1. Introduction
The examine of either economic increase leads to poverty allowance is a field of major contention today. The neo-liberal view to this issue is that increase is good for the poor, and that poverty can be alleviated straight through economic growth. In this essay, I argue that unless the poor share meaningfully in the economy and the constraints that hinder their participation are removed, increase on its own cannot help in poverty reduction. The state should also play a major role in making the poor advantage from increase by pursuing pro-poor policies. In the subsequent paragraphs, I define what pro-poor increase is; spell out the constraints to pro-poor increase and what can be done to make increase advantage the poor.
Trickle Up Poverty
2. Definition of concept: pro-poor growth
According to Ravillion and Datt (1991:19), pro-poor increase can be defined as ‘growth that involves and benefits the poor’. In other words, pro-poor increase requires the maximum participation of marginalized groups in all sectors. Ravallion and Datt supplementary argue that pro-poor increase is, inter alia, characterized by what they call ‘deliberate transfers to the ultra poor who are not able to lift themselves out of poverty. In essence, the argument that they are advancing is that the poor need help or intervention in order for them to advantage from growth. This means that pro-poor increase is a deliberate intervention to make the poor advantage from increase rather than leaving the poor to the fate of the ‘invisible’ hand of the market. It has to do with setting an enabling environment in which the poor have the opportunity to share meaningfully in the economy.
According to Kydd et al (2001:10) pro-growth will occur when the following conditions exist:
Price or productivity increases in tradable products with high average share in the poor’s expenditure.
Price and productivity increase in tradable products with high labour inputs by the poor.
Changes in technology or reduced barriers of entry, allowing the poor to engage in yield of non-tradables which they could not previously engage in or
Gains in the indispensable numbers of non-poor, which lead to wide demands for goods or services, produced by the poor as a result of upstream or expenditure linkages.
It is important to note that not all increase is pro-poor. Here are some of the characteristics or aspects of increase which are not pro-poor:
Disparities in wealth distribution
Increases in rural poverty
Growth that ignores agricultural amelioration despite the role that it plays in poverty alleviation
Lack of speculation in health and education, which play a indispensable role in poverty alleviation
Failure to mitigate inequalities and lack of programmes aimed at addressing the needs of the poor (www.seurities.com).
As Acocella (1998:162) notes, it is indispensable to remember that increase does not all the time lead to human development. increase may occur without any indispensable impact on human development, especially with regard to the poor. Acocella supplementary argues that real amelioration or increase occurs when there is revision in the well being of people. increase that does not lead to revision in the welfare of citizen cannot be said to be developmental in nature. Genuine growth, as Ferro et al (2002:4) note, should lead to human development, and this entails ‘empowering the poor to conduce to and advantage from this growth’. It is clear that pro-poor increase does not occur automatically without the implementation of the right policies that will be instrumental in facilitating its manifestation. There are polices and practices that may hinder pro-poor increase from taking place. I scrutinize a few in the next section.
3. Constraints to pro-poor growth
For pro-poor increase to occur in any society, it is important to ensure that all the barriers that prevent the poor from reaching their goals are removed. Failure or reluctance to deal with such barriers may frustrate the enlarge of poor citizen and may ultimately hinder any poverty allowance strategy from successfully addressing the issue of poverty. Here are some of the constraints that can negatively sway pro-poor growth:
3.1 Inequality and lack of way to market
It is difficult to pursue pro-poor policies in countries characterized by inequality. Stewart (1995:209) argues that it is difficult to develop pro-poor policies in inegalitarian societies. He gives an example of inegalitarian societies such as Ghana, Mexico and Philippines, where he argues that increase has not made any impact on the poor. These societies are contrasted with Indonesia ‘with a more egalitarian buildings to start with and a more pro-poor pattern of growth’. Other examples given are East Asian societies, which due to their efficient policies of dealing with inequality were able to cut the level of poverty in a dramatic way. This means that there is a association between poverty and inequality. May (2002:2) also shows that policies of inequality pursued by the apartheid government in South Africa were not good for poverty allowance as they excluded unavoidable groups from participating in the economy of the country. The propagation of inequality led to ‘loss of assets such as land and livestock and simultaneously the denial of opportunities to develop these assets straight through limiting way to markets, infrastructure and education.
The problem with inequality is that it results in collective exclusion where unavoidable groups are denied opportunities or services. The exclusion of the poor from participating meaningfully in the economy can negatively sway their well being. In an economy where inequality is low, the poor will tend to get a higher share of the benefits from increase as compared to an economy which is characterized by a high degree of inequality. As Ravallion and Datt (1997:7) show, ‘inequality in the proprietary of bodily and human assets are likely to sway the prospects of poor citizen to share in economic growth’. Policies that are pro-poor will ensure that the poor have way to markets and infrastructure. It is clear that in cases where there is no equality among the distinct socio-economic classes, confidence on market troops and the invisible hand of Adam Smith to meet basic needs is merely wishful thinking.
3.2 Fiscal constraints
Governments, especially in the developing countries are looking it hard to pursue pro-poor increase policies and approaches for poverty alleviation due to fiscal constraints. Structural Adjustment programmes are in most instances making matters worse. The reality is that governments are usually faced with the challenge of having to cut expenditure in collective services, which are supposed to advantage the poor. This means that less money is spent on important services such as health, education and other basic services. Cuts in government expenditure directly sway the poor (Howard 2001:57). However, it is important to note that the state is faced with global challenges and constraints in its effort to pursue policies that are good for poverty alleviation. There is global pressure for the state to take a less ‘directive’ role in the economy.
3.3 Reducing the role of the state
The liberalization of markets which goes with globalization is among other things advocating for the rolling back of the state, the repeal of restrictions on prices and on quantities moved and stored. As Howard (2001:57) rightly notes, the ‘liberalization of financial markets increases poverty and inequality’. As part of globalization, governments are forced to liberalize their markets. However, the indispensable examine is either liberalization of markets advantage the poor. There are mixed reactions to this. There are those who view globalization as beneficial to the poor, especially with regard to opportunities it offers for trade and new markets. On the other hand there are those who view it as harmful.
As Levinson (2001:11) shows, globalization ‘benefits the poor in some countries and harm those in other countries’. Although there is a normal call for ‘rolling back the state’, in order to give way to the markets to work (if ever they work), the state has a role to play especially pertaining to things that individuals cannot do for themselves. It is tasteless especially among the poor to find citizen who cannot share in the labour market due to old age, infirmity, persisting illness or otherwise incapacitated, socially excluded or discriminated. The poverty of such citizen according to Streeten (1995:253) cannot be removed or alleviated by relying on the market, but by deliberate ‘pressure for collective services and replacement payments and elimination of discrimination’. The emphasis on reducing the role of the state in the economy can have negative impact on pro-poor growth.
For pro-poor increase to take place, the state should play a crucial role in the redistribution of resources and opportunities straight through the replacement of assets, prioritization of the poor in collective spending and in managing market liberalization to safe the livelihoods of vulnerable people. As Ferro et al (2002:19) point out, ‘government is an instrument of the citizen in the amelioration process’. Hence government can play a crucial role in pro-poor increase by developing the right policies for addressing poverty.
4. What can be done to advantage the poor?
The following are some of the things that can be done to advantage the poor:
There is need to focus on amelioration of human capital, especially among the poor in order to get ready them to share meaningfully in the economy.
The poor must have great way to markets, especially with regard to credit
There is need to exact biases against the poor in collective spending, taxation trade and regulatory environment.
5. Conclusion
Pro-poor increase policies are indispensable for the meaningful allowance of poverty. The 2015 target of halving earnings poverty can only be achieved if countries can adopt pro-poor increase strategies. It would be difficult to attain the 2015 target without ‘pro-poor shift in distributional patterns’ (Mutume 2000). Something must be done to improve the position of the poor by providing opportunities that will make way to markets easier for them. Worth noting is that even in cases where markets work, they may not all the time work in favour of the poor given the constraints discussed above.
If these constraints are not dealt with or removed, increase will have no meaningful impact on the lives of the poor. There is need to learn from past failures with regard to the association between increase and poverty alleviation. Sen (1986, cited in Sachs 1991:292) elaborate this clearly: ‘country after country has learned the hard way that the so called trickle down law is fallacious, that increase can be immiserizing, that famines also happen in periods of boom when people’s entitlement does not allow them to buy and/or produce the food indispensable to keep them alive’
Given the level of poverty in the world today, there is therefore need for turn in strategy or coming in dealing with poverty allowance by making increase pro-poor. This entails, inter alia, an understanding that increase on its own cannot address poverty. The Director of the World Bank, Ian Goldin indicated the point of pro-poor growth: ‘we have come to understand that economic growth, though necessary, is not adequate to deal with poverty’ (Sunday Times, 1 September 2002: 15).
6. References
Acocella, N. 1998. The foundations of economic course values. Cambridge: Cambridge University Press.
Ferro, M, Rosenbatt, D and Stern, N. 2002. Policies for pro-poor increase in India. http://www.arts.cornell.edu/eco/India
Howard, J.2001. making globalization work for people. Basic proprietary at work: summary and prospects, 122: 55-60
Kydd, J, Dorward, A, Marrison, J and Cadisch, G. 2001. The role of agriculture in pro-poor growth. [http://www.wye.ac.uk/Ag]
Levinson. J. 2000. Globalization and poverty. University of Michigan. Ford School of collective Policy, National Bureau of Economic Research.
May, J. 2000. Growth, amelioration and inequality, in Phillip, D (ed.). Poverty and inequality in South Africa: meeting the challenge. Cape Town and London: Zed Press.
Mutume G. 2001. Finance: are the Imf and the World Bank policies pro-poor? http://www.oneword.org/ips2/angoo.
Pieterse, J.N. 2000. amelioration theory: deconstruction and reconstruction. London: Sage Publications.
Ravallion, M and Datt, G. 1999. When is increase pro-poor: evidence from the diverse experiences of India’s states? [http://netec.mcc.ac.ukl/wopec/data/papers]
Stewart, F. 1995. Adjustment and poverty. London: Routledge
Streeten, P.P. 1995. Reasoning about development. Cambridge: Press Syndicate of the University of Cambridge.
Sachs, I. 1991. Poverty, enlarge and development. London: Kegan Paul International and Unesco.
Economic growth and Poverty allowance - development growth Work For the Poor
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