Chronic Poverty and Development Policy

Chronic Poverty Report 2004-5

Presentation at QEH, September 16 2004

David Hulme
Director, CPRC; Co-Director, GPRG Professor, IDPM, University of Manchester

www.chronicpoverty.org

Outline
What is chronic poverty?

Global extent and prevalence

Why focus on the chronically poor?

Who are they?

Where are they?

Why are people chronically poor?

What does this mean for policy?

What is chronic poverty?

Distinguished by extended duration: the chronically poor are those living below a given poverty line for a long time:
Poor for all or much of their lives, Pass on poverty to subsequent generations, and/or Die a preventable, poverty-related death.

Chronically poor are commonly multi-dimensionally deprived. Combinations of capability deprivation, low levels of material assets, and socio-political marginality keeps them poor over long periods.
Relationship between poverty severity and poverty chronicity, at both the country and household level, is complex and only partly understood.

What is chronic poverty?

Chronic poverty is that poverty that is ever present and never ceases. It is like the rains of the grasshopper season that beat you consistently and for a very long time. You become completely soaked because you have no way out. Some poverty passes from one generation to another, as if the offspring sucks it from the mothers breast. They in turn pass it on to their children.
- Group of disabled women in Nkokonjeru Providence Home, Mukono, Uganda (source: Lwanga-Ntale 2003).

Poverty dynamics
Poverty line Mean score

Time

Time

Time

Time

Time

Always poor Usually poor Fluctuating Occasionally Never poor (BPL in each (mean poverty poor (poor in poor (mean (APL in all period) over all periods some periods poverty APL but periods) BPL, not poor in but not others, at least 1 period mean poverty in poverty) every period) around poverty line)

CHRONICALLY POOR

TRANSITORY POOR

NON POOR

Poverty dynamics vs. poverty trends

Uganda has experienced significant reduction in poverty: from 1992 to 1999, aggregate national poverty rate fell by about 20%. But this aggregate poverty trend tells us nothing about what happened to individual households. Poverty trends can mask important poverty dynamics:
about 19% of households were poor in both 1992 and 1999 (the chronically poor), and while almost 30% of households moved out of poverty, another 10% moved in (the transitory poor).

This more nuanced understanding of poverty requires the collection of panel data and life histories alongside the standard household surveys.

Global extent of chronic poverty

APPROX. 300-420 MILLION CHRONICALLY POOR
South Asia Sub-Saharan Africa 135-190 m 90-120 m Highest number of chronically poor people Highest prevalence of chronic poverty (esp. West/ Central Africa) Significant numbers remain

China Rest of East Asia/Pacific Latin America/ Caribbean Europe/Central Asia

40-65 m 10-20 m 16-23 m 2-5 m

Relatively high proportion of poor are chronically poor Fastest growth rates of chronic poverty (esp. Central Asia and Russia)

Middle East/North Africa

3-5 m

Global extent (size) and prevalence (colour) of chronic poverty

Desperately deprived Relatively non-deprived

Moderately deprived Insufficient data OECD

Deprivation: severe stunting, U5MR, female illiteracy, probability of not surviving until 40, $1/day poverty headcount

Why focus on the chronically poor?

The moral case

MDGs, and post-MDGs:

Some MDGs can never be achieved without reaching the chronically poor. Other MDGs will be achieved fully or in part by excluding the chronically poor. The poverty of those left behind post2015 will likely be even more intractable.

Grievance-based politics?
By denying the poorest those with least to lose we risk undermining political and economic stability Useful for mobilising political commitment and funds, but remains unproven

Who are the chronically poor?

Discrimination and deprivation
Marginalised ethnic, religious, caste groups, incl. indigenous, nomadic peoples; Migrant, stigmatised, bonded labourers; Refugees, IDPs; Disabled people; People with ill-health, esp. HIV/AIDS; To different extents, poor women and girls.

Household composition, life-cycle position

children; older people; widows; households headed by older people, disabled people, children, and, in certain cases, women

Where are the chronically poor?

Understanding spatial poverty traps
Chronic poverty is harshest where spatial and social deprivation overlap. REMOTE LOW POTENTIAL
Areas far from the centres of economic and political activity. Far is calculated in terms of distance and time ( frictional distance). Areas with low agricultural or natural resources, often crudely equated with drylands and highlands. Politically disadvantaged areas

LESS FAVOURED

~1.8 billon people

WEAKLY terms of communication and markets. Economically INTEGRATED disadvantaged areas.

Areas that are not well-connected, physically and in

Why are people chronically poor?

Context matters Causes of chronic poverty sometimes same as causes of poverty, only more intense, widespread, long-lasting. In other cases, there is a qualitative difference between the causes of transitory and chronic poverty, requiring different policies. Rarely a single cause most chronic poverty due to multiple, overlapping, interacting factors operating at levels from intra-household to global. Maintainers: factors that keep people in poverty Drivers: factors that cause people to slide into poverty traps

Why are people chronically poor?

The maintainers and drivers of chronic poverty
Quantity and quality of economic growth
No, low, and narrowly-based growth situations raise the probability of people being trapped in poverty. But growth is not almost enough. For the working chronically poor, sectoral composition of growth really matters, esp. whether it includes broad-based agricultural growth and is in sectors with high demand for unskilled labour The non-working chronically poor are most vulnerable to economic shocks, because of their dependance on any benefits from economic growth derived from a mix of private and public social protection.

Geography and agro-ecology

Geography and agro-ecology combine with social, economic, political and institutional factors to create spatial poverty traps

Why are people chronically poor?

The maintainers and drivers of chronic poverty Social exclusion and adverse incorporation
Structures of social exclusion (discrimination, stigma, invisibility) are the basis for processes of adverse incorporation (declining assets, low wages, job insecurity, minimal access to social protection, dependency on a patron). Risk and vulnerability shape social relations: chronically poor people often manage vulnerability by developing patron-client ties that produce desirable, immediate outcomes by trading-off longer term needs and rights.

Cultures of poverty?
Does how people cope with poverty (economically, socially, psychologically) make poverty more difficult to escape?

High capability deprivation

Not investing in PHC, nutrition, primary education can diminish opportunities that cant be regained in later life (or by children)

Why are people chronically poor?

The maintainers and drivers of chronic poverty

Weak and failed/ing states

Desperate deprivation and increased inequality due to: State failure social protection and services (e.g. education, health) do not operate undermining human capital. Violence, weak rule of law destroys assets and discourages domestic/foreign investment (except for illegal and extractive activities) so that growth is low/ negative and not pro-poor. Low levels of civil and political rights Poor economic policies

Weak and failing international system

Why are people chronically poor?

The maintainers and drivers of chronic poverty
Severe, widespread and multiple shocks (driver)
along with limited access assets (private/collective) and a weak institutional context including systems of social protection, basic services, conflict prevention and resolution, public information (maintainers) combine to undermine resilience to shocks, driving people into chronic poverty.

Property grabbing: No safety net to fall back on after a

husbands death (driver), and discrimination based on gender and marital status (maintainer) strips away any assets that could be used to bounce back. Malawian famine: Bad weather (a shock), bad policy (a failure of national and international governance), and reduced resilience (due to e.g. HIV/AIDS, poverty-induced asset depeletion) combined to cause hundreds/thousands, of preventable deaths, and has trapped many more survivors in intractable poverty.

What can we do about chronic poverty?

Much chronic poverty reduction is about good poverty reduction
Peace-building and conflict prevention HIV/AIDS prevention (especially in India, China and the CIS) and greater access to retroviral treatment (in Africa) Pro-poor, broad-based economic growth Strengthening national and international governance Making trade fair (especially removing northern agricultural protectionism) Effectively managing national indebtedness Slowing down global warming Improving the effectiveness of basic service delivery

but it also requires new priorities

What can we do about chronic poverty?

Prioritise livelihood security:
Increase chronically poor peoples resistance and resilience to adverse shocks and trends. Social protection policies are crucial in order to interrupt downward trajectories and allow opportunities to be pursued (e.g. non-contributory pensions, insurance, transfers) Focus on preventing and interrupting childhood poverty (e.g. interventions in nutrition/health, education, household security) Focus on preventing ill-health, and descents into chronic poverty caused by ill-health (e.g. curative services for breadwinners and carers)

What can we do about chronic poverty?

Enhance opportunity: Expand and diversify economic opportunities for chronically poor people by: stimulating broad-based growth (e.g. rural; raised demand for unskilled labour; enhances human capital) making markets work for poor people (esp. labour and food markets), and redistributing material and human assets (e.g. land reform; progressive taxation)

What can we do about chronic poverty?

Foster empowerment and make rights real
Enhance the capacity of those trapped in poverty to influence state institutions that affect their lives. Remove the political, legal, social barriers that work against them. Move beyond rhetoric of participation, decentralisation and rights. Address the difficult political question of how social solidarity can be fostered across households, communities and nations (e.g. monitoring of MDG #8).

What can we do about chronic poverty?

National agenda
Delivering basic services: reduce access barriers; improve service quality; foster demand for services among the chronically poor Delivering social assistance: that can have development as well as relief outcomes requires innovations in targeting, technology, institutions Using PRSs to prioritse the chronically poor

International agenda
Using MDGs to address chronic poverty Financing chronic poverty reduction: increase aid volume; direct aid to poorest countries, social assistance and basic services; commit to sustained aid