Dollarisation of Poverty: Rethinking Poverty Beyond 2015

Rethinking Poverty Beyond 2015

Palash Kamruzzaman

• Publisher: Palgrave Pivot
• Year: 2015
• ISBN:
  9781137541437
• Topic: Law
• Subtopic: Civil Rights in Law
• Index: Law

This book offers a critical analysis on employing a universal understanding of poverty and suggests ways forward for poverty reduction for developing countries in a post-2015 era. Taking specific country-contexts into account, the author argues that national poverty lines should be the benchmark for future anti-poverty policies.

1

Introduction

Abstract: This chapter insists that the volumes of debate on poverty suggest there is no unanimously agreed-on definition of poverty that can be applied for everyone. Poverty is a political and highly contested concept because what commentators mean by poverty depends on what they intend to do about it. Given this context, two key aspects are identified for further investigation. First, is it really possible to understand poverty for all poor countries through a ubiquitous definition? Second, to what extent can a universal understanding of poverty contribute to poverty reduction for poor developing countries? This is of particular significance in the final year of the Millennium Development Goals (MDGs), especially to find out more effective ways forward for poverty reduction after 2015.

Kamruzzaman, Palash. Dollarisation of Poverty: Rethinking Poverty Beyond 2015. Basingstoke: Palgrave Macmillan, 2015. DOI: 10.1057/9781137541437.0004.

1.1Introduction

The volumes of debate on poverty suggest that there is no unanimously agreed-on definition of poverty that can be applied for everyone. Poverty can be seen through a range of perspectives, and many of those often overlap and sometimes contradict with each other. Poverty is a political and highly contested concept because what commentators mean by poverty depends on what they intend to do about it (Alcock, 1993; Deutsch and Silber, 2005). Logically, differences must point to differing conceptualisations of poverty, which in turn have consequences for anti-poverty policies and their effects (in terms of application and outcome). Thus academic and political debate about poverty is not merely descriptive; it is inherently prescriptive too. The seeds of this book were planted in my mind in 2005, while I presented a paper at the Warsaw School of Economics, Poland.¹ There, I argued that despite ‘significant’ poverty reduction (in percentage points), the total number of poor people have markedly risen in Bangladesh since its independence in 1971. My proposition was that the country needs to adopt a local understanding of poverty in contrast to almost solely relying on the $1 a day concept/framing of poverty. I contended that an endogenous understanding of poverty will depict a more realistic picture and thereby be likelier to be effective in lifting more people out of poverty. However, I did get a substantial amount of constructive feedback (mainly from the participants with an Economics background) for missing the aspect of Purchasing Power Parity (PPP) in my paper. As a non-economist, I was not aware at that time that the $1 a day poverty formula is being measured by the PPP value even though I went through a number of sociological/anthropological works in order to prepare that paper. The literature I consulted did not include this point (and this is still very much the case, not only in academic literature but also in extra-academic sources – such as in media coverages; newspaper columns, reports and editorials; NGO reports; anti-poverty campaigns etc.).

In principle, I concur with the arguments that in order to improve the lives of the poorest people in the world international aid assistance needs to be more effective through improved global partnership. At the same time, I am also aware of the aid effectiveness agenda of the international aid architecture² (OECD, 2005/2008, 2015a). Improved global monitoring of aid effectiveness, along with ease in understanding for creating mass awareness for wider impact, are being cited as the main reasons for operationalising the $1 a day formula for conceptualising poverty by the major international financial institutions (IFIs). A method that has been claimed to be accepted and practiced by major donor organisations (for more details, please see Sections 3.2 and 4.2). But common sense tells us that understanding and framing of poverty (consequently the ways out of poverty too) are likely to vary significantly across the countries. People from conflict-affected countries will perceive poverty differently from the drought-prone or environmentally vulnerable countries. Notions of poverty will also be different based on geographic locations (e.g., people of a land-locked country may identify why someone is poor differently than people of a low-land, flood prone country or people of a country where desert constitutes the majority of its landscape). One might, therefore, ask: Do we need a universal definition of poverty. How useful would this definition be to understand and measure poverty for all poor countries? Any attempt to produce one such definition would raise eyebrows especially when it is proved to be difficult to agree upon a common definition of poverty. As it is axiomatic that a universal definition of poverty is almost impossible, why was the $1 a day formula used as the benchmark for global poverty reduction in past 15 years? Does this represent another example of hegemonic relationship in international development? Perhaps, it does. As Wade (2004) states, a universal definition (of poverty) enables leading IFIs to propose global frameworks from Washington DC or any other powerful ‘centre’ in order to pursue/promote a particular ideology as a potential way out of poverty for the poor countries.

Given this context, this book investigates two main points. First, it asks, is it really possible to understand poverty for all poor countries through a ubiquitous definition? A few years back in 2002, I was working in two villages in Bangladesh, and I asked a farmer – who is poor; do you consider yourself as poor? ‘We are not poor’ was the response from the farmer. She went on to suggest that ‘you (indicating me as an urban dweller) are poor. You have no sky, no green, no fresh food and fresh air. You live in a cage (she referred to congested concrete flats of Dhaka city, where the usual practice is to rely on refrigerated meals, and air pollution level is severe). But we don’t have these problems, we can talk to someone, have more brothers and sisters to whom we can open up our mind to, and go to someone when we need a shoulder. So we are certainly not poor’ (personal communication). For many, this may not be a useful way to perceive poverty. Perhaps rightly so. But this offers an alternative view of poverty felt by someone who according to conventional wisdom may deemed to be poor (as her income falls below a certain amount) highlighting that an universal definition based on someone’s income cannot embrace all aspects of poverty either. Let me specify this further. How useful is this to understand poverty across all poor countries according to someone’s income measured in US dollars? Alkire (2013) shows how such an approach fails to explain other dimensions of poverty using an example of a Kenyan widow. She illustrates, ‘Beatrice is a widow who lives in a shack with a sheet-iron roof and an earth floor in the Lunga Lunga slum in Nairobi. The shack has no toilet, and she and her family must pay five Kenyan Shillings each time they use the public facility. Neither she nor her teenage sons have jobs, but she receives a little rental income from other houses in the slum. According to an income measure of poverty, Beatrice is not poor’. Both these examples, of the Bangladeshi farmer and the Kenyan widow, indicate that poverty needs to be viewed as comprehensively as possible taking variable dimensions into account especially when these views are expressed by those who live with/in poverty. This leads to the second central feature of this book. I assess to what extent such a universal understanding of poverty can contribute to poverty reduction for poor, developing countries. This is of particular significance at a time when the world is in the final year of its latest development round under some set objectives outlined in the Millennium Development Goals (MDGs). Saith (2006: 1167) argued that the MDGs were here, there and everywhere. They gave well-meaning persons in the north-west a sense of solidarity and purpose and provided a mechanical template of targets and monitoring indicators aptly suited to the limits of the bureaucratic mind, populist seasoning for politicians, gravy train for development consultants, and covered every country as it has had meals and targets galore for everyone. This perhaps led Sumner and Tiwari (2009: 43) to insist that ‘development’ meant the Millennium Development Goals for most actors in development. However, the focus of this book is not all goals and targets of the MDGs. The emphasis here is the outcome of using a universal concept of poverty in almost all national and international anti-poverty policies, as adoption of $1 a day poverty line in MDGs made poverty virtually synonymous with an individual’s income of less than $1 a day applicable in all poor countries.

In doing so (addressing these two central features), the next chapter (Chapter 2) offers an overview of poverty from different perspectives such as absolute and relative contexts; social exclusion; capabilities approach; participatory approach; chronic poverty; multidimensional poverty; and psychological aspects of poverty (such as shame). Based on this discussion, it is argued there that poverty is neither universal nor just an economic issue. Poverty entangles various specific contexts given any society’s cultural, political, historical, geographical and religious contexts. This sets the ground for the following chapters. Chapter 3 scrutinises how the concept of poverty has been encapsulated in one universal framework of $1 a day, to be more specific $1.25 a day, based on Purchasing Power Parity value. This chapter offers a critical analysis of such conceptualisation focusing on the aspects of (1) in-built incoherence of this mechanism for different revised versions of PPP; (2) poor people’s realties that make them pay much higher price for a set bundle of goods, in practice, than the suggested amount; (3) inability to represent an amount of income for a very basic living cost for poor people in actual realities; and (4) creating pseudo-awareness among non-specialist actors of poverty reduction. Based on the discussions made in Chapter 2 (where it is discussed that poverty has so many dimensions and it is almost impossible to produce one universal definition that will be applicable for all poor countries), and the drawbacks highlighted earlier, this chapter then asks the following question: ‘What were the underlying politics behind promoting such a method?’ This is further extended in Chapter 4 by assessing the impact of this framing of poverty in reducing poverty across the poor, developing countries. It is explored in this chapter how poverty reduction agenda was donorised and technicalised in a way so that it can be claimed that global number of poor people are being halved even though situations have not improved to a satisfactory level for the majority of the poor countries. This chapter reviews some existing proposals for possible ways forward for poverty reduction after 2015. This is followed by a proposition arguing that locally suitable national poverty lines (developed after taking context-specific multidimensional aspects of poverty into account) would be more effective for future poverty reduction in specific country cases. Targets, indicators will be variable – according to the context of a given society. A genuine political will to make meaningful partnership among various actors (government, NGOs, donors, activists etc.) would enhance the fights against poverty at the country level. Chapter 5 offers the conclusion of this book, arguing that poverty is not about crossing a set line. Drawing from ideas of culture of poverty and structural violence it is argued that poverty (and poverty reduction) should not only be looked at through an income/ consumption lens. It also needs to be acknowledged that poverty is a structural issue that makes and keeps people poor and increases/retains inequality in societies and therefore future anti-poverty policies should clearly address these issues too. Future poverty reduction paths need to entangle multiple dimensions of national contexts, and at the same time, it is also imperative to build a synergy to reduce the exploitative nature of global trade. Focus should also be on women, employment, remittance, youth and environment in building national and international poverty reduction policies.

Notes

  1   Paper titled ‘Understanding Local Poverty: A Bangladesh Case Study’, presented at the European Association for Development Research and Training Institute’s (EADI) workshop on multidimensional poverty working group, Warsaw School of Economics, 15–16 December 2005.

  2   The five core principles developed from several high level forums (such as in Rome, 2002; Paris, 2005; Accra, 2008; and Busan, 2012) are ownership, alignment, harmonisation, results and mutual accountability (OECD, 2005/2008, 2015a). The concepts of harmonisation, alignment, mutual-accountability may sound unproblematic – but, in practice, they can often be used to cover up the hegemonic nature of aid relationships and to gang up over the developing countries (see Eyben, 2007; Hayman, 2009).

2

An Overview of Understanding Poverty from Diverse Perspectives

Abstract: This chapter offers an overview of poverty from different perspectives such as absolute and relative contexts, social exclusion, capabilities approach, participatory approach, chronic poverty, multidimensional poverty and psychological aspects of poverty (such as shame). It is seen through all these perspectives that poverty is neither universal nor just an economic issue. Drawing on this discussion, it therefore raises the question of why a one-size-fits-all $1 a day poverty, based on Purchasing Power Parity (PPP) value, was incorporated in global poverty reduction discourse? Although, during the past decade, and especially after setting out the Millennium Development Goals (MDGs), poverty has become virtually synonymous with an individual’s income of less than $1 a day, is it applicable to all poor countries? This also sets the ground for the following chapters.

Kamruzzaman, Palash. Dollarisation of Poverty: Rethinking Poverty Beyond 2015. Basingstoke: Palgrave Macmillan, 2015. DOI: 10.1057/9781137541437.0005.

2.1Introduction

This chapter outlines that poverty can be perceived from a whole range of perspectives and economic aspects is just one of those. A brief overview of different perspectives of poverty will offer a suitable platform for pitching the central arguments of this book in the following chapters. The main point this chapter intends to emphasise on is that poverty needs to be viewed from a holistic perspective as answers to the question ‘What is poverty?’ are diverse. Various actors and organisations working on this issue, such as researchers, academics, donors, aid agencies, think-tanks and civil society organisations, offer different ideas of understanding poverty. Some of these ideas imply that poverty should be understood independently of other aspects related to it, whereas other ideas contend that poverty must be viewed with other related issues that can lead to it or catalyse the factors for individuals and groups to fall into it. According to Yunus (2002), the first thing to remember is that poverty is not created by poor people. It has been created by social, political and financial institutions and the leaders, designers and managers of these institutions. This reflects Wood’s (2003: 456) argument that ‘people are poor because of others’, and needs to be perceived in relational terms. This means that poverty is not only an economic issue¹ but also a form of social and psychological deprivation occurring when people lack ownership, control or access to resources to maintain minimum levels of living (Like-Minded Group, 1990; McCarthy and Feldman, 1988). Poverty is neither a result of something for which the poor people are responsible, nor is it a natural fact; it is a social experience (Green and Hulme, 2005). Lewis (1962) observes that poverty has often seemed as a natural and integral part of a whole way of life, intimately related to poor technology and/or poor resources or both. Poverty may also involve class antagonism and a wide range of social problems but not necessarily define a class or any other ‘identity’ group based on shared territory or culture (Hickey and Bracking, 2005). It is also argued that poverty originates in social injustice rather than it being a mere consequence of scarcity of resources. When injustice is institutionalised in the social, political, legal and economic structures of a society and someone or a group of people become or stay poor, this refers to a structural social consequence (Ferge and Millar, 1987; Sobhan, 2002). Bearing these diverse backgrounds in mind, the following passages outline how poverty has been conceptualised by different scholars from assorted perspectives. For example, poverty can be perceived in monetary terms, comprising absolute and relative forms; through a capabilities approach; in terms of inequalities and social exclusion; chronic poverty can be distinguished from less severe poverty; there is a participatory approach; and then it can be described from a multidimensional perspective.

2.2 Looking at poverty though multiple lenses

Traditionally, the measurement, assessment and analysis of poverty are linked primarily with one’s income or consumption. This may be because such an approach enjoys the advantage of simplicity (Anand and Sen, 1997) based on the assumption that money is a universally convertible asset that can be translated into satisfying all other needs (Scott, 2002: 488; Ahuvia, 2008) – a view that is fundamentally different from the common saying of money cannot buy everything. However, it is observed that monetary approach to poverty is most widely used in development literature (Clarke, 2008). Other than its intuitive attractiveness, this is largely due to its long-term application, dating back to the earliest work on poverty in England during...

Table of contents

• Cover
• Title
• 1  Introduction
• 2  An Overview of Understanding Poverty from Diverse Perspectives
• 3  Problems of Dollarising Poverty
• 4  Poverty Reduction as a Development Agenda Looking Beyond 2015
• 5  Conclusion
• References
• Index