Discourse on poverty alleviation, paradigm shift from MDGs to SDGs

Events | | 3-10-2019, 01:00

 Discourse on poverty alleviation, paradigm shift from MDGs to SDGs

MAHAMMAD MAMISHZADA

The London School of Economics and Political Science, London, UK.

 

 

 

 

 

 Introduction 

  Poverty reduction remains the ultimate goal in development discourse with an unambiguous consensus among nations. Nevertheless, there are conflicting views  on the definition of poverty, and consequently on determining the ways to battle it. Some economists argue that economic growth is a primary means to get      out of poverty. On the other hand, some view poverty alleviation as elimination of deprivations and enabling access of people to a myriad of social opportunities. Alternatively, this is also dubbed as capabilities based approach which focuses on “constitutive” freedoms such as access to healthcare, education,    social services as a means to obtain the same ends (A. Sen, 1999 p.36). All in all, poverty is multidimensional and therefore not all dimensions can be           measured the same way. It makes debate  especially  heated,  since   none   of   these   views   alone   possess   the   power   to comprehensively explain and lead the way out of poverty. Hereby in this article, I will make an attempt to explain the definition of poverty, and then discuss both sides of coin – whether economic development is the best way to poverty alleviation or not. Furthermore, drawing upon conclusions, I will briefly describe paradigm shift in      development  discourse for poverty alleviation.

 

Definition of Poverty

There is no unified and solid definition of poverty, however it is commonly referred as deprivation from necessities of life to sustain living, be it either material or non- material. Despite varying views on its definition, most economists do agree that, it is multidimensional and can take various forms. Some segregate poverty to four main measurement approaches such as monetary, capability, social exclusion and participatory methods (Caterina Ruggeri Laderchi et al. 2003). Others divide it into even more groups such as social inferiority, isolation, physical weakness, vulnerability, seasonality, powerlessness and humiliation (Robert Chambers 1995). Among them, monetary approach is universally accepted as main identification strategy to define poverty, since it is easier to measure, express in numbers, interpret and to convert across countries. The most difficult approach to measure and describe in severity, is social exclusion. It basically presupposes marginalization, the limitation of participation in society, erosion of liberal values, and no access to markets of exchange. The last approach, which is participation methods, purports having say of poor people in decisions on what is means to be poor. It is about how people in poverty express their needs, the necessities that they want to be addressed (Chambers 1994, 1997). Besides monetary based income approach, the rest other dimensions can be commonly expressed as capabilities based approach advocated by A. Sen (1985, 1997, 1999). He views poverty not just basically reflected in income, but life longevity, health, education, and access to welfare systems.

  Economic Development as a means to poverty alleviation

  Although proponents of this view do not suggest that it is the only and best way to improve the lives of the poor, nevertheless they do believe that growth       benefits poor proportionally as anyone else in the society (D.Dollar, A.Kraay 2002). By running cross-country regressions based on country-year observations of    a sample of 92 countries for the last four decades, the authors find that the average income of the poor quintile rose equiproportionately with the average       income within the country. This relationship holds robust across regions and through variations of income in both normal and crisis periods. Nevertheless, they    also emphasize that a set of policy tools such as protection of rights, openness to trade, low inflation, and financial development have little effect in the income    distribution. Therefore, these policy packages contribute to the income of the poor as much as to the overall economy.Due to rising inequality within some countries such as in the U.S. and China, public opinion challenges this view. Many believe that, in reality the poor are not benefiting from economic growth at all (D.Dollar et al. 2014). The rich reap the fruits of economic growth, while poor cannot catch-up with the life standards. This is also backed by studies on the income groups of countries. According to these studies unprecedented economic growth in last two decades spurred many low-income countries (LICs) to move to the middle-income countries (MICs) group. Nevertheless, intra-country inequality remained unaffected by the shift among country groups. Therefore, today up to 70-75% of the world’s poor population live in MICs (Andy Sumner 2011). Especially countries with the large population such as India, Nigeria, Indonesia and Pakistan graduated to MICs without much improvement in poverty levels.Other proponents of income based view dismiss this argument based on studies of authors such as Deininger and Squire (1996), Chen and Ravallion (1996), Easterly (1999). Through social surveys and comparing it with the growth rates of a country, these studies affirm the null hypothesis that change in income and the inequality are unrelated. These authors dismiss any strong anti-poor effects of aggregate growth at the country level. Meanwhile, this does not preclude the very real possibility that some kinds of aggregate growth could hurt some people.Another angle to support economic development view is through employment perspective. Poverty alleviation programs are doomed to fail if job opportunities are not created. Focusing on social welfare programs based on capabilities approach, to improve ‘constitutive freedoms’ would only create mass of unemployed people who are educated, housed and fed, which would ultimately stop country’s development (Alice H. Amsden 2010). The author compares this to flawed Say’s law - which supposes creating supply will make its own demand. She backs her view by comparing employment and poverty rates of Latin America, Africa and Middle East with that of East Asia – especially China for over 25  years.  She  concludes  that  employment  rate  and  poverty  alleviation  are  positively correlated. Based on International Labor Organization data, the author observed that while employment rate rose in China to 76.6% in 2003, its poverty fell from    40% in 1990 to 15% in 2005. Simultaneously, within other regions poverty rates failed to fall, as no significant improvement in employment was observed, remaining at 62.5% in 2005 (see Andy Sumner 2011, p.866).
Although not explicitly expressed, support for this view can even further be extended by including, industrialist view of (Chang H.J.2013). He advocates that, without industrialization to increase productivity of states, MDGs will not succeed, as they are mainly focused on humanistic approach rather than income based. Overseeing production side of the discourse, income of the developing states will not increase, thus they will not be able to pull themselves out of poverty.   All in all, economic development increases income and consumption of the poor, and contributes to poverty alleviation. However, it only addresses basic material  needs, while other dimensions of poverty remain unattended. Therefore, this view holds partially true. 

Other ways to poverty alleviation

Should the other dimensions of human needs be considered, then income based approach proves to be inadequate. Not all forms of deprivation are reflected in economic development of a country. A great deal of people’s livelihood constitutes of both tangible and intangible assets that are not reflected in GDP. Some of these include home-gardening, usage of common property resources, casual labor, moral support, access to information resources and the rights to practice what they want (Chambers, R. 1995). Friendship, love, laughter, life fulfillment, story sharing are not easily measured and income is not highly correlated with the qualitative approach such as undernourishment, child mortality rates or school completion (Bourguignon et al 2010: p 24, 27)Therefore, A.Sen proposes focusing on capabilities based approach such as rule of law, provision of fundamental freedoms, healthcare, nutrition and education as one of the means to poverty alleviation. For example, despite being much richer (even after correcting for cost-of-living differences) on average African Americans in United States have a lower chance of reaching advanced ages that do people in enormously poorer regions of China, or Kerala state of India, Shri-Lanka, Jamaica or Costa Rica. The reason for this, reportedly are, social arrangements, and community relations, law and order, presence of violence. It evidently indicated that, in the presence of income, the main end - better conditioning of human life was not achieved (Sen, A. 1999).In Rajastan, a survey was conducted to reveal true needs of people and the degree of poverty alleviation. The results of the research are known as Jodha’s paradox (Jodha, N.S. 1998). In 1964-66 survey people named 38 criteria which they needed, and in second survey in 1982- 84, it was revealed that, 5% of people who were worse off in terms of real per capita income, actually became better off by their own criteria, and were more satisfied. Some of the improvements included better infrastructure, wearing shoes, good housing and less dependency on loans. It is therefore paradigms on poverty alleviation have changed.

 

Through social protection and safety nets as well, the poverty and deprivation issues may be addressed. Its impact is huge affecting around 150 millions of poor, and overall half a billion population. Because of its importance, in a figurative meaning it is viewed as “quiet revolution” (D.Hulme et al. 2009). Forms of social assistance vary, such as in advanced countries it is more of a social insurance, employment protection and promotion, however in developing countries its main focus is on poverty reduction. Another element of social protection practice is rights-based approach which emphasizes obligation of states to protect rights of people.Based on above analysis, capabilities based approach is an important way to reduce poverty. However, evidently, this becomes the core issue only after people escape from worse-off situation – that is very low levels income, and thereby low consumption.

 

 Which way is the best? – Paradigm Shifts

 

Development paradigms over poverty alleviation have evolved from more of an income- based approach to capabilities based approach. Since 1990’s Washington consensus- which called for open market based growth approach, later on evolved to Post-Washington Consensus which also targeted good governance problems in peoples’ well-being. Currently, a new paradigm shift is observed which is called Beijing Consensus which emphasizes balance between state-led capabilities enhancement and market oriented income growth view in development discourse. Because of the shift in paradigm from income-based to capabilities approach, Millennium Development Goals were mainly focused on capabilities approach.Only two out of 8 MDGs: “Eradication of extreme poverty and hunger” and “Global Partnership for Development” promotes the income and productivity based approach. Today in monetary terms 11, 5% of total world population- 835.5 million people live under$1.25 poverty line (GMR 2014-2015). Therefore, to supplement the 1st goal and even eradicate poverty to 3% of total global population, World Bank’s “Twin Goals” were introduced. These goals address two main problems in income based approach: The 1st one is to increase the income of the poor, to above the $1.25 threshold. As most of the poor today live in MICs, the 2nd goal is to decrease income inequality, and achieve “Shared Prosperity”. Therefore, it focuses on to increase income of the poor bottom 40% in every country rather than average income growth of the whole population (GMR 2014-2015). Furthermore, since 2015 MDGs are even extended to 17 goals named “Sustainable Development Goals” and is mainly based on qualitative capabilities based approach rather than income.Visions on policy formation have also changed over time. Before - either through economic development, or through capabilities enhancement - policy packages were imposed “top- down”, based on criteria set by a group of “professionals”. However, over the last decade it has become more of a “bottom-up” approach based on local, participatory, and based on people’s needs (Robert Chambers 1995).

 

Conclusion

As suggested from the above analysis, and practically reaffirmed by policy of the United Nations, and its subsidiary World Bank, both economic development and capabilities enhancement are key to ultimate poverty alleviation. Because poverty is multidimensional, it requires multiple ways to be addressed. Although economic development increases peoples’ consumption and satisfies material needs, non-material needs and other forms of deprivation requires capabilities approach. In this sense, both rapid economic development and capabilities approach are best depending on the context of the problem. Thus, poverty alleviation is two-pronged: rapid economic development may escape people from starvation and destitution by increasing their income. Also in order people could take advantage of increased income, capabilities-based approach and policy tools are needed such as improved access to healthcare, education, other social services and even be it as simple as diverse “basket of choices”.