Meeting the Challenge of Poverty and Inequality Mick Moore and Howard White Introduction: Stresses historical continuity in the discourses around poverty – the poor can be seen as objects of charity, threats, or potentially productive resources Dual conceptions of poverty in international development discourse: - as a condition affecting virtually all in a country – leads to a policy focus on economic growth for the whole country, with little concern about distributional implications - as something affecting only a part of the population – leads to more focused public interventions to uplift the ‘poorest of the poor’ Attitudes towards equity have changed more over time, and promoting equality has not always been a central policy concern - the Kuznets inverted U-curve was accepted – this suggested that inequality would first increase and then decrease with growth - there now seems to be a shift towards a belief that equality improves growth Main arguments of the chapter: - realistic conceptions of poverty must be broad (go beyond just income and consumption) - there is support for synergy – focusing on poverty and inequality reduction is likely to be good for, or at least not bad for, growth - governments and public authorities are important in poverty reduction, but they should focus on basics - delivering basic services and ensuring political stability and coherence to allow for the emergence of political groups as advocates for the poor Go all out for growth? Ravallion (1997) argues because there is a positive relationship between per capita income levels an human development, countries with poor human development should focus on growth rather than human development. Economic growth is expected to improve human development through increase in private expenditure (poverty reduction), and public spending. Focusing on improving human development may do so only at the cost of growth. See pg. 68 for a diagram. Ranis, Stewart and Ramirez (2000) argue instead that countries that focus disproportionately on human development are more likely to enter ‘virtuous circles’, in which improved human development reinforces improved growth. There is a substantial amount of empirical literature indicating that growth and human development will be more rapid and robust with policies focusing on equity. When will economic growth reduce poverty? While the international development community has begun talking about ‘broad-based’ or ‘pro-poor’ growth, there is no clear set of policies advocated to achieve this than those advocated for growth per se. Because of population growth, distributionally neutral economic growth will not reduce the numbers of people in poverty – it may even see their increase. Poverty elasticity (how effectively growth affects poverty measures) increase as inequality falls. This means that more unequal countries require higher levels of growth to reduce poverty. Sub-Saharan Africa (SSA) has the highest levels of inequality in the world, and these appear to be rising – GDP growth of 6-9% will be required to lift people out of poverty. Economic growth must be pro-poor and governments must intervene with redistributive policies to ensure the reduction of relative poverty. Sub-Saharan Africa: The Extreme Case Despite the high levels of inequality, current forecasts are for low levels of growth in the area. Conventional explanations for inequality – economic globalization and the collapse of central planning systems – do not seem to apply to SSA. African states are less effective at transforming economic resources into welfare for their populations. Low levels of immunization coverage and tropical environments lead to high levels of death through contagious diseases. This reinforces the idea that public action is just as important to poverty reduction as private enterprise. From neo-liberalism to international activism? There has been a recent shift from the Washington consensus orthodoxy that solutions to poverty lie solely in markets and economic growth, and a reassertion of the importance of effective states and state action in development. There is a high level of international public activism around poverty and inequality, a focus on partnership, and a new emphasis on governance, institutions and capacity building. There is evidence that inequality is growing globally, led in part by the unequalizing effects of economic globalization. In most developing areas there has been an increase in absolute numbers living in poverty, but there are concerns about how to measure and define poverty. They suggest taking account not just of income/consumption but also famine, undernutrition, longevity and education. This type of definition stresses the importance of public sector action in combating poverty. The governance-poverty connection in democracy Democracies have not performed better than non-democracies in poverty reduction. This may in part be a legacy of the cold war – non-democratic socialist states were often pro-poor, and democracies were often encouraged to suppress leftist opposition. But there are also wide variations in formal electoral democracies – participation by the poor is often low, there are not always national level ‘class’ identities for mobilization around, and rural areas pose particular challenges for organization around poverty alleviation. Organization of political society within democratic systems is crucial to the type of public policy that develops. States with stable parties tend to be more pro-poor, and states with fragmented party systems tend to do less well. These fragmented systems are particularly widespread in SSA, and reflect underlying features of policy and society. Development of national-level class and occupational identities is weak, and states tend to be weak with little capacity, providing little incentive for people to mobilize around gaining access to state resources at the national level. This is an argument for improving state capacity as essential to development. The governance-poverty connection: Participation Highly skeptical about new, participatory approaches to development policies, especially participatory poverty assessments (PPAs) as the best way for the poor to influence national policies. PPAs have deepened understanding of poverty, but have not had a significant effect on national policies. They are more likely to impact World Bank policy, but are still vulnerable to elite capture, selective reading of evidence, and researcher or institutional biases. Policy implementation remains political, especially at the national level, and PPAs are unlikey to be able to affect this while organizations of the poor remain weak. The governance-poverty connection: Accountable States The international community is trying to hold states accountable to International Development Targets (IDTs). But it is not clear who states are being held accountable to. As described above, a strong opposition in the political system is often lacking. The absence of a free press or mass media is one reason for the persistence of famine and lack of accountability. The absence of societal organizations concerned about poverty, or a ‘concerned middle class’ is another reason. Donor-driven NGOs do not fulfill this role. Concluding Comments Poverty alleviation will require a substantial degree of public action The solution lies in attention to the basics by states – the delivery of basic services by states, and sufficient stability and coherence to encourage the development of pro-poor organizations.