPublic Disclosure Authorized JICA Japan International Cooperation Agency KFW Kreditanstalt für Wiederaufbau (Reconstruction Bank) LAC Latin-American and Caribbean LSMS Living Standards Measurement Survey MAIS Integrated Health Care Model (in Spanish Modelo de Atención Integral de Salud) MARENA Ministry of Natural Resources and the Environment MAGFOR Agricultural and Forestry Ministry MDGs Millennium Development Goals MHCP Ministry of the Finance and Public Credit MINED Ministry of Education MECD Ministry of Education, Culture, and Sports MIFAMILIA Ministry of the Family MINSA Ministry of Health MOH Ministry of Health MTI Ministry of Transport and Infrastructure NDP National Development Plan NER Net Enrollment Rate NGO Non-Governmental organization PAHO Pan American Health Organization PAININ Comprehensive Care Program for Nicaraguan Children PRS Poverty Reduction Strategy PSS Public Social Spending PER Public Expenditure Review PINE Comprehensive School Nutrition Program PROCOSAN Health and Nutrition Community Program (in spanish Programa Comunitario de Salud y Nutrición) RAAN North Atlantic Autonomous Region RAAS South Atlantic Autonomous Region SDC Swiss Agency for Development and Cooperation SETEC Presidential Secretariat SILAIS Integral Health Service Local Systems (in spanish Sistemas Locales de Atención Integral de la Salud) SimSIP Simulations for Social Indicators & Poverty SNV Netherlands Development Organization SWAP Sector Wide Approach UNICEF United Nations Children's Fund UPA Primary Agricultural Unit (in spanish Unidad Primaria Agricola) USAID US Agency International for Development WFP World Food Program WDI World Development Indicators Vice President: Pamela Cox Country Director: Laura Frigenti Director PREM: Marcelo Giugale Lead Economist: J. Humberto López Sector Manager PREM: Jaime Saavedra Task Team Leader: Florencia Castro-Leal Renos Vakis TABLE OF CONTENTS Acknowledgments _____________________________________________________ 11 Preface ______________________________________________________________ 13 Executive Summary _____________________________________________________ i Chapter I. Poverty and its Macroeconomic Context _________________________ 1 A. The Evolution of Poverty and Inequality 1993-2005 ___________________________ 2 B. Employment and Labor Income ___________________________________________ 14 C. Will Growth Reduce Poverty in Nicaragua? _________________________________ 18 D. Priorities as Identified by the Poor_________________________________________ 22 Leaders and people agree on the top priority: Potable Water _______________________________22 The construction of roads and repair of existing roads is also listed as a top priority by leaders and people in general_______________________________________________________________23 Having limited productive opportunities is a resonant theme nationwide ___________________23 Health and education, infrastructure and services, are at the top of the list for leaders and for people _______________________________________________________________________23 E. Policy Recommendations _________________________________________________ 24 Chapter II. Opportunities for Human Development ________________________ 26 A. Progress and Prospects in Attaining MDGs _________________________________ 27 Progress toward meeting PRS long-term Goals and MDGs ________________________________27 Prospects for attaining PRS long-term Goals and MDGs by 2015 ___________________________29 B. Opportunities in Education ______________________________________________ 31 Does education pay in Nicaragua? ___________________________________________________31 Inequities in Access: Enrollments ____________________________________________________33 An analysis of current patterns in educational attainment__________________________________37 What are the constraints to access to schooling?_________________________________________39 Exploring Differences in Quality of Instruction _________________________________________40 Internal Quality Indicators__________________________________________________________42 Quality and Test Scores____________________________________________________________47 The challenges in education ________________________________________________________49 C. Opportunities in Preventive Health________________________________________ 51 Health Status ____________________________________________________________________53 Maternal Health__________________________________________________________________53 Child Health ____________________________________________________________________55 Morbidity_______________________________________________________________________56 Healthcare Utilization _____________________________________________________________57 Preventive Healthcare _____________________________________________________________58 Social Security___________________________________________________________________60 Healthcare Constraints_____________________________________________________________60 Health Policy Recommendations ____________________________________________________62 D. Opportunities in Water and Sanitation_____________________________________ 64 Water __________________________________________________________________________64 Water Quality ___________________________________________________________________67 Sanitation_______________________________________________________________________68 Water Constraints ________________________________________________________________68 Water Policy Recommendations _____________________________________________________71 E. Opportunities in Reducing Malnutrition ___________________________________ 73 Malnutrition Policy Recommendations________________________________________________76 Chapter III. Opportunities for Income Generation _________________________ 78 A. Productive Services And Infrastructure _____________________________________ 78 Roads__________________________________________________________________________79 Energy _________________________________________________________________________83 Telecommunications ______________________________________________________________86 Credit Services __________________________________________________________________87 B. Inequities in Intangible Assets_____________________________________________ 89 Networks and Organizations ________________________________________________________90 Titling _________________________________________________________________________92 C. Agricultural Productivity _________________________________________________ 94 Factors of production______________________________________________________________96 Agricultural Inputs________________________________________________________________98 Determinants of productivity________________________________________________________99 Findings on Impact ______________________________________________________________100 Policy Recommendations _________________________________________________________101 Chapter IV. The Distribution of Public Social Spending in Nicaragua ________ 103 A. Public Spending in Nicaragua: Basic Facts _________________________________ 104 B. Distribution of Spending_________________________________________________ 106 Fiscal incidence and simulations____________________________________________________109 C. Sectoral Distribution of Spending _________________________________________ 110 Education______________________________________________________________________110 Preschool education______________________________________________________________113 Primary education _______________________________________________________________113 Secondary education _____________________________________________________________115 University education _____________________________________________________________115 Health __________________________________________________________________ 116 Housing and local public services ____________________________________________ 118 Water and Sanitation______________________________________________________ 118 Social Assistance__________________________________________________________ 119 Rural development and road infrastructure ___________________________________ 121 Policy implications: making public spending pro-poor __________________________ 122 References __________________________________________________________ 124 Annexes ____________________________________________________________ 128 Annex 1 – Summary of Statistical Tables _____________________________________ 128 Annex 2 – Statistical Appendix ______________________________________________ 128 Annex 3 – Technical document about two aspects related to defining the Extreme Poverty Line based on the Nicaragua 2005 Living Standards Measurement Survey (LSMS) __ 128 Annex 4 – Poverty Map of Nicaragua ________________________________________ 128 Tables: Table 1.1: Main Macroeconomic Indicators, 1998-2006 (percent)................................................
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