1. Introduction
The examine of either economic growth leads to poverty allowance is a subject of major contention today. The neo-liberal view to this issue is that growth is good for the poor, and that poverty can be alleviated through economic growth. In this essay, I argue that unless the poor partake meaningfully in the economy and the constraints that hinder their participation are removed, growth on its own cannot help in poverty reduction. The state should also play a major role in development the poor advantage from growth by pursuing pro-poor policies. In the subsequent paragraphs, I define what pro-poor growth is; spell out the constraints to pro-poor growth and what can be done to make growth advantage the poor.
Trickle Up Poverty
2. Definition of concept: pro-poor growth
According to Ravillion and Datt (1991:19), pro-poor growth can be defined as ‘growth that involves and benefits the poor’. In other words, pro-poor growth requires the maximum participation of marginalized groups in all sectors. Ravallion and Datt additional argue that pro-poor growth 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 discussion 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 growth is a deliberate intervention to make the poor advantage from growth 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 chance to partake 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 growth 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 essential numbers of non-poor, which lead to wide demands for goods or services, produced by the poor as a ensue of upstream or expenditure linkages.
It is prominent to note that not all growth is pro-poor. Here are some of the characteristics or aspects of growth which are not pro-poor:
Disparities in wealth distribution
Increases in rural poverty
Growth that ignores agricultural development despite the role that it plays in poverty alleviation
Lack of speculation in health and education, which play a essential 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 essential to remember that growth does not all the time lead to human development. growth may occur without any essential impact on human development, especially with regard to the poor. Acocella additional argues that real development or growth occurs when there is correction in the well being of people. growth that does not lead to correction 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 lead to and advantage from this growth’. It is clear that pro-poor growth 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 growth from taking place. I contemplate a few in the next section.
3. Constraints to pro-poor growth
For pro-poor growth to occur in any society, it is prominent 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 strengthen of poor citizen and may finally 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 create pro-poor policies in inegalitarian societies. He gives an example of inegalitarian societies such as Ghana, Mexico and Philippines, where he argues that growth 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 productive policies of dealing with inequality were able to reduce 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 confident 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 create these assets through limiting way to markets, infrastructure and education.
The question with inequality is that it results in group exclusion where confident 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 growth as compared to an economy which is characterized by a high degree of inequality. As Ravallion and Datt (1997:7) show, ‘inequality in the rights of corporeal and human assets are likely to sway the prospects of poor citizen to partake 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 surrounded by the dissimilar socio-economic classes, confidence on market troops and the indiscernible hand of Adam Smith to meet basic needs is merely wishful thinking.
3.2 Fiscal constraints
Governments, especially in the developing countries are finding it hard to pursue pro-poor growth policies and approaches for poverty alleviation due to fiscal constraints. Structural Adjustment programmes are in most instances development matters worse. The reality is that governments are regularly faced with the challenge of having to reduce expenditure in group services, which are supposed to advantage the poor. This means that less money is spent on prominent services such as health, study and other basic services. Cuts in government expenditure directly sway the poor (Howard 2001:57). However, it is prominent 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 essential 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 general 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 common especially among the poor to find citizen who cannot partake in the labour market due to old age, infirmity, persisting illness or otherwise incapacitated, socially excluded or discriminated. The poverty of such citizen agreeing to Streeten (1995:253) cannot be removed or alleviated by relying on the market, but by deliberate ‘pressure for group services and change 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 growth to take place, the state should play a crucial role in the redistribution of resources and opportunities through the change of assets, prioritization of the poor in group spending and in managing market liberalization to protect the livelihoods of vulnerable people. As Ferro et al (2002:19) point out, ‘government is an instrument of the citizen in the development process’. Hence government can play a crucial role in pro-poor growth 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 development of human capital, especially among the poor in order to get ready them to partake meaningfully in the economy.
The poor must have good way to markets, especially with regard to credit
There is need to exact biases against the poor in group spending, taxation trade and regulatory environment.
5. Conclusion
Pro-poor growth policies are essential for the meaningful allowance of poverty. The 2015 target of halving revenue poverty can only be achieved if countries can adopt pro-poor growth strategies. It would be difficult to attain the 2015 target without ‘pro-poor shift in distributional patterns’ (Mutume 2000). Something must be done to heighten 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, growth 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 growth and poverty alleviation. Sen (1986, cited in Sachs 1991:292) construe this clearly: ‘country after country has learned the hard way that the so called trickle down system is fallacious, that growth can be immiserizing, that famines also happen in periods of boom when people’s entitlement does not allow them to buy and/or yield the food essential to keep them alive’
Given the level of poverty in the world today, there is therefore need for change in strategy or advent in dealing with poverty allowance by development growth pro-poor. This entails, inter alia, an comprehension that growth on its own cannot address poverty. The Director of the World Bank, Ian Goldin indicated the importance 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 growth in India. http://www.arts.cornell.edu/eco/India
Howard, J.2001. development globalization work for people. Fundamental rights at work: overview 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 group Policy, National Bureau of Economic Research.
May, J. 2000. Growth, development 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. development theory: deconstruction and reconstruction. London: Sage Publications.
Ravallion, M and Datt, G. 1999. When is growth 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. Mental about development. Cambridge: Press Syndicate of the University of Cambridge.
Sachs, I. 1991. Poverty, strengthen and development. London: Kegan Paul International and Unesco.
Economic growth and Poverty allowance - development growth Work For the Poor
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