Economic inclusion involves the integration of individuals and households into broader economic development processes – where that is meaningful and possible. Interventions aim to help poor and vulnerable people increase assets and income through access to wage or self-employment, and target groups may vary based on policy objectives and political economy factors (new poor, extreme poor, women, youth etc).
A central principle of economic inclusion2 is that poor and vulnerable households encounter ‘poverty traps’ and face multiple constraints. These constraints include low levels of human capital, limited access to productive inputs, frequent exposure to uninsured risks, and reduced cognitive bandwidth that impairs decision-making.
Other constraints are also relevant – such as the aspirational or psycho-social limitations facing many individuals, particularly women, in undertaking new initiatives and income-generating activities.
Economic inclusion programmes seek to address these multiple constraints at various levels, including individual and household (e.g. human, physical or psycho-social capacity), community (e.g. social norms), local economy (e.g. access to markets and services) and across formal institutions (e.g. access to political and administrative structures).
While economic inclusion programmes are often multidimensional, they tend to have a foundational intervention that acts as the primary entry point, with other measures subsequently layered above. The most common entry points are social assistance (the focus of this paper), livelihood and jobs initiatives, and financial inclusion investments – although these interventions are not mutually exclusive.3 Programmes commonly include a combination of cash or in-kind transfer, skills training or coaching, and access to finance – and these are often delivered in a time-bound and deliberately sequenced manner. Figure 1 illustrates the main components of economic inclusion programmes. Community-wide measures are also increasingly integrated to help address social norms. The design of economic inclusion programmes is informed by experiences in graduation-focused programmes, although economic inclusion extends significantly beyond a graduation framework.