Poverty and Development

Dr Shailaja Fennell
Development Studies
What is poverty?
 “Poverty is the result of economic, political, and social
processes that interact with each other and frequently
reinforce each other in ways that exacerbate the
deprivation in which poor people live. Meager assets,
inaccessible markets, and scarce job opportunities
lock people in material poverty. That is why
promoting opportunity—by stimulating economic
growth, making markets work better for poor people,
and building up their assets—is key to reducing
poverty” (WDR, 2000/1,1).
How do we conceive of poverty?
 Absolute poverty uses a basket of goods to
indicate the inability of the poor to satisfy
basic minimum material requirements for their
human survival.
 Relative poverty is measured in relation to
the standard of living and social norms in a
particular society. It goes beyond physical
deprivation to social exclusion and the ability
to participate in social activities.
Who is measuring the poverty?
subjective and objective poverty

where the former defines poverty based on the

experiences of the poor themselves through
various participatory approaches, while the
latter uses quantifiable scientific methods,
such as food baskets and poverty lines, to
measure poverty.
What is the relationship between
poverty and development?
The Growth-Poverty- Inequality Debate

 The relationship between economic growth and poverty lies at

the centre of current development discourse.

 Fifty years ago growth has been perceived as the ultimate

solution for all underdevelopment problems. Development was
synonymous with the increase in GDP.
 The Lewis model (1954) presumed that growth would trickle-
down to the poor.

 Rostow (1960) focussed on capital accumulation during the

“take-off” stage which transforms traditional societies to modern
ones
How does development affect
inequality?
 Kuznets (1955) argued for the inverted U-curve
hypothesis explaining that inequality tends to rise
initially with growth, until the benefits of this growth
start to trickle down thus leading to a long-term
reduction in inequality rates with further acceleration
of growth.
 Inequality was even sometimes perceived beneficial
for growth as the rich tend to save more than the
poor and these saving are essential for the indivisible
investments needed at initial growth stages (Kaldor,
1955)
Whither from economic growth?
 In the 1970s and early 1980s, the focus of the
poverty debate shifted from economic growth to the
provision of basic needs.
 Basic Needs Approach: (Streeten et.al., 1981, 8) To
identify a universal set of basic needs and direct
public resources and poverty reduction strategies to
meeting these needs
 The BN approach is also consistent with Amartya
Sen’s entitlement approach which also stresses on a
bundle of food commodities an individual can
command from an economy to meet his/her basic
food requirements (Sen, 1981).
 Pro-Poor Growth for Poverty
Reduction
 1970s: it became evident that growth "does not
always trickle down" nor does it necessarily enhance
the provision of social services.
 "growth with redistribution" (Ahluwalia et.al, 1978)
were promoted and social services were regarded as
a means to raise the poor's incomes and enhance
their well-being.
 Anand and Ravallion (1993) explain that there is no
dispute over the importance of growth for poverty
reduction; however, it should not be regarded as the
ultimate goal of all development policies, but rather
as an essential means to human well-being.
Human Development Paradigm

 Sen's capability approach constitutes the conceptual

foundation of the human development paradigm.
 Human development is generally defined as "both the
process of widening people's choices and the level of
their achieved well-being" (UNDP, 1990, 9)
 The human development paradigm thus puts people
at the centre of development and focuses on four
essential pillars: equality, sustainability, productivity
and empowerment (UL Haq, 1995
What is the Human Development
Index?

 -the human development index (HDI) - to

measure human development based on three
indicators: life expectancy, literacy (i.e. years
of schooling) and relative income adjusted for
purchasing power parity.
So how do we measure poverty now?

 Income and Assets

 Lifetime and Time Duration

 Space and exclusion

How do international institutions
measure poverty?
 Arguing for the primacy of economic growth as the
ultimate means of poverty reduction, the World Bank
measured poverty mainly in monetary terms till the
1980s, drawing the poverty line at the minimum
nutritional intake required by the poor for
subsistence.
 After the failure of the Structural Adjustment
Programmes (SAPs) to reduce poverty while
improving growth rates in developing countries the
World Bank has moved to “adjustment with a human
face” (Cornia et.al, 1987) that promotes long-term
investments in education, health and other social
services.
World Bank today
 In the early 1990s, realizing the limitations of
SAP as a “cookie-cutter” approach, the World
Bank adopted the Poverty Reduction Strategy
Papers thus urging national governments to
draft their own poverty reduction strategies as
a necessary criterion for accessing WB and
IMF funds.
The UN Approach
 The UNDP adopts a broader definition of
poverty focusing not only on growth but also
on promoting human development. According
to UNDP, growth benefits the poor only if it is
not jobless, voiceless, rootless, futureless or
ruthless (UNDP, 1996).
Why do we need to identify different
types of poverty?
Chronic poverty

 Chronically poor people are those who

experience deprivation over many years,
often over their entire lives, and who
sometimes pass poverty on to their children.
Many of the chronically poor die prematurely
from health problems that are easily
preventable. Such poverty is hard to reverse.
http://www.chronicpoverty.org
What are the implications of chronic
poverty?
Chronically poor people experience
deprivation at multiple levels

 Chronic poverty is typically characterized not

only by low income and assets, but also by
hunger and undernourishment, illiteracy, the
lack of access to basic necessities such as
safe drinking water and health services, and
social isolation and exploitation.
Is chronic poverty of a distinct type?
 The chronically poor are not a distinct group but are
typically those experiencing discrimination,
stigmatization or “invisibility”, including socially
marginalized ethnic, religious, indigenous, nomadic
and caste groups; migrants and bonded labourers;
refugees and internally displaced persons; and
people with disabilities and certain illnesses such as
HIV/AIDS. In many contexts, poor women and girls,
children, and older people (especially widows) are
more likely to be trapped in poverty.
What does chronic poverty relate to
Human Development?
How can multiple deprivation be
alleviated?
 Poverty-Targetting approach

 Micro-credit schemes

 Nutritional support

 Housing programmes

 Water and sanitation

Would slum upgradation help
mainstream the poor?
 market based solutions
 welfare based solutions
 claims based solutions
 self determining solutions

 (Satterthwaite and Mitlin 2004)

Could infrastructure be the solution?
Should there be investment in the
environment of poor communities?
Could investment reverse the rise in
relative inequality?
Can the poor be brought into the
market?
 If the starting point is the high cost of services
for the poor this merely returns to the dual of
high risk/low return.

 The use of targetting strategies focus on a

single dimension such as micro credit or
housing. The presence of multiple of
deprivation requires a multi-pronged
response
Are the poor a worse option than the
rich?
 4 billion rather than 1 billion

 Biodiversity rich

 New solutions through new approaches

OR