Strengthening Social Security Systems in Rural Areas of Developing Countries

Abstract

It is now generally accepted that the western approach of enlarging state-based social security systems in developing countries in order to achieve universal coverage have failed. It is the poor and rural population in particular who are largely excluded from any kind of social insurance. This paper reviews the literature to identify the major reasons for state and market failure and describes the existing systems and their institutional strengths and weaknesses. Given that the state, the market, member based organizations and private households as main providers of social security in developing countries have their own albeit different limits, the paper explores the possibilities of a public-private partnership. Such a partnership should be build on local information, on the one hand, while enhancing the possibilities of risk pooling, reinsurance and better access to risk capital, on the other.

JEL Classification: H55, 010, Q10