Perceptions of Poverty

Extreme poverty strikes when household resources prove insufficient to secure the essentials of dignified living. The consequences of persistent poverty include hunger, children out of school, exposure to unnecessary health risks, and the diminution of household back-up resources.

Attempts to understand and tackle poverty often fail to do justice to the reality of its experience and too readily subside into an abstract mix of emotion and economics.

Take for example the images of poverty published by humanitarian agencies to inspire support for their appeals. These often provoke a complex mix of outrage at the inhuman environment and awe at the beauty of the protagonists, especially children.

The label of “poverty porn” sometimes pinned to this otherwise altruistic material provides early warning that poverty is a sensitive subject to be approached with caution.

Very poor people are not passive agents resigned to their fate – indeed, exhaustive ingenuity is required to manage tiny amounts of money through an unpredictable annual cycle of household misfortune. Far from crushing the human spirit, the extreme poverty of the developing world instead draws out many of its finest qualities.


Professor Hans Rosling deploys innovative visual technology to explore the trends in global poverty over the last 200 years, from IFPRI
Official Poverty Statistics

Based on World Bank figures which are used for official global poverty statistics, the number of people in developing countries living below the international poverty line of $1.25 per day fell from 1.82 billion to 1.37 billion between 1990 and 2005. For the subsequent three years to 2008, the Bank has offered a preliminary estimate that global poverty fell by a further 200 million to 1.2 billion.

Rice vendor in Bangladesh © David Swanson/IRIN / IRIN News

China accounted for 475 million of the reduction to 2005, implying that poverty increased elsewhere over this period. In India alone the increase was 91 million people. In 2005, one third of global poverty was located in India and just over a quarter in sub-Saharan Africa.

Expressing poverty as a percentage yields more favourable results due to rising population. Although the number of poor people in sub-Saharan Africa increased by 21 million between 1990 and 2005, the percentage rate of poverty fell from 58% to 51% in that period.

The trend of migration from poor farming regions has raised the incidence of urban poverty, especially in the slum zones of the world’s major cities. Nevertheless, poverty remains inextricably linked with the disappointing progress in agriculture in developing countries.

The most persistent poverty is found amongst very small farmers and landless labourers, tribal and indigenous people experiencing discrimination, and nomadic pastoralists on marginal land.
Uncertain Trends

Opinions differ on the accuracy of the latest World Bank estimate and on the trend in global poverty in the years since 2008. The more positive view observes that rates of economic growth in the developing world, including Africa, have been more resilient through recent years of turbulence than in industrialised countries.

This perspective highlights the improvement in those indicators for poverty reduction which are not related to income. There has been global progress towards education for all, gender equality and lower mortality rates of both adults and children.

2008 food price riots in Burkina Faso © Brahima Ouedraogo / IRIN News

A less positive interpretation of recent events focuses on the impact of economic shocks on poor individual households. Having barely recovered from the rollercoaster of food and energy prices in 2007/08, developing countries were hit by another six-month price spiral peaking in February 2011. Poor families spending a large proportion of their incomes on food and fuel are invariably the most severely affected.

Furthermore, a sequence of economic assessments has concluded that economic growth in developing countries is widening inequality rather than reducing poverty. The Africa Progress Report 2011, published by a high level research and advocacy group chaired by former UN Secretary-General, Kofi Annan, describes the continent’s economic recovery as “low quality growth....heavily dependent on the export of primary, generally unprocessed commodities.”
Measuring National Poverty

Poor countries typically determine their national poverty line as the value of a basket of basic food and essential non-food items. Some governments work with separate urban and rural poverty lines, recognising that costs are higher in cities.

Farming rice in Kaduna State, Nigeria © Kate Holt / IRIN News

Most developing countries adopt a hardline interpretation of “essential”, restricting non-food items to a minimum. Household surveys analyse consumption as well as income, recognising that goods may be exchanged by barter and that many families grow their own food.

Statistics will highlight the incidence of households whose income is just above or below the poverty line. A high incidence forewarns that a small change in national economic fortunes or in redistribution can make a large impact on poverty figures. Understanding how families are drawn into and escape from poverty is invaluable in preparing effective poverty reduction strategies.

A criticism of income-based poverty assessment is its exclusion of important criteria such as access to education, health, water and housing. A new Multidimensional Poverty Index, launched by the UN Development Programme in 2010, is the most recent attempt to supplement our understanding of poverty.


How is poverty measured? A presentation by the World Bank
Measuring Global Poverty

As each national poverty line reflects a different view of essential food and goods, an alternative method is needed to aggregate global poverty on a consistent basis.

The World Bank calculates an international poverty line by reference to the national poverty lines in 10-20 of the world’s poorest countries. These figures are converted into US dollars, not by standard currency exchange rates, but by purchasing power parity (PPP) rates. This exercise was last completed using 2005 data, the average figure becoming the international poverty line of $1.25 per day.

Food market in Bangladesh © David Swanson/IRIN / IRIN News

The spending power of $1.25 in the United States at 2005 prices therefore provides an indication of the experience of poverty for over one billion people. This aggregate figure for global poverty is evaluated by comparing the $1.25 benchmark with the income data from hundreds of recent household surveys conducted in developing countries.

This process inevitably leads to confusion in countries whose choice of national poverty line differs significantly from the international benchmark. A prolonged and controversial review of the national poverty line in India was provoked in part because it had fallen in value so far behind the $1.25 figure.

A second tier international poverty line of $2 per day is derived from the average of national poverty lines in all lower and middle income countries. The World Bank reports that 2.6 billion people live below this benchmark, a figure which has changed little since 1981.


Understanding how people move in and out of poverty is important, as explained in this World Bank production.
Poverty Data Problems

During 2011, both the UN and the World Bank drew attention to the low quality and excessive timelag in global poverty statistics, especially the component figures from Africa. They were referring to one important symptom of the global divide - the capacity for timely collection and analysis of a country’s standard of living.

Household data is logistical problem in Nigeria © OneWorld TV

The production of statistics in the developing world is impeded by the prohibitive cost, skills and logistics involved in conducting household income and expenditure surveys. Many international aid programmes therefore aim to strengthen government departments responsible for national statistics.

Logistical constraints are frequently aggravated by political factors. The advent of elections is often a reason for delaying the conduct or publication of a survey. Political disputes over the basis of calculating a poverty line are inevitable where it dictates the cost of social welfare benefits.


Africa’s Statistical Tragedy - Shanta Devarajan, Chief Economist for the Africa Region of the World Bank, speaks about the urgent need to address the shortcomings of development statistics.
Causes of Global Poverty

International Governance
A vantage point of history observes that most poor countries were vassals of the great colonial powers of the 19th and 20th centuries. The exit strategies pursued in granting independence cemented geographical boundaries that were inspired more by the politics of empire than the creation of new nation states.

Displacement in Burundi may have colonial origin © IRIN News

Too many countries found themselves lacking a critical mass of natural resources or population, landlocked, or seething with irreconcilable ethnic division. A significant proportion of today’s global poverty exists in war-torn and post-conflict countries.

The newly independent countries were also denied fair representation in international negotiations, either by exclusion or by lack of capacity. Globalisation has generated great wealth in recent decades but its governance is driven by economic power rather than democratic principles.

This has been most apparent in global trade rules which have obstructed developing countries from reproducing proven models of industrialisation. Agricultural development has been impeded by massive subsidies available to US and European farmers.

National control of domestic development strategies has also been hampered by the presumption on the part of donor agencies that western political and economic ideologies should be reproduced. Expectations of democratic and fiscal rectitude are enforced through conditions attached to concessionary loans and grants. The consequences have not always coincided with the interests of the poor.

National Governance
It has to be said that many developing countries have been the architects of their own misfortunes. Self-perpetuating kleptomaniac governance has drained economic growth through corruption and clientele politics.

Planting a rice paddy, Pondicherry, India © Peter Armstrong

Weak democracy further perverts the allocation of resources. As long as the poor are denied a political voice, chronic vulnerabilities such as insecure land rights and lack of opportunities for women will remain.

For the same reason, government spending priorities have been poorly targeted; for example African governments have failed to honour their own commitment to investment in agriculture, the core need of the vast majority of their populations.

These shortcomings of internal governance contribute to the widening inequality in many developing countries that gives rise to concern.

Population growth also places great demands on poverty reduction programmes but is not an underlying cause of poverty. Rich countries have themselves emerged successfully from periods of high population growth that coincided with industrial development.
Why Should We Care?

There are two philosophical platforms which justify our concern about global poverty. First is the abhorrence of extreme poverty on ethical grounds which for many springs from religious teaching. This moral stance is greatly reinforced by awareness of the political injustice that has created and perpetuated the global divide.

We care about child labour © Kamila Hyat / IRIN News

The faith response to global poverty finds secular expression in the 1948 Universal Declaration of Human Rights which asserts that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family.” The pursuit of poverty reduction as an obligation under human rights law is reflected in the mission statements of many UN agencies.

The second reason why we should care lies in self-interest. In a globalised world, countries large and small are interdependent.

Extreme poverty is the engine of international labour migration which the richer countries are notoriously reluctant to accommodate. The spread of disease is difficult to control if weak countries lack capacity to participate in an international response. Whilst the risk of terrorism is often complex in origin, extreme poverty is the ideal recruiting ground for its foot soldiers.

From a more positive perspective, neo-liberal capitalism thirsts for a larger world economy. A prosperous Africa would increase the slice of the cake for others. If India could eradicate its mass rural and urban poverty, the country would achieve the economic superpower status it craves.


Global poverty hurts US jobs – business leaders explain the interdependence of the US economy with the fortunes of poorer countries, from The Borgen Project
Millennium Development Goals

A principled rights-based approach to global poverty, in which its eradication would become the prime objective of economic management, has never been adopted by the international community. However, the failure of macro-economic policies of the 1980s and 1990s created pressure on world leaders to establish accountability for poverty reduction.

This led to the Millennium Declaration, a promise signed by all world governments to achieve eight quantifiable Millennium Development Goals (MDGs) with targets to be met by 2015. Income poverty is the subject of the first Goal but its target to halve the global rate (by reference to the international poverty line) falls far short of a rights-based vision of an end to all poverty.

Nevertheless, the MDGs have added pressure on developing countries to put poverty reduction at the centre of their national economic strategies. Since 1999 international donors link their support to Poverty Reduction Strategy Papers (PRSPs) which articulate how a country's long term growth plans will be tailored to benefit the poor. Equally important, the World Bank and IMF have been instructed to realign their priorities in the same way.

The latest World Bank projections suggest that MDG1 will be achieved comfortably, with the rate of poverty in developing countries expected to fall from 46% to 14% between 1990 and 2015. But the residual 14% - 883 million people - will remain in extreme poverty to mock the sense of achievement.
Climate Change

The UN Human Development Report for 2007/08 was unequivocal in concluding that stabilisation of greenhouse gas emissions is an "essential part of the overall fight against poverty and for the MDGs".

Cyclone shelter in Bangladesh © David Swanson/IRIN / IRIN News

Climate change has become part of the poverty agenda because poor people tend to live in the most vulnerable locations with limited means to adapt. For example, the river deltas of Bangladesh and Burma are densely populated by poor households exposed to risks of storm and tidal surges.

In sub-Saharan Africa, populations are predominantly rural, dependent on rain-fed agriculture for subsistence and livelihoods. Poor families are ill-equipped to respond to changing rainfall patterns and the shorter growing season caused by warmer days and nights.

Longstanding concerns about responsibility for global poverty are therefore redoubled by the injustice inherent in climate change. The poorest countries suffer the greatest impact whilst being the smallest contributors to greenhouse gas emissions.

The inadequacy of pledges to reduce greenhouse gas emissions by amounts necessary to prevent runaway climate change is therefore as disturbing to anti-poverty campaigners as to environmentalists.
Solutions to Global Poverty

Foreign Aid
Foreign aid fulfils an invaluable role in lifting millions of people out of poverty, in building government institutions and in pioneering new ideas for development. It would be even more effective if the OECD donor governments would honour their promises to increase aid.

Food storage depot in Western Kenya © Peter Armstrong

Separate quantifiable commitments are in place to increase the aggregate level of foreign aid, the proportion of aid targeted at the 48 Least Developed Countries and the amount of aid to sub-Saharan Africa. None have been fulfilled by more than a handful of donor countries. And a similar pattern of unsubstantiated promises of financial support is emerging in the fight against climate change.

However, it is important to recognise that aid alone cannot create the ideas, ambition and opportunities necessary to transform the world’s poorest economies. Foreign aid is a necessary but insufficient solution to global poverty.

Tax Recovery
International corporations active in developing countries are notoriously adept at manipulating their complex inter-company structures to minimise tax burdens. The rules for international tax have evolved under that authority of the OECD whose membership comprises the world’s richest economies. Anti-poverty campaigners are pressing for greater engagement of the UN in this field.

With richer countries seizing on any prospective source of finance that might become a substitute for foreign aid, moves to reverse the low recovery of tax in developing countries are strongly supported. The lure of secretive tax havens for wealthy elites, combined with repatriation of corporate profits, drives capital out of these countries on a scale comparable with the inflow of foreign aid.

International Priorities
These moves to counter the incestuous nature of international tax regulations illustrate the core dynamics of the global divide. If the international rules for conduct of a globalised economy are created by the dominant participants, the outcome is likely to prejudice those yet to gain a foothold.

Vietnam's success didn't follow western rules © United Nations Development Programme

It may be relevant to note that, apart from Brazil, the two countries with the greatest success in poverty reduction are China and Vietnam. Their governments have overcome the structural barriers to development by methods which have largely sidestepped western regulations and prescriptions.

They have retained strong state control over key sectors of their economies, permitting only gradual liberalisation. Furthermore, they show little inclination to relax tough restrictions on human rights and democratic freedom.

As China becomes increasingly influential in African economic development, the richer countries may be persuaded to take bolder steps to address extreme poverty. The removal of agricultural subsidies that protect American and European farmers is the most familiar cry for global justice. But the principle of equity is also pursued in regulations for trade, investment, intellectual property rights, climate change and energy.

National Priorities
Greater justice in international economic governance may improve the fortunes of developing countries but the outlook for global poverty depends ultimately on their internal social policies.

Dairy co-operative in Pondicherry, India, Nov 2003 © Peter Armstrong

In terms of sectoral priority, it is generally accepted that investment in the rural economy is the most cost effective means of reducing poverty. Many governments in Africa have renewed their commitments to raise spending on agriculture. The bastions of land reform and the subservient role of women in farming must also be overcome if this strategy is to succeed.

The dominant feature of recent social protection plans is the surge in interest in household cash transfers, often conditional on children’s attendance at school and for immunisation. Empowering the poor through secure purchasing capacity is viewed as the solution to the most pressing contemporary problems - malnutrition, short term local economic shocks and long term chronic poverty.

Inspiration comes from Brazil and Mexico, countries once renowned for extremes of inequality. Poverty reduction and stronger economic performance in these countries have been attributed in part to the success of their respective family-based income-support programmes, known as Bolsa Família and Oportunidades.

Cash transfers represent overdue recognition of the rights of the poor, as opposed to their needs. Such fundamental reordering of priorities is the surest remedy for the global poor, as indeed it may be for all of us in search of a sustainable future.

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