Munich Personal RePEc Archive
Poverty Reduction
Ortiz, Isabel
Initiative for Policy Dialogue, Columbia University
2007
Online at
https://mpra.ub.uni-muenchen.de/31961/
Electronic copy available at: http://ssrn.com/abstract=991935
P o ve rty Re d u ctio n
By I sa be l Or t iz
h t t p :/ / w w w 2 . g sb . co lu m b ia . e d u / ip d / j _ p o v e r t y . h t m l
P o v e r t y Tr e n d s a n d M e a s u r e m e n t s
Mor e t han 2. 8 billion people, or ar ound half t he w or ld's populat ion, liv e below t he int er nat ional pov er t y line of US$2 a day . Of t hose, 1. 2 billion people liv e in ex t r em e pov er t y , sur v iv ing on less t han $1 a day . Most of t he poor ar e in Asia and Afr ica. The incidence of pov er t y is lar ger in w om en t han m en and higher in r ur al ar eas t han in ur ban ar eas. Vulner able gr oups such as t he elder ly , et hnic m inor it ies, r efugees or per sons w it h disabilit ies ar e m uch m or e affect ed by pov er t y . Since 1990, t he incidence of pov er t y has decr eased, and t he pr opor t ion of people liv ing below t he t w o dollar - a- day pov er t y line declined fr om 60% t o 53% of t he t ot al w or ld populat ion. How ev er , in absolut e t er m s, pov er t y is not decr easing. Populat ion gr ow t h r em ains high in dev eloping count r ies, and m any ar e bor n in pov er t y and dest it ut ion. Using Wor ld Bank 's dat a, t he num ber of poor people has act ually incr eased since t he lat e 1980s.
The definit ion and m easur em ent of pov er t y is a highly polit ical issue. Count r ies t end t o hide t he ex ist ence of lar ge pock et s of pov er t y as it m ak es t hem look under dev eloped and ev idences public policy failur es.
Cur r ent ly , differ ent count r ies use differ ent m et hodologies and ar e har d t o com par e - oft en t hey ar e based on t he per capit a ex pendit ur e necessar y t o at t ain 2000- 2 5 0 0 calor ies per day , plus a sm all allow ance for non-food consum pt ion. How ev er , t hese m easur es do not adequat ely r eflect ot her ex penses necessar y t o cov er basic n eeds - clot hing, dr ink ing w at er , housing, access t o basic educat ion and healt h, am ong ot her s. This is t he r eason t hat Unit ed Nat ions inst it ut ions st ar t ed using t he one and t w o- dollar - a- day pov er t y lines; but t hese also hav e obv ious flaw s. I f m easur em ent s based on a r eal m inim um consum pt ion bask et w er e used, t he num ber of people liv ing in pov er t y w ould soar . Ther e ar e m any m or e poor people t han appear r egist er ed in official st at ist ics.
Many ar gue t hat pov er t y is not only incom e pov er t y . Pov er t y also has non- econom ic dim ensions, lik e
discr im inat ion, ex ploit at ion, or fear . Ot her aspect s should be consider ed, such as lack of cont r ol of r esou r ces, v ulner abilit y t o shock s, helplessness t o v iolence and cor r upt ion, lack of v oice in decision- m aking,
pow er lessness and social ex clusion. As w e ex pand t he definit ion of pov er t y , t he num ber s of people affect ed by it incr ease.
Pov er t y should be dist inguished fr om inequalit y . I nequalit y show s t he dist r ibut ion of incom e, consum pt ion and ot her w elfar e indicat or s in societ y ; in 2000, t he r ichest 1 per cent of adult s ow ned 40% of global asset s, and t he r ichest 10% of adult s account ed for 85% of t ot al w or ld asset s; in cont r ast , t he bot t om half of t he w or ld adult populat ion ow ned bar ely 1% of global w ealt h. The com par ison bet w een w hat t he r ich and t he poor possess r aises ser ious quest ions on t he adequacy of cur r ent dev elopm ent m odels ( dev elopm ent for w hom ?) and gener at es feelings of inj ust ice and polit ical claim s. This is w hy nat ional est im at es of inequalit y ar e ev en less r eliable t han t hose on pov er t y ; incom e dispar it ies ar e not at t he cor e of nat ional st at ist ical dat a ( for inst ance, Egy pt and I ndonesia ar e " officially " m or e equal societ ies t han Aust r alia or Fr ance) . For t hese r easons, Unit ed Nat ions inst it ut ions hav e been w or k ing t ow ar ds bet t er m onit or ing of pov er t y and dist r ibut ion dat a. Recent findings show t hat inequalit y has been gr ow ing in t he lat e decades of t he 20t h cent ur y .
Electronic copy available at: http://ssrn.com/abstract=991935
P o ve r ty R e d u c ti o n i n H i s to r i c a l P e r s p e c ti ve
Pov er t y is not a new phenom enon. Many descr ipt ions of Eur ope in t he 19t h cent ur y descr ibe liv ing and w or k ing condit ions sim ilar t o t hose seen t oday in dev eloping count r ies. Char les Dick ens’ st or ies of childr en’s m isfor t unes ar e analogous t o t he liv es of m any w or k ing childr en in cont em por ar y Afr ica, Asia and Lat in Am er ica. Fr iedr ich Engels descr ipt ion of Manchest er 's r iv er I r k indust r ial ghet t o is sim ilar t o t oday ’s shant y -t ow n scenes fr om Sm ok y Moun-t ain in Manila or Nov a I guazu in Rio de Janeir o. Wha-t happened in dev eloped count r ies, econom ic dev elopm ent accom panied of social dev elopm ent , can also happen in dev eloping count r ies.
Let's t ak e t he ex am ple of t he US in t he 1930s. Aft er t he 1929 cr ash and t he Depr ession, pov er t y w as w idespr ead, people m igr at ed w it h lit t le m or e t o sell t han t heir ow n labor , m afias w er e pow er ful and cit izens pow er less - once again, a sim ilar sit uat ion t o t oday 's dev eloping count r ies. Aft er y ear s of har dship,
unem ploy m ent and cr isis, t he Roosev elt Adm inist r at ion em bar k ed on t he New Deal t o r ev it alize t he econom y and suppor t US cit izens. I t w or k ed. The US ent er ed a per iod of pr osper it y .
At t he end of Wor ld War I I , polit icians fr om t he adv anced econom ies w er e det er m ined t hat unem ploy m ent and econom ic cr isis, w hich had pr ov ok ed polit ical cr isis and r esult ed in Com m unism and Fascism , should nev er happen again. They accept ed t hat full em ploy m ent and m acr oeconom ic st abilit y should be t he pr im ar y nat ional policy obj ect iv e, and t he gov er nm ent got m or e inv olv ed in educat ion, m edical car e, social and housing assist ance, m inim um r et ir em ent lev els, em ploy m ent policies, enfor cem ent of labor law s and
r egulat ions. These pr ogr am s w er e not new , t hey had been an essent ial par t in t he m oder nizat ion pr ogr am s of t hese w ealt hier societ ies at t he ear ly st ages of t heir dev elopm ent . I t w or k ed again. Post w ar policies allow ed high pr oduct iv it y gains in t he w or k for ce, ex panded dom est ic dem and, and incr eased econom ic gr ow t h. The populat ions of Eur ope, Japan, Nor t h Am er ica, Aust r alia and New Zealand ex per ienced a pr osper it y unseen in hist or y .
The lesson is t hat pov er t y can be r educed if gov er nm ent s ar e com m it t ed - and it can be r educed fast . How ev er , Thir d Wor ld gov er nm ent s ar e r ar ely fully com m it t ed - pov er t y r educt ion is gener ally only one of m any dev elopm ent al obj ect iv es. A significant am ount of dev eloping count r ies ar e st ar v ed of capit al, pr essur ed by ex t er nal debt , and hav e lim it ed access t o dev eloped count r ies m ar k et s t o ex por t t heir pr oduct s. Social policies, such as healt h, em ploy m ent or pensions, hav e not been a pr ior it y ; t hey hav e been lar gely neglect ed, or at best addr essed w it h inadequat e r esour ces. St andar d policy pr escr ipt ions pr ov ided by m aj or dev elopm ent agencies ( “ t he Washingt on Consensus” ) ar e oft en inadequat e and ended causing pov er t y in t he past . I n m any cases, public policy - m ak ing has been capt ur ed by som e int er est gr oups w ho benefit dispr opor t ionat ely fr om public policies, inst ead of ensur ing dev elopm ent for t he m aj or it y of t he populat ion. This is w hy t he pov er t y r educt ion debat e is highly polit icized and ideological.
Th e P o ve r ty, In e q u a li ty a n d Ec o n o m i c Gr o w th D e b a te
Many ar gue t hat pov er t y r educt ion should not be a pr im ar y obj ect iv e for dev eloping count r ies and t hat econom ic gr ow t h should be t he fir st pr ior it y . Ev ent ually , t he benefit s of gr ow t h w ill " t r ick le dow n" t o t he poor . Fur t her , academ ics lik e Sim on Kuznet s, t he 1971 Nobel Pr ize laur eat e in econom ics, say inequalit y is
necessar y in t he fir st st ages of dev elopm ent of a count r y . These v iew s ar e old but st ill influent ial in t he dev elopm ent debat e. Num er ous gov er nm ent s t oday suppor t w hat it has been called t he " t r ick le dow n plus" appr oach ( gr ow t h as a fir st pr ior it y , w it h som e lim it ed basic educat ion, w at er supply and ot her social dev elopm ent pr oj ect s) .
Fr om a dev elopm ent w or k er per spect iv e, t he debat e appear s r at her st er ile - a conv enient w ay t o post pone pr o- poor policies. I t seem s obv ious t hat pov er t y r educt ion needs econom ic gr ow t h t o be sust ainable.
par t icular ly m alnut r it ion and pov er t y in childr en, dam age healt h, cause deat h, r educe int elligence, and low er pr oduct iv it y and oppor t unit ies for fut ur e adult s, a high t ax t o pay for a count r y . Equit able policies ar e an indispensable inst r um ent for count r ies t o r aise pr oduct iv it y , m aint ain t heir int er nat ional com pet it iv eness, dev elop dom est ic m ar k et s and cont inued econom ic gr ow t h.
The a r g u m e n t s f o r e co n o m ic g r o w t h f ir st ar e:
•
A count r y should sav e and inv est in it s fir st dev elopm ent st ages; ev ent ually , t he benefit s of gr ow t h w ill t r ick le dow n t o t he r est of societ y•
The r ich sav e m or e; accor dingly , if t her e ar e low er w ages ( higher inequalit y ) t her e w ill be higher av er age sav ings, and t hus fast er gr ow t h•
Pov er t y and inequalit y k eep t he labor for ce cheap and t hus encour age inv est m ent•
At t ent ion should be giv en t o lim it ing t ax at ion on inv est or s/ higher incom e gr oups. This can lim it av ailable r esour ces for pov er t y r educt ion or social dev elopm entThe a r g u m e n t s a g a in st e co n o m ic g r o w t h f ir st ar e:
•
Econom ic gr ow t h and pov er t y r educt ion should be pr om ot ed in par allel fr om ear ly dev elopm ent st ages, as par t of t he count r y 's m oder nizat ion st r at egy and t he social cont r act bet w een t he gov er nm ent and cit izens•
The qualit y of gr ow t h m at t er s; m acr oeconom ic v ar iables ar e only aggr egat es, dev elopm ent r equir es m or e t han GDP gr ow t h, em phasis has t o be placed on t he pr ocess of gr ow t h ( i. e. em ploy m ent , dist r ibut iv e aspect s, good gov er nance, cor r ect ing m ar k et im per fect ions. ensur ing st abilit y inst ead of v olat ilit y ) w it h par allel inv est m ent s in social dev elopm ent•
I nequalit y fost er s dist or t ed dev elopm ent pat t er ns such as dependency on cheap labor ( t he so- called " r ace t o t he bot t om , " pushing salar ies dow n t o t he lev el of t he poor est com pet ing count r y )•
Egalit ar ian dist r ibut ion pat t er ns encour age dom est ic dem and and t hus gr ow t h; gr eat er effect iv e dem and ( consum pt ion r at ios) of t he low er incom e gr oups gener at es a lar ger dom est ic m ar k et•
Raising t he incom es of t he poor incr eases pr oduct iv it y of t he w or k for ce•
The gr eat er t he inequalit y t he less t he t r ick le- dow n effect giv en t hat pow er ful gr oups t end not let t heir pr iv ileges go, ult im at ely leading t o polit ical conflict•
The huge gap bet w een r ich and poor - 80% of w or ld's populat ion r eceiv ing only 11% of w or ld's incom e - has becom e m or e w or r y ing since t he w or ld is facing t he t hr eat of or ganized t er r or ism fr om gr oups based in som e of t he w or ld's poor est count r ies.N a ti o n a l P o ve r ty R e d u c ti o n P o li c i e s a t th e B e g i n n i n g o f th e 2 1s t Ce n tu r y
Ar ound t hr ee- quar t er s of t he count r ies in t he dev eloping w or ld hav e ant i- pov er t y plans incor por at ed in t heir nat ional planning. These, how ev er , ar e oft e n under budget ed, hav e no t ar get obj ect iv es or deadlines. I n 1995, t he int er nat ional com m unit y set som e specific t ar get s, t he Millennium Dev elopm ent Goals ( MDGs) , lat er endor sed by all count r ies at t he Unit ed Nat ions 55t h Gener al Assem bly ( 2000) . They include halv ing hunger and ex t r em e pov er t y by 2015, and im pr ov ing a basic set of dev elopm ent indicat or s, such as achiev ing univ er sal pr im ar y educat ion, r educing infant m or t alit y r at es, im pr ov ing m at er nal healt h, pr om ot ing gender equalit y and em pow er ing w om en, com bat ing HI V/ AI DS and m alar ia, suppor t ing env ir onm ent al sust ainabilit y and consolidat ing dev elopm ent par t ner ships. The MDGs ar e am bit ious but achiev able pr ov ided gov er nm ent s' com m it m ent . Unit ed Nat ions inst it ut ions, t he OECD, bilat er al donor s and int er nat ional NGOs, hav e all v oiced suppor t for t he MDG t ar get s.
I n t his cont ex t , t he m ult ilat er al financial inst it ut ions ( such as t he Wor ld Bank and t he r egional dev elopm ent bank s) changed t heir oper at ional obj ect iv es fr om econom ic gr ow t h t o pov er t y r educt ion - at least r het or ically . That has been a v er y im por t ant change, full of cont r ov er sy - t he old " gr ow t h v er sus pov er t y " debat e
1 . D ia g n o se o b st a cle s t o p o v e r t y r e d u ct io n a n d d e sig n st r a t e g ie s t o o v e r co m e t h e m : The fir st st age consist s of under st anding w hy pov er t y ex ist s in a par t icular count r y , agr eeing on a pov er t y m easur e, r ev iew ing t he obst acles t o r educe pov er t y . Nat ional Dev elopm ent St r at egies, and w her e applicable, Pov er t y Reduct ion St r at egies ( PRS) , ar e dr aft ed ident ify ing m edium - and long- t er m t ar get s t o r educe pov er t y .
2 . Pr io r it iz e p o licie s f o r p o v e r t y r e d u ct io n : Pov er t y r educt ion is not achiev ed by char it y - t y pe safet y net s alone. Pov er t y r educt ion r equir es st r uct ur al changes at t he econom ic, polit ical and social lev els.
( a) Pr om ot ing em ploy m ent - gener at ing gr ow t h: That m eans pr om ot ing qualit y , non- v olat ile gr ow t h t hat suppor t s em ploy m ent , w it h at t ent ion t o dist r ibut iv e aspect s and good gov er nance. I t r equir es adequat e m acr oeconom ic policies, em ploy m ent should be a pr im ar y obj ect iv e and not t o be “ cr ow ed out ” by a nar r ow focus on inflat ion cont r ol and fiscal discipline. Som e ar e t oler ant t o m oder at e r at es of inflat ion giv en t he posit iv e effect s of an ex pansiv e m onet ar y and fiscal policy on aggr egat e dem and. Macr oeconom ic policies m ust also ensur e t hat public ex pendit ur es in t he social sect or s ar e m aint ained at sat isfact or y lev els. Addit ionally , an adequat e ex change r at e policy com bined w it h indust r ial policy st im ulat es out put and em ploy m ent gr ow t h. Fiscal, m onet ar y , and ex change r at e policies should be consist ent w it h em ploy m ent - gener at ing gr ow t h and public inv est m ent st r at egies. Bot h pr iv at e and public sect or ent er pr ises can be an engine of gr ow t h and em ploy m ent ; for t hem t o cont r ibut e t o pov er t y r educt ion, an enabling env ir onm ent and effect iv e r egulat or y fr am ew or k should be enfor ced t o pr om ot e com pet it ion, enfor ce fair pr act ices and st andar ds, and ensur e t hat essent ial goods and ser v ices ar e affor dable and r each t he poor .
( b) Equit able sect or policies t hat pr ov ide oppor t unit ies, asset s and incom es t o t he poor : This is, public policies in any sect or ? fr om agr icult ur e t o ener gy ? t hat ar e pr ogr essiv e and benefit all. For inst ance, sect or policies t hat enable t he poor t o build, buy or hav e access t o nat ur al asset s ( land, pr oper t y , nat ur al r esour ces) , finance ( cr edit ) , and access social ser v ices ( educat ion, healt h, social pr ot ect ion) . Many public policies in dev eloping count r ies had v er y lim it ed cov er age and ended benefit ing t he w ealt hy . I ncidence benefit analy ses dev eloped ar ound t he w or ld for a v ar iet y of public policies ev idence t hat , gener ally , t he follow ing public inv est m ent s ar e equit able:
• Educat ion and healt h: Ex panding cov er age of fr ee pr im ar y and secondar y ser v ices
• I nfr ast r uct ur e: r ur al elect r ificat ion, affor dable w at er and sanit at ion, r ur al r oads, affor dable public t r anspor t sy st em s
• Social Pr ot ect ion: Social secur it y / w elfar e pr ogr am s, especially non- cont r ibut or y social pensions • Labour : Decent w or k agenda, act iv e and passiv e labour m ar k et policies
• I nclusiv e finance: dev elopm ent bank s, r ur al bank s, m icr ofinance
• Decent r alizat ion, if good gov er nance at t he local lev el, at t ending t o equalizing r edist r ibut ing for m ulas secur ing t r ansfer s bet w een r egions
• Rur al dev elopm ent pr ogr am s ensur ing access t o land, w at er , m ar k et s, liv est ock , cr edit for sm allholder s
• Ur ban dev elopm ent and housing focused on low - in com e ar eas
Alt er alia, t he follow ing do not benefit t he poor :
• Defense/ m ilit ar y ex pendit ur es
• Healt h: Ur ban hospit als far fr om ur ban m ar ginal ar eas, specialized clinics ( car diology et c. ) • I nfr ast r uct ur e: Lar ge infr ast r uct ur e pr oj ect s —dam s, m ot or w ay s, air por t s
• Social Pr ot ect ion: Pr iv at e pensions
• Financial sect or : Refor m / r escue of bank ing sy stem ( t r ansfer s t o lar ge bank s)
m anagem ent fr ee of polit ical dist or t ions w it h decent r alized m echanism s for br oad- based par t icipat ion in t he deliv er y of public ser v ices and effor t s t o m inim ize t he lik elihood of t hese ser v ices being capt ur ed by local elit es; pr om ot ing pr ogr essiv e t ax sy st em s and adequat e allocat ions for social ser v ices; fight ing nepot ism and cor r upt ion.
( d) Em pow er ing t he poor and ex cluded gr oups by enhancing t heir capacit y t o influence t he inst it ut ions t hat affect t heir liv es and st r engt hening t heir par t icipat ion in polit ical and econom ic pr ocesses. Or ganizing t he poor and ex cluded gr oups t o fight for t heir r ight s w as a cr it ical fact or in pr om ot ing social pr ogr ess in dev eloped count r ies - social dev elopm ent w ould hav e not happened w it hout t he fight of unions and civ il r ight s gr oups. Em pow er m ent and social m obilizat ion ar e
int r insically link ed t o t he br oader agenda of good gov er nance, t r anspar ency , and account abilit y of t he gov er nm ent t o it s cit izens.
( e) Fight ing Ex clusion and Gender Dispar it ies. The incr easing fem inizat ion of pov er t y is now a w ell-r ecognized t ell-r end. The gendeell-r div ision of laboell-r and ell-r esponsibilit ies foell-r household w elfaell-r e t ell-r anslat e in non- paid w or k and lack of oppor t unit ies. Gender dispar it ies fr equent ly r esult in gender based inequalit y in access and cont r ol of r esour ces and discr im inat ion against w om en's basic r ight s, e. g. educat ion, em ploy m ent , inher it ance, r egist r at ion. To r educe pov er t y and t o adv ance t he st at us of half t he w or ld's populat ion, su ppor t m ust be pr ov ided t o t he dev elopm ent of gender - sensit iv e policies and pr ogr am s. Ot her ex cluded gr oups ( e. g. cast e, et hnic gr oups) r equir e specific affir m at iv e policies.
3 . Ad e q u a t e f u n d in g : Policies need t o be accom panied of adequat e funding. Most gov er nm ent s and public inst it ut ions ( including int er nat ional or ganizat ions) claim t hey do a lot for t he poor – t he issue is how m uch? Their r eal pr ior it ies ar e r eflect ed in t he budget s. Who benefit s m ost fr om public ex pendit ur es? I s spending r eaching t he poor ? Or is spending cent er ed on sust aining adm inist r at iv e st r uct ur es, v est ed int er est s?
4 . T h e p o lit ica l e co n o m y o f r e f o r m : Nat ional adm inist r at ions ar e usually not opposed t o pov er t y r educt ion but find t hem selv es in sit uat ions in w hich pow er ful m inist r ies or v est ed int er est gr oups fight for pr iv ileges and unj ust ified shar es of t he budget , collapsing r esour ces for pov er t y r educt ion. A good st ak eholder analy sis of t he w inner s and loser s of r efor m m ay facilit at e t he pr ocess, by m ak ing t he t r ade- offs t r anspar ent ; public ex pendit ur e r ev iew s ar e also useful t ools t o br ing t r anspar ency and r at ionalit y t o decision m ak ing. Successful pr ogr am s ar e nor m ally t hose t hat ar e suppor t ed by t he ser ious polit ical com m it m ent of t he count r y 's
leader ship, and agr eed on by nat ional polit ical coalit ions.
B u t M o r e Is N e e d e d to R e d u c e P o ve r ty: R e d i s tr i b u ti o n , In te r n a ti o n a l P o li c i e s
Cr it ics of t his agenda say it does not go far enough. The agenda, gener ally suppor t ed by UN agencies and t he pr ogr essiv e w ings of t he dev elopm ent bank s, is a necessar y but not sufficient condit ion for fast pov er t y r educt ion. For inst ance, m or e can be added on r edist r ibut ion policies. Redist r ibut ion is essent ial because t he benefit s of gr ow t h do not nat ur ally r each all in societ y , it is a legit im at e goal of public policy , t o balance t he t endency of t he m ar k et t o concent r at e r esour ces. Redist r ibut ion needs t o happen at t w o lev els, nat ionally and int er nat ionally – let ’s r em em ber t hat t he r ichest 2% ow ns 50% of w or ld’s w ealt h. Jeffr ey Sachs, Dir ect or of t he UN Millennium Pr oj ect , not es t hat pov er t y could be er adicat ed w it h only one per cent of t he com bined GDP of OECD count r ies. Redist r ibut ion m ay be achiev ed t hr ough dom est ic t ax at ion, incr eased dev elopm ent aid and new pr oposed int er nat ional sour ces such as t ax es on sh or t- t er m speculat iv e financial t r ansact ions, on ar m s t r ade, pollut ion and ot her s.
( i) Re solv e t h e p r ob le m of Th ir d W or ld d e b t :Despit edebt r educt ion at t em pt s, m any dev eloping count r ies r em ain highly indebt ed and t heir scar ce funds hav e t o be used for debt r epay m ent inst ead t han for pov er t y r educt ion - NGOs lik e Jubilee 2000 hav e been fight ing for a cancellat ion of all debt in poor est nat ions.
( ii) M a n a g e in t e r n a t ion a l f in a n ce a n d co r p o r a t io n s:Cont inual shock s and inst abilit ies in t oday 's financial m ar k et s hav e led cr it ics t o t alk about a " global casino" and t he need t o r egulat e it t hr ough a new financial ar chit ect ur e t hat suppor t s dev elopm ent , fight s shor t- t er m speculat iv e capit al flow s, t ax ev asion and m oney launder ing. Ther e is a need t o est ablish and enfor ce bet t er pr inciples of public account abilit y and pr ot ect cit izens/ consum er s fr om possible cor por at e ir r esponsibilit y
( iii) Re f or m in t e r n a t ion a l t r a d e, Cu r r en t t r ade ar r an gem ent s ar e not fr ee and non discr im inat or y as is claim ed. I n fact , t he EU, US and Japanese subsidize t heir ow n pr oducer s, including t he agr icult ur al sect or - agr icult ur e is one of t he few econom ic act iv it ies t hat poor count r ies can dev elop t o r educe pov er t y . I nst ead, in t he nam e of " efficiency " and " fr ee m ar k et s" , dev eloping count r ies ar e t old t o open- up and liber alize t heir econ om ies - as a r esult , dom est ic pr oducer s cannot com pet e w it h t he subsidized, higher qualit y pr oduct s fr om dev eloped count r ies and close dow n, gener at ing fur t her unem ploy m ent and pov er t y . Abandoning t his double m or al ( " Do as I t ell y ou, not as I do" ) and uncr it ical im plem ent at ion of m ar k et- fundam ent alist policies is essent ial t o r educe pov er t y . Cur r ent t r ade policies should be r eplaced for a sy st em of " fair " t r ade w hich fav or s poor er r egions, ensur ing t hat dev eloping count r ies ar e giv en a r ole in t he w or ld econom y .
Th i n g s t o W a t c h Ou t F o r - D i s ti n g u i s h i n g B e tw e e n R h e to r i c a n d P r a c ti c e
• Wher e ar e budget ar y allocat ions going? I s spending pr o poor ? ( applicable t o gov er nm ent or any inst it ut ion -i. e. m inist r y , int er nat ional or ganizat ion) . I s spending cent er ed on sust aining adm inist r at iv e st r uct ur es, v est ed int er est s?
• Ar e k ey sect or al pr ogr am s ( agr icult ur e, infr ast r uct ur e, educat ion, healt h, pensions, et c) w or k ing t o r educe pov er t y ? Who benefit s? What ar e t he m aj or obst acles t o t he poor t o par t icipat e in econom ic act iv it ies and benefit fr om dev elopm ent ?
• How ar e gov er nm ent r ev enues collect ed? I s a pr ogr essiv e t ax sy st em enfor ced?
• Ar e cor r upt ion and cr im e disr upt ing inv est m ent and civ il act iv it ies? Do all cit izens hav e equal access t o j ust ice, secur it y and ser v ices? I s t he gov er nm ent effect iv ely fight ing discr im inat or y pr act ices against gender , cast e, r ace, or r eligious beliefs? Ar e com m unit ies or ganized and ar e aw ar e of m echanism s t o pr ot ect t hem fr om abuse?
• What hav e been t he social im pact s of r ecent econom ic policies? ( im pact s on labor and em ploy m ent , im pact s on pr ices of essent ial goods and ser v ices, im pact s on gender and v ulner able populat ions)
• How is pr ogr ess m easur ed - How is t he pov er t y line calculat ed and hav e t her e been any changes in t he m et hodology ?
Co n c lu s i o n : U n d e r s ta n d i n g P o ve r ty o n a Glo b a l S c a le
The lat est t hink ing on pov er t y r educt ion focuses on t he need t o under st and pov er t y on a global scale.
Fir st ly , because pov er t y is r e- em er ging in dev eloped econom ies, pov er t y is no longer a Thir d Wor ld
cit izen has ex per ienced a significant decr ease in w elfar e, w hile gr ow t h has r em ained low , unem ploy m ent and public debt high, because t hese neoliber al shor t- t er m policies do not addr ess t he long- t er m st r uct ur al causes of t he pr oblem : ov er pr oduct ion and global ex cess capacit y in a cont ex t of w eak effect iv e dem and.
Secondly , it is necessar y t o t hink globally because som e of t he causes of pov er t y in dev eloping count r ies ar e due t o int er nat ional policies t hat gov er nm ent s cannot influence ( for inst ance, lack of access t o dev eloped count r ies’ m ar k et s) . Reducing pov er t y w ill r equir e a concer t ed int er nat ional effor t . Addit ionally , dev eloping count r ies w er e for ced t o adopt t he sam e or t hodox m odel applied t o dev eloped econom ies - t he so- called " Washingt on Consensus" polices ( st r uct ur al adj ust m ent s, r educing cont r ols on capit al and t r ade, cur v ing public ex pendit ur es, pr iv at izat ion) . This led t o m aint aining or deepening social depr iv at ion, inst ead of
inv est ing in hum an capit al as par t of nat ional dev elopm ent st r at egies, t o t he point t hat t he 1980s- 2 0 0 0 s h av e been called " t he lost decades" .
The new cent ur y st ar t s w it h pr ofound changes. Globalizat ion is shift ing t r ade, inv est m ent and t echnology , changing v alues; it is also gener at ing econom ic int er dependence and v ulner abilit y t o econom ic shock s and dow nt ur ns. I f no equit able policies ar e in place, count r ies m ay ex per ience m ount ing unem ploy m ent , pov er t y , m ar ginalizat ion and polit ical conflict , giv en t hat populat ions pay t he shor t- t er m cost s of cr isis. For
