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How can lump-sum cash transfers be designed to improve their productive potential?

2016 — By Rodolfo Beazley, Maham Farhat

Cash transfer programmes are one of the most popular welfare policies in the developing world and are also backed by a large and rigorous evidence base.

Besides the effects on consumption and human capital, the productive impact of cash transfers has been increasingly scrutinised. Despite the fact that this is often not the core objective of these programmes, transferring substantial amounts of cash could have productive effects at household and community levels. From this viewpoint, cash transfers could not only reduce poverty by increasing consumption expenditure but also by enhancing the productivity of beneficiaries and stimulating local growth. If this were true then the potential of cash transfers would be enormous.

This paper looks at lump-sum cash transfers and explores how these can be designed to improve this productive potential.