Rethinking poverty reduction- Nepali Times

NEW YORK � Last year, FAO announced that the number of hungry people in the world increased over the last decade. In 2008, the World Bank announced a significant decline in the number of poor people up to the year 2005. But if poverty is defined principally in terms of the money income needed to avoid hunger, how can announcements such as these be reconciled?

In Sub-Saharan Africa and parts of Asia, poverty and hunger remain stubbornly high. International agencies estimate that more than 100 million people fell into poverty as a result of higher food prices during 2007-2008, and that the global financial and economic crisis of 2008-2009 accounted for an increase of another 200 million. Delayed job recovery from the global downturn remains a major challenge for poverty reduction in the coming years.

The mixed record of poverty reduction calls into question the efficacy of conventional approaches. Countries were advised to abandon their national development strategies in favour of globalisation, market liberalisation, and privatisation. Instead of producing sustained rapid growth and economic stability, such policies made countries more vulnerable to the power of the rich and the vagaries of international finance and global instability, which has become more frequent and severe due to deregulation.

The most important lesson is the need for sustained rapid growth and structural economic transformation. Governments need to play a developmental role, with implementation of integrated policies designed to support inclusive output and employment growth, as well as to reduce inequality and promote social justice.

Such an approach needs to be complemented by appropriate industrial investment and technology policies, and by inclusive financial facilities designed to support them. In addition, new and potentially viable production capacities need to be fostered through complementary developmental policies.

By contrast, the insistence on minimal government and reliance on the market led to precipitous declines in public infrastructure investment, particularly in agriculture. This not only impaired long-term growth, but also increased food insecurity.

Advocates of economic liberalisation policies cited the success of the rapidly industrialising East Asian economies. But none of these economies had pursued wholesale economic liberalisation. Instead, governments played a developmental role by supporting industrialisation, higher value-added agriculture and services, and improvement of technological and human capabilities.

Structural transformations should promote full and productive employment as well as decent work, while governments should have enough policy and fiscal space to enable them to play a proactive role and to provide adequate universal social protection.

The last three decades also saw the divorce of social policies from overall development strategies as a consequence of the drive for smaller government. National economic development strategies were replaced with donor-favored poverty-reduction programs, such as land-titling, micro-credit, and 'bottom of the pyramid' marketing to the poor.

Such fads have not succeeded in significantly reducing poverty. This is not to deny some positive consequences. For example, micro-credit has empowered millions of women, while important lessons have been learned from such schemes' design and implementation.

Unfortunately, poverty remains endemic, with more than a billion people going hungry every day. There are also growing fears that climate change will more adversely threaten the lives of the poor.

The United Nations' biennial Report on the World Social Situation, entitled Rethinking Poverty, makes a compelling case for rethinking poverty-measurement and poverty-reduction efforts. For the world's poor, 'business as usual' has never been an acceptable option.

The author is United Nations Assistant-Secretary-General for Economic Development. Project Syndicate, 2010

1. pasas
poverty is just a symptom, why not go after the core problem like working infrastructure, education, healthcare etc? Or is that 'cause that won't bring in sustained perks to ngo-tantra?

Posted on: 12 JUNE 2010 | 1:30 PM NST

2. Wilko - ICFON
Pasas is right. Poverty and hunger are the symptoms. If we want to reduce poverty in Nepal, we should tackle multiple problems in the villages. Constructing only a school in a village is not a solution. we have to work on all sides at the same time: education of adults, training them on health and sanitation items, promoting collaboration, improved agriculture, etc. If we would target Nepali villages in this way, poverty could be eradicated after 5 years of training. At the same time, peace should come so that people will start new companies in Nepal, which eventually lead to more people earning a salary. But as long as peace is not there, we better focus on the villages where life is hard.

Posted on: 12 JUNE 2010 | 11:52 PM NST

3. Daniel Gajaraj
THE ONLY WAY TO ERADICATE POVERTY IS BY CREATING MORE AND MORE JOBS TO GENERATE MORE DISPOSABLE INCOMES. REMEMBER ENTREPRENEURSHIP IS THE BEST WAY FOR JOB CREATION. IT IS NOT THE RESPONSIBILITY OF THE GOVERNMENT TO CREATE JOBS BUT TO CREATE THE ENVIRONMENT WITH LEAST FRICTION AND HIGHEST INCENTIVES FOR THE PRIVATE SECTOR. FREE MARKET ECONOMY SHOULD BE ACCEPTED, NOT CENTRALIZED CONTROLLED ECONOMY. THEY RETARD THE ECONOMY AND PROGRESS . .EFFECTIVE REGULATORY BODIES ARE NECESSARY .TO REDUCE THE ECONOMIC DEVIDE BETWEEN THE HAVES AND THE HAVE-NOTS MAKE THEM PARTNERS AND BRING THEM TO THE MAIN STREAMS BY PROVIDING LOANS.SKILL TRAINING ,LOW -TECH MANUFACTURING,TRANSFERING LABOUR FROM AGRICULTURE TO OTHER SECTORS AND EDUCATION WILL WILL BE EFFECTIVE IN REDUCING POVERTY.

Posted on: 13 JUNE 2010 | 8:36 AM NST

4. Slarti

There is something not right about this. Over the past 60 or so years of history the UN has been a failure in most interventions it has made. This is true for nearly all multilateral organizations. The reason is not a lack of good intention. It is failure of execution of that intention.

One would think that the rethink in organizations manned by such capable individuals would be further away from a standard ideological debate, but alas.

The fault with nearly all these schemes is that you are looking at the wrong end. The problem is not poverty; it is the mechanism of delivery. In trying to do good institutions always fail to understand the people they deal with and society's they intervene in. The desire to then blame it on a lack of "culture" leads on to greater blunders. People do not need to change; it is for the system to do so, people will follow.

Take the failure of food delivery in far and mid-west of Nepal. Calculate the amount of money spent by the government and by several multilateral and charitable organizations, and then try and figure out how difficult is it to let people have the money so they can buy the food themselves.

Surprisingly, one of the best examples of change is China. The moment they gave up dogma, they came up with a solution. The Chinese government understood that it did not matter whether it is socialism or capitalism or whateverism. What matters is whether people get what they expect to get, given their circumstances. They allowed people to farm, set higher prices to transfer money to the farmer, and then let them choose what they want to eat.

I understand that there are still problems that they need to sort out, primarily to do with the sheer size of the population, but the fact is that they tried a solution away from political rhetoric and it worked. In Nepal, and everywhere else, governments have to make similar choices – and most importantly one – do they trust people to, by and large, make the right decisions for themselves. Additionally, do they truly understand their people?

If the answer to their question is yes, everything will fall into place. If it is no, they better roll up their sleeves and get to work, before it is too late.

One fact of life, economic or otherwise will never change. It is not the outcome but action which matters, an action taken with the right intention which is in agreement with your values, will, more often than not, get you the right outcome. For every country and for every society, and for every person.

Get the right mechanism that suits you, and don't listen to the UN.

Posted on: 14 JUNE 2010 | 9:01 PM NST

5. Puspa
I absolutely agree with the author. It is true need to re-define poverty. For example Nepal has well maintained to afford hundreds of posh motor-cars, millions (Rupees) and modest accommodation (some) political and bureaucrats in its Capital city whose job is to define poverty of their fellow citizens who are not enough fortunate to see a doctor when they are sick, on top of hardly manage for food / dietary sufficiency and basic education. No wonder, who cares of social security. But if those elites in Kathmandu find some time to think about poverty probably they will look for appropriate photograph (as shown in this article too). I still wonder change in what needed is in mind-set of those elites who rejoicing all possible facilities in Kathmandu. Nepalese people have well-performed their part in a hope of change for 6 decades. I don't blame to politicians, they are just dumbs!!

Posted on: 15 JUNE 2010 | 3:22 AM NST