Living with Poverty

Attempts to define or measure poverty cannot do justice to the reality of its experience. Far from crushing the human spirit, the extreme poverty of the developing world instead draws out many of its finest qualities. Family loyalties survive the desperate search for livelihoods, displaying stoicism in the face of exclusion, dignity amongst deprivation.

Evidence of this defiance lies in the controversial images of poverty used by development agencies to raise awareness of their work. We are torn between horror 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.

Extreme poverty strikes when household resources prove insufficient to secure the essentials of dignified living. Periods in which a family has enough food and can enjoy reasonable health will be tempered by the insecurity of life in under-developed economies. That fragility will be defined by a lack of education, the absence of work opportunities, the diminution of household back-up resources and exclusion from valuable social and decision-making networks.
Global Poverty Trends

China's success bolsters poverty figures © Tamilla Held

Based on World Bank figures which are used for official global poverty statistics, the number of people living below the international poverty line of $1.25 per day fell from 1.8 billion to 1.4 billion between 1990 and 2005. China accounted for 465 million of this reduction, implying that poverty has increased elsewhere over this period. In sub-Saharan Africa, the increase was 100 million.

However, expressing global poverty as a percentage reverses the trend due to the rising global population. For example, extreme poverty in sub-Saharan Africa has fallen slightly from 57% to 51% between 1990 and 2005.

The wealth of our new millennium has tended to increase inequality rather than reduce poverty. UNDP has reported that, in 2005, the richest 500 people in the world earned more than the poorest 416 million.

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. Rural poverty rates are more than double those in cities, often embracing the majority of the rural population. The most persistent poverty is found amongst ethnic minorities experiencing discrimination, tribal and indigenous people, and nomadic pastoralists on marginal land.
Measuring National Poverty

Household data is logistical problem in Nigeria © OneWorld TV

The time lag in global poverty statistics stems partly from the prohibitive cost, skills and logistics involved in conducting household income and expenditure surveys in the developing world. Delays may be aggravated through controversy over the basis of calculating poverty, often inevitable where it dictates the distribution of aid or social welfare.

Most countries 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. The food poverty line is the most stringent measure, reducing the basket to food items only. Household surveys analyse consumption as well as income, recognising that goods may be exchanged by barter and that many families grow their own food.

Most poor countries take a very narrow view of what constitutes “essential” non-food items to include in the basket. This approach attracts criticism for ignoring other important dimensions of poverty such as limited access to education, health, water and housing.
Measuring Global Poverty

Confusion over India's poverty line © Changemakers.net

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 average of the national poverty lines in 15 of the world’s poorest countries. This exercise was last completed using 2005 data, resulting in an international poverty line of $1.25 per day. The figure of $1 a day which is often quoted relates to an earlier assessment based on 1985 data.

Global poverty is then assessed by reference to “data from 675 household surveys across 116 developing countries”, according to the World Bank. This data is compared to the $1.25 benchmark, not by standard currency exchange rates, but by purchasing power parity (PPP) rates which smooth out the different buying power of the dollar in each country.

The World Bank figure of $1.25 per day was intended to be a bottom marker. Unfortunately, the two countries with the largest populations in the world, India and China, have both defined national poverty lines which are even lower. India’s poverty line is $1.02 which gives a national poverty rate of 26%, compared to 42% on the international basis. In China the gap is even wider, tripling its national poverty numbers to over 200 million. These inconsistent measures are the source of much confusion.

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 Bank reports that 2.6 billion people live below this benchmark, a figure which has changed little since 1981. Indeed a slightly higher benchmark of $2.50 per day captures more than half of the world’s population. The World Bank is due to review these poverty lines in 2011.
Causes of Global Poverty

Displacement in Burundi may have colonial origin © United Nations' Integrated Regional Information Network

Understanding global poverty involves stepping back from the infinite variety of circumstantial misfortune experienced at household level. A vantage point of history will observe 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.

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

The newly independent countries also lacked capacity to punch their weight in international negotiations. This has been most apparent in the evolution of global trade rules which have prevented them from reproducing proven models of industrialisation. Agriculture has been similarly impeded by massive subsidies available to US and European farmers. The consequence has been inability to break free of the shackles of the colonial economic model which depends largely on the export of natural resources.

Control over domestic development strategies has also been hampered by conditions for concessionary grants and loans. Designed to create macroeconomic stability, these have cut back state activity and impeded the provision of education, health, social safety nets and opportunities for work.

It has to be said that many governments have been the architects of their own misfortunes. Self-perpetuating kleptomaniac governance has drained economic growth through corruption and clientele politics. Weak democracy perverts the allocation of resources, most apparent in African governments’ failure to meet their own commitment to invest in agriculture, the core need of the vast majority of their populations. The broader lack of institutional capacity and infrastructure hinders delivery of aid programmes and business investment alike.

Population growth places great demands on poverty reduction programmes but it 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?

We care about child labour © Kamila Hyat / IRIN News

There are two contrasting and complementary reasons why we should care about global poverty and wish to eradicate it. First is the abhorrence of extreme poverty on ethical grounds which for many springs from religious teaching. This 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.”

This was codified for purposes of international law into the International Covenant on Economic, Social and Cultural Rights. Although the US refuses to ratify this Covenant, it came into force in 1976. 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 more difficult to control if weak countries lack capacity to deliver an appropriate 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.
International Response

A principled rights-based approach to poverty, in which its eradication would become the prime objective of economic management, has never been adopted by the international community. The failure of macro-economic policies of the 1980s and 1990s created pressure on world leaders to find an approach which delivered measurable results for poverty reduction. This led to the Millennium Declaration, committing governments to eight Millennium Development Goals (MDGs) with targets to be met by 2015.

Apart from the Goal to provide primary education for all, the targets aim for reduction rather than elimination. For example, the first Goal to halve extreme poverty (defined as $1.25 per day) falls far short of the vision of eradicating poverty demanded by a human rights perspective. Even if this target is achieved, current projections suggest that 800 million people would remain in extreme poverty in 2015.

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. More important, the World Bank and IMF were instructed to realign their priorities in the same way.
Economic Recession

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

Macroeconomic stability, the principle on which African governments have been lectured by international financial institutions for decades, has imploded spectacularly in western economies. 2008 saw an uncontrolled rollercoaster of food and energy prices as a backdrop to the disgrace and collapse of the banking system.

Instead of questioning the unsustainable economic model which delivered these shocks, governments have indulged in an orgy of spending on bank rescues and economic “recovery”. By contrast, the World Bank’s 2009 Global Monitoring Report points out that 43 of the 48 poorest countries lack the financial status necessary to raise funds to execute a fiscal stimulus.

Not only are these countries denied the weaponry to fight economic recession, they are doubly vulnerable to its impact. Foreign direct investment and the value of exports have collapsed, remittances from overseas are threatened and foreign aid budgets are under pressure. For households which spend a large proportion of their incomes on food, higher prices have been a crushing blow.

How these setbacks will impact global poverty figures is as yet uncertain. The 2009 MDG Progress Report estimates that the economic crisis will add 55-90 million people to the category of extreme poverty. The Food and Agriculture Organization reports an additional 100 million people experiencing hunger through a combination of lower incomes and higher food prices.

The G20 crisis meeting in April 2009 made a gesture to global poverty by increasing the financial resources of the IMF. Annual lending to low income countries is scheduled to rise by $4 billion, about the same amount as US subsidies for scrapping old cars. Amnesty International’s “Demand Dignity” campaign describes the situation as a human rights crisis, calling for “a different kind of response and a different kind of leadership.”
Climate Change

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

The UN Human Development Report for 2007/08 is unequivocal in concluding that stabilisation of greenhouse gas emissions is an "essential part of the overall fight against poverty and for the MDGs". Impact projections by the Intergovernmental Panel on Climate Change (IPCC) confirm that freshwater availability and crop yields, the building blocks of human development, are threatened by climate change, with Africa the most vulnerable region. Countries prone to extreme weather events tend also to be those with high rates of poverty. Examples include Haiti and Bangladesh.

What can be done? Each Least Developed Country (LDC) has prepared a National Adaptation Programme of Action (NAPA) in the hope of attracting funding. These reports stress the limited capacity of poor rural communities to adapt, their profile being dominated by small farms with limited access to capital.

Longstanding concerns about responsibility for global poverty are therefore redoubled by the injustice inherent in climate change. Research by the UK-based International Institute for Environment and Development shows that the 100 countries most vulnerable to climate change account for just 3.2% of global carbon dioxide emissions. The poorest countries suffer the greatest impact whilst being the smallest contributors.

Climate campaigners advocate a transfer of resources from rich to poor countries to fund adaptation and clean energy technologies, additional and comparable in value to existing flows of foreign aid. This implies commitments in excess of $100 billion per annum, a figure not yet remotely acceptable to the richer countries.
Solutions to Global Poverty

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

Anti-poverty campaigners continue to expose the failure of governments to honour their promises. They focus particularly on the Millennium Declaration and on the 2002 Monterrey Consensus when the richest countries renewed commitments to increase aid budgets to 0.7% of national income. Despite the success of coordinated international campaigning in the period up to the Edinburgh G8 summit in 2005, the shortfall between current flows of foreign aid and the estimated gap in financing the MDGs remains formidable.

In the area of trade and investment, campaigners continue to lobby for the removal of agricultural subsidies that protect American and European farmers at the expense of the poor. There is a new focus on tax avoidance manoeuvres by multinational corporations active in developing countries, tactics which are estimated to deny governments the receipt of annual tax revenues totalling $160 billion.

Ranged against these campaigns are those who prefer the unconditional pursuit of economic growth as the road map for eventual poverty reduction. This view frowns on state engagement in economic management or pro-poor policies, encouraging instead entrepreneurial activity through foreign investment, raising funds via the discipline of international markets.

The two countries with the greatest success in poverty reduction, China and Vietnam, create awkward precedents for policymakers. These governments have retained strong state control over key sectors of their economies, permitting only gradual liberalisation. Furthermore, they have not yet observed standards of human rights and democratic freedoms that many development agencies prefer to see.

The lack of consensus on poverty alleviation has itself proved unhelpful by pulling countries in different directions. Most of the large bilateral government donors tread a middle path. They increasingly downplay governance issues whilst promoting the concept of inclusive growth with pro-poor institutional capacity building and the provision of social safety nets to protect the poorest. The L’Aquila Food Security Initiative announced at the 2009 G8 summit in Italy suggests a new priority of investment in agriculture.

There is justifiable concern that these attempts to fine-tune solutions to global poverty may be overwhelmed by the pace of events. The failure of politicians to respond to signals of climate and economic breakdown has almost certainly provoked an inexorable rise in global poverty with unpredictable consequences. A fundamental reordering of priorities is the only available remedy for the poor. It may also prove to be the critical first step on the road to a sustainable future for us all.

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