PHA-Exchange> 34 In preparation of PHA 2

[Claudio]

ON POVERTY: 
 

1. Sound economic policies are conducive to growth, but so are sound social policies.

 

2. In countries where income inequality is low, growth is twice as effective in reducing poverty as in countries with high income inequality.

In countries where the distribution of income worsens during growth, the impact of growth on poverty is not strong.

 

3. The impact of providing social services to the poor has been less than expected, mainly because: 

a) investments in health and education, for example, have grown at a slower pace than the GDP has grown (for redistribution to occur, what is needed is increasing the share of public spending on poor people's needs);

b) the quality of the services expanded is poor;

c) interventions do not respond to the poor people's real needs;

d) there is no community involvement in making decisions about these safety-net programs which do not attack the root causes of poverty.

 

4. The effects of adverse external shocks such as volatile capital flows and falling terms of trade are not only transitory; such shocks can lock people into poverty for the long term by causing irreversible damage to children, for example (malnutrition, abandoning school, etc).  [Indonesia an example]

 

5. The total number of people living on less than $1 a day has risen from 1.18 billion in 1987 to 1.2 billion (24% of the world's population) in 1998; if one excludes China, the figures are 880 million people in 1987 and 986 million (26.2% of the world's population) in 1998.

 

6. Poverty is more than low income, a lack of education and poor health. The poor are powerless to influence the social and economic factors that determine their well-being (.or poverty) and have their legal rights violated all the time.

 

7. Unresponsiveness of state institutions and corruption are additional barriers to poverty alleviation. Needed are participatory mechanisms to prevent the domination by local elites.

 

8. Poor people define their poverty in terms of lack of opportunities, lack of power and lack of security. This broader definition of poverty requires a broader set of actions to fight it.

 

9. In international terms, industrial countries' protectionism causes annual losses in welfare of more than twice the amount of overseas development assistance.



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