A PSIA should be carried out if the reform is expected to have substantial impacts on poverty, if it is prominent in the government's policy agenda, or highly controversial. It can be conducted before, during or after a reform is implemented. But it is important to start the analysis early, so that the findings can be fed into the policy dialogue and design of the reform.

The analysis should not only assess what impacts the reform may have, it should also explain how they come about.  The approach offers an analytical framework for doing so, which should inform the conceptual design of the studies. Those involved in and those affected by the reform must be identified at the outset.  It is also important to have an understanding of the institutions and ‘rules of the game’ that affect the behaviour of stakeholders. A central step of the analysis is describing the transmission channels through which the impact of reforms is felt. These include:

• employment
• prices for production, wages and consumption
• access to goods and services
• social, human, financial and natural assets
• transfers and taxes
• authority.

Data and information are then gathered, enabling conclusions to be drawn about the type and scale of the impacts. The risks are then identified and the options for modifying the reforms considered. A PSIA uses a broad range of methods for social, economic and political analyses. Qualitative studies help to explain the impact mechanisms, while quantitative evaluations help to establish statistically the general correlations. The possible instruments for data collection and analysis range from participatory impact analyses to elaborate economic models. An important part of the approach is linking analysis and policy dialogue. The opportunities for participation are many, including choosing the subject of the PSIA, formulating the issues for analysis, as well as discussing the interim findings or drafting recommendations for implementation. In this way, the evidence base for decisions can be improved, their transparency enhanced and stakeholder support during implementation strengthened.

PSIAs should respond primarily to the needs of the stakeholders in the partner countries. Local experts should be involved as far as possible in their implementation. However, the necessary capacities are not always in place. Therefore supporting capacity development is key to establishing sustainable expertise and structures for poverty and social impact analyses and promoting their application in policy-making processes in the partner countries.

GTZ assists government and civil-society partner institutions in developing countries in:

• building country capacities and expertise in commissioning and implementing PSIAs and related analyses
• using analyses as a basis for policy debate and decision-making
• incorporating PSIAs into national strategies (such as PRS) and policy-making structures, and
• developing and applying qualitative and quantitative methods for poverty impact analyses.

Downloads

• Short Guide on Poverty Social Impact Analysis (PSIA)
  de-psia-leitfaden-kurz.pdf, 0,08 MB (German)
  en-psia-short-guide.pdf, 0,06 MB (English)
• Principle for PSIA Process in Policy Cycles and Stakeholder Participation (DFID/GTZ)
  en-principles-for-psia-process-2006.pdf, 0,17 MB (English)
• PSIA User’s Guide
  povlibrary.worldbank.org/files/12685_psia..., 0,66 MB
• Good Practice Note on PSIA
  siteresources.worldbank.org/.../...psia9204.pdf, 0,26 MB

Links

• TIPS Sourcebook
  web.worldbank.org/.../extsocialdevelopment/...
• Analysing the Distributional Impacts of Reforms
  www-wds.worldbank.org/servlet/...
• E-Learning Course on Poverty and Social Impact Analysis
  lnweb18.worldbank.org/.../...thepsiae-learningcourse