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Social Sci LibreTexts

10.2: Measuring and Reducing Poverty

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  • Since the end of the Second World War states have come together to find ways to reduce poverty through prompting economic growth. As discussed earlier in the chapter, concepts of global justice underpin international poverty-reduction strategies, giving focus to approaches that seek to enhance the rights of the marginalised. The extent to which these efforts have been successful is highly debatable – but the intent has certainly been there. States have attempted to address the challenges of poverty at a global level in various ways. We discuss four approaches below.

    1. Official development assistance (aid)

    Typically, aid comes from developed states and is either channelled bilaterally (or directly) from one state to another or diverted multilaterally through international organisations like the United Nations. It is one way in which wealthy nations have attempted to meet their moral obligation to assist poorer nations. Indeed, developed countries have spent a great deal on official development assistance over the years. In 2014 alone, states spent over $135bn on aid according to a report from the Organisation for Economic Cooperation and Development (OECD). However, the success of such efforts has been inconsistent, and in some cases poverty has actually got worse. The reasons for this are complex but some examples may be helpful.

    First, inappropriate types of aid can be sent. Instead of sending money that a developing country can use to address poverty, developed states sometimes provide goods that may or may not be helpful. For example, in Gambia a number of oxygen devices were donated to a hospital, but unfortunately they were not compatible with the local electricity voltage. This rendered the devices unusable, highlighting how aid needs to be properly thought through. Second, corruption in some countries has seen aid syphoned off into the offshore bank accounts of the political elite. For example, the New York Times claimed that over $1 billion in foreign aid intended to help Bosnia rebuild itself after years of destructive war was stolen by Bosnian officials for personal gain (Hedges 1999).

    Aid has also been used for the political purposes of the providing state. For example, during the Cold War the United States and the Soviet Union used aid to prop up states that were sympathetic to their own political cause. In many of those places this did little to address poverty; rather, it helped fund regional wars that led to further instability and poverty. For example, the 1975–2002 civil war in Angola saw the Soviet Union and the United States provide aid in the form of military assistance to opposing forces. Aid has also come from developed countries or international institutions with specific conditions for use (‘conditionalities’) that have only served to make things worse. As already mentioned, such aid requires the receiving nation to restructure its economy in ways that may not benefit the most vulnerable people. For example, during the structural adjustment programmes of the 1980s in Latin America, income per capita fell in 18 countries. During similar programmes in sub-Saharan Africa, income per capita fell in 26 countries over the same period (Stewart 1991).

    2. Trade and investment

    The trade in goods and services together with foreign direct investment by private corporations can play an important role in poverty reduction. One of the ideas behind free trade and reducing barriers to investment between countries is to provide opportunity for states in the international system to grow economically. International trade in goods and services has risen significantly since 1945. Investment between states, or so-called foreign direct investment, has been a major source of that economic growth. But these global activities frequently hide an inconvenient reality: developing countries are often only involved in a minor way in global trade and investment activities. This is due to a number of reasons ranging from inadequate infrastructure such as roads, rail, and ports to limited access to financial capital. In comparison to developed nations, many developing countries have a higher proportion of lower skilled or undereducated workers in their workforce. As a result, investment opportunities that require highskilled and high-income employment are more often found in developed countries and investment by corporations in developing nations typically targets a low-skilled and low-wage workforce. This reality is difficult to overcome. Although nations such as China and India are investing heavily in an attempt to level the playing field, they are more fortunate than others due to their comparative wealth and high historic levels of economic growth. Despite some notable exceptions, the general picture is that trade and investment have not assisted poverty reduction to any significant extent.

    3. Money lending

    A third poverty-reducing strategy is lending developing countries money, or capital, so that they can invest in areas that will help them develop economically. Money lending is different from aid as loans need to be paid back, with interest. Loans can be provided for key infrastructure projects like bridges, roads, electricity lines and power plants. These can typically act as catalysts for economic development, but they require significant access to capital. The importance of access to capital resulted in the establishment of the World Bank in 1944. Its mission was to lend developing countries money at below market interest rates and also provide expert advice on the establishment of sound economic policies. On paper, the idea is a good one. However, the practices of the World Bank are not without controversy. As we explored earlier in the chapter, there has been criticism of the conditions attached to the loans. Although the most censured of the policies have been abandoned, damage has been done. In addition, the provision of interestbearing loans to developing countries has created a huge problem of indebtedness. Many developing countries cannot afford to invest in important domestic programmes such as education and healthcare due to the burden of their debt repayments. This has sparked calls to cancel the debt of developing countries and allow them a fresh start. To date, although some debt has been cancelled, the larger challenges caused by the nature of outstanding loans and how they were imposed remain.

    4. United Nations’ goals

    In response to the many failings noted above, a new approach emerged in 2000 when the United Nations and its member states moved to eradicate extreme poverty by 2015. The United Nations Millennium Development Goals (MDGs) consisted of eight categories or areas of focus for states to engage in:

    1. Eradicate extreme hunger and poverty

    2. Achieve universal primary education

    3. Promote gender equality and empower women

    4. Reduce child mortality

    5. Improve maternal health

    6. Combat HIV/AIDS, malaria and other diseases

    7. Ensure environmental sustainability

    8. To develop a global partnership for development.

    A cross-section of approaches was employed for achieving these goals, including harnessing elements of the three strategies outlined above. The key thing however, was to have a coordinated approach to a set of agreed targets. However, the initiative proved a mixed bag in terms of results. For example, some goals related to education and child mortality have seen real – if uneven – progress, while rates of hunger and malnutrition have actually worsened in some cases. Exacerbating this further, the aftermath of the 2008 financial crisis has reduced the projected amount of money (and jobs) available to many governments. Anthony Lake, Executive Director of the United Nations Children’s Fund (UNICEF), accounted for the mixed picture of success and failure as follows:

    In setting broad global goals the MDGs inadvertently encouraged nations to measure progress through national averages. In the rush to make that progress, many focused on the easiest-to-reach children and communities, not those in greatest need. In doing so, national progress may actually have been slowed. (UNICEF, 2015)

    Given these unsatisfactory results, the international community agreed that a more robust initiative was needed and the Sustainable Development Goals (SDGs) were adopted at the United Nations in 2015. They have 169 clear targets spread over 17 priority areas, all to be achieved by 2030:

    1. No poverty

    2. No hunger

    3. Good health

    4. Quality education

    5. Gender equality

    6. Clean water and sanitation

    7. Renewable energy

    8. Good jobs and economic growth

    9. Innovation and infrastructure

    10. Reduced inequalities

    11. Sustainable cities and communities

    12. Responsible consumption

    13. Climate action

    14. Life below water

    15. Life on land

    16. Peace and justice

    17. Partnerships for the goals.

    Like the Millennium Development Goals, the Sustainable Development Goals can be described as aspirational. Although the newer targets have their critics, one reason that they may offer greater hope in reducing poverty is that the planned interventions are more detailed. The target is not only reducing poverty, but addressing the many conditions that feed and cement conditions of poverty, including poor (or negative) economic growth. And the most vulnerable are now being targeted proactively, addressing one of the criticisms of the Millennium Development Goals.