This Poverty Assessment is the firstoutput of a multi-year program adopted by the World Bank toassist the Governments of Serbia and Montenegro in thedevelopment and implementation of their Poverty ReductionStrategies. The program relies on collaboration in jointdata production and analysis. Based on data collected in2002, the report finds that absolute material povertyaffects every tenth person in both Serbia and Montenegro.From an historical standpoint, this isa very highincidence. Inequality remained moderate by regionalstandards, and as a result poverty isshallow. At the sametime vulnerability--or exposure to negative shocks andinability to cope with them-- threatens many currentlynon-poor individuals. At least as many suffer fromdeprivation in other dimensions of well being, such ashealth, education, housing, social inclusion or propertyrights. Material poverty, therefore, isnot the onlychallenge for the Governments. Four factors are moststrongly related to poverty: low education attainment;joblessness; the location in rural areas and depressedregions, and the presence of socially disadvantaged members(such as internally displaced persons or Roma). The poor arefound to face serious problems of access to public services(health, education, sanitation) and sufferdisproportionately from the deterioration in the quality ofpublic service provision. Even though some of the socialassistance programs are among the best targeted programs inthe region, the social protection system as a whole suffersfrom large exclusion errors. Given the high level ofvulnerability of the population and the shallowness ofpoverty, a broad-based growth strategy that ensures that thebenefits accrue at least proportionately to the poor iscentral for accelerated poverty reduction. Improvements inthe business climate will stimulate private sector growthand feed into employment generation. Growth will increasefiscal revenues to remedy the problems of chronic underfunding, while structural and public administration reformswill strengthen the governance and the quality of servicesprovided to the poor. The multidimensional nature of povertyrequires concerted and well coordinated action in differentsectors. The report isorganized in two volumes. Volume One(Executive summary) summarizes the Report content. VolumeTwo (Main report) provides detailed results of povertyanalysis. Due to data limitations the sectoral part of themain report covers Serbia in greater details. An analysis ofavailable data for Montenegro ispresented in a background paper.
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