Poverty reduction

Poverty reduction (or poverty alleviation) is any process which seeks to reduce the level of poverty in a community, or amongst a group of people or countries. Poverty reduction programs may be aimed at economic or non-economic poverty. Some of the popular methods used are education, economic development, and income redistribution. Poverty reduction efforts may also be aimed at removing social and legal barriers to income growth among the poor.

Economists such as Hernando de Soto see improvement in property rights as being instrumental in poverty reduction. Other economists also highlight government corruption as a chief problem in reducing poverty in the developing world.

Poverty reduction strategies

Since the second half of the Twentieth Century, governmental and non-government organisations have proposed or attempted to reduce global poverty through a number of strategies. As global poverty has such detrimental effects upon societies and communities, the relative merits of these strategies remain source of great controversy.

Free market

What could broadly be called free market reforms represent one strategy for reducing poverty. For example, noted reductions in poverty in the 20th century have been in India and China, where hundreds of millions of people in the two countries grew out of poverty, mostly as a result of the abandonment of collective farming in China and the cutting of government red tape in India. This was critical in fostering their dramatic economic growth. However, UN economists argue that for the market reforms to work, good infrastructure is needed. China is thus willing to invest in railways, roads, ports and rural telephony in various African countries as part of its winning formula for economic development, which was something that was considered too risky by many of Africa's traditional Western partners.

However, UN economists argue that for the market reforms to work, considerable state intervention is needed. For example, today, China opertates and active industrial policy using tarriffs and legislative measures to promote 'strategic' sectors that have a long-term potential for profits ignored by risk-averse private investors. India too started growing in the 1980s, a full decade before economic liberalisation, largely because of a fiscal push due to government social programmes (most notably in the countryside). While the Free Market certainly aided growth and poverty alleviation in China and India (as the World Bank argues forcefully) it is difficult to deny that state planning built the foundations of this growth and continues to 'guide' the market today in both these countries.

Bringing the market to remote, rural areas can bring farmers the information to produce more profitably. For example, mobile phones could be used to do this, helping people in remote areas of the developing world. Farmers receive market information sent directly to their phones. In Ethiopia, farmers in remote areas produce crops that may not bring the best profits. When they sell their products to a local trader, who then sells to another trader, and another, the cost of the food rises before it finally reaches the consumer in large cities. Economist, Gabre-Madhin proposes warehouses where farmers could have constant updates of the latest market prices, making the farmer think nationally, not locally. Each warehouse would have an independent neutral party that would test and grade the farmer's harvest, allowing traders in Addis Ababa, and potentially outside Ethiopia, to place bids on food, even if it is unseen. Thus, if the farmer gets five cents in one place he would get three times the price by selling it in another part of the country where there may be a drought. Already, farmers in Ethiopia are switching from their traditional crops to more profitable export crops, such as sesame seeds that are destined for the Middle East, even though they are not used in local Ethiopian cuisine. Over the past three years, sesame-seed production has risen nearly 200 percent, from 199,000 tons in 2001 to 380,000 in 2005. In relation to this approach, a strategy that could help impoverished countries is to shift from cash crops to more selfsustaining ones. For example, right now cash crops are sold to developed nations at low prices in exchange for high-priced food crops. If these countries are allowed to shift to food crops they would be able to sustain themselves better. (See cash crop for more details)

Improving the social environment and abilities of the poor

Millennium Development Goals

Eradication of extreme poverty and hunger by 2015 is a Millennium Development Goal. In addition to broader approaches, the Sachs Report (for the UN Millennium Project) proposes a series of "quick wins", approaches identified by development experts which would cost relatively little but could have a major constructive effect on world poverty. The quick wins are:

Development aid

That is correct to say that most developed nations give some development aid to developing nations. The UN target for development aid is 0.7% of GDP; currently only a few nations achieve this. Some think tanks and NGOs have argued, however, that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient countries , or because it's tied with the importing of products from the donor country over cheaper alternatives, or because foreign aid is seen to be serving the interests of the donor more than the recipient. Critics also argue that much of the foreign aid is stolen by corrupt governments and officials and that higher aid levels erode the quality of governance. Policy become much more oriented towards what will get more aid money than it does towards meeting the needs of the people.

Supporters argue that these problems may be solved with better audit of how the aid is used. Aid from non-governmental organizations may be more effective than governmental aid; this may be because it is better at reaching the poor and better controlled at the grassroots level. As a point of comparison, the annual world military spending is over a trillon dollars.

Other approaches

Some have argued for radical economic change in the system. There are several fundamental proposals for restructuring existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups: socialism, communism, anarchism, libertarianism, binary economics and participatory economics, among others.

Inequality can be reduced by progressive taxation, wealth tax, and inheritance tax.

In law, there has been a move to establish the absence of poverty as a human right.

The IMF and member countries have produced Poverty Reduction Strategy papers or PRSPs.

In his book "The End of Poverty", a prominent economist named Jeffrey Sachs laid out a plan to eradicate global poverty by the year 2025. Following his recommendations, international organizations such as the Global Solidarity Network are working to help eradicate poverty worldwide with intervention in the areas of housing, food, education, basic health, agricultural inputs, safe drinking water, transportation and communications.

The Poor People's Economic Human Rights Campaign is an organization in the United States working to secure freedom from poverty for all by organizing the poor themselves. The Campaign believes that a human rights framework, based on the value of inherent dignity and worth of all persons, offers the best means by which to organize for a political solution to poverty.

Organizations that promote poverty reduction

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Fields of study that deal with poverty reduction

See also


External links

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