Absolute poverty results from the underdevelopment and unequal distribution of income and wealth within and among nations. It could be addressed through well-designed welfare and development programs focused on the poor.
by Sirisena Amarasekara
This series engages in a thorough exploration of strategies to alleviate poverty, critically examining the limitations of previous plans implemented by successive governments in Sri Lanka. It aims to propose a comprehensive plan for effectively addressing extreme poverty. – Editors
As most people were equally poor, poverty was not a social, political, or economic issue in traditional societies. Scarcity of food, clothing, shelter, illiteracy, and ill health were common factors, and ordinary people had a hand-to-mouth life. Then, it was a way of life with cultural traditions and practices to ensure the community’s sustainability at a low standard of living. Then, it was a common phenomenon worldwide. However, the Industrial Revolution brought rapid economic growth in the Western economies and eradicated mass poverty. Due to science and technology advancements, food and other basic needs were available at affordable prices. People’s purchasing power improved as they found wage employment in industrialised urban agglomerates. Moreover, many Western nations had the opportunity to exploit the resources of their colonies and underdeveloped nations. Due to the revolutionary changes in social and political thinking in Western countries, exploitation within the nation was minimised, and the results of the industrial revolution and agricultural development trickled down to the poor. Therefore, poverty was not a major socioeconomic issue in advanced countries, and the small percentage who have been bypassed in the development process are looked after by state-sponsored welfare programs.
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| Young girl in the window of her father's Tuk-tuk (traditional taxi) in Jaffna, Sri Lanka. [ Photo: Natalia Davidovich /World Bank] |
However, third-world countries did not benefit from the industrial revolution but became victims due to economic polarisation in the West. Today, poverty is a major social and economic issue in developing countries, making it a global problem. After the Second World War, many underdeveloped countries, including new nations, became independent from their colonial masters and aspired for development. The World Bank, a few other multinational agencies and advanced countries initiated helping these nations for economic growth. However, increased income and wealth polarized, favouring rich people and prosperous urban regions bypassing the poor and rural regions. Consequently, the poor in rural areas and urban peripheries fell into poverty. Under these circumstances, in addition to the inherited historical structural factors (race, caste, religion, gender, feudalism, etc.), national growth also became a contributory factor to mass poverty in newly developed and developing countries, which required focused interventions and unique strategies. Under these circumstances, poverty alleviation has become a famous slogan among the donor community since the 1970s.
Understanding Poverty
Poverty is when people or communities have no financial or other resources to satisfy basic human needs, such as decent shelter and clothing, potable water, healthy food, and essential health and education facilities. This situation may be called absolute, extreme, or abject poverty. Each nation has its parameters and criteria for determining the official poverty line. The absolute poverty threshold significantly varies between developed and developing countries. According to the World Bank’s recent update (2022), the global poverty line is fixed at US$ 2.15 income per day. According to World Bank data, 29.13 % of the world population was in absolute poverty in 2000. The figure declined to 14.2 in 2010 and 8.44% in 2019 before the Corvid pandemic. The United Nations and the World Bank advocaters for global poverty reduction. The United Nations Millennium Development Declaration, signed in 2000, commits world leaders to eight development goals: to combat poverty, hunger, illiteracy, environmental degradation, and discrimination against women, to be achieved by 2015. All eight goals are interrelated and focused on poverty alleviation. The World Bank aims to reduce global poverty below 3% by 2030. There is no doubt that the initiative taken by the donor community has immensely contributed to reducing the global poverty level. The poverty reduction in China and India, which is one-third of the global population, undoubtedly has contributed to reducing global poverty to a low rate of 8.44%.
Absolute poverty results from the underdevelopment and unequal distribution of income and wealth within and among nations. It could be addressed through well-designed welfare and development programs focused on the poor. However, relative poverty may exist in any society because it has no definite threshold. It is defined in comparison to the income/consumption level of the same society. People who have elevated themselves from absolute poverty may be able to satisfy their basic needs but may not enjoy the same standard of living as others, enjoying the same society and economy. Relative poverty is an issue concerning the qualitative aspects of life and an outcome of the unequal distribution of growth benefits. It may be addressed through national growth and appropriate fiscal, monetary, pricing, internal terms of trade and wage policies, etc.
People who are just above absolute poverty can fall into poverty again due to various factors such as national or global economic crises, natural or man-made disasters, health issues, etc. Therefore, pushing people above the poverty line and preventing them from falling back into poverty are equally essential. Also, some people may get into a poverty trap, making it very difficult to escape from it due to particular social, humanitarian, and economic issues they face, creating a self-reinforcing poverty cycle. They are the most vulnerable groups who need continuous, direct intervention to prevent further deterioration of living conditions.
Each country has developed strategies to achieve the Millennium development goals and reduce poverty. As the concentration of the poor is high in rural areas, many nations opted for rural development. Poverty alleviation strategies commonly include cash and material grants, land alienation for the poor, credit for farming and self-employment, supply of potable water, employment guarantee schemes, food for work, women and child welfare, health and education facilities for the poor, assistance for shelter for needy people and child immunisation etc.
Chinese Experience
China is one of the countries that has achieved its poverty alleviation goals by the end of 2020, and there are many lessons to be learned by other nations on sustainable poverty alleviation. The Chinese Vice Minister of Finance has stated that China has accomplished the arduous task of eliminating extreme poverty, and they will continue to sustain and expand the gains in poverty alleviation and comprehensively realise rural revitalisation. The Ministry of Finance will ensure that fiscal policy measures will be taken and implemented to support the transition. China is ready to continue strengthening cooperation with the World Bank in the relevant areas. It is clear from this statement that while proceeding to become the leading economic power globally, their commitment is to work with the international community for sustainable poverty alleviation on the domestic front.
Their highest priority in poverty alleviation is income generation. To that end, support was extended to poorer areas to promote the industries by providing access to finance such as loans, subsidies, micro-credit, technical training, modern equipment, infrastructure, and marketing facilities for local products. The second is the assurance of basic needs such as food and clothing. Also, a subsistence allowance is paid for eligible families based on specific criteria to ensure the basic needs of the people in absolute poverty (Minimum Living Guarantee). The third is the guarantee of essential medical services, safe shelter with potable water and electricity and compulsory education for nine years.
In addition to the above, there were a few ancillary and complementary activities to strengthen the poverty alleviation program. One such major program is the relocation of unviable settlements in highly remote areas to more convenient locations, enabling their integration into the main streams. Another important supportive activity was linking poverty alleviation with ecological conservation to face the challenges of climate change. A massive reforestation program has been implemented by employing millions of poor people. Such programs would generate sustainable employment and national wealth in the future. In addition to direct involvement by the government, the private sector also plays a significant role in bringing capital, technology, and carrier training to the countryside. Private sector involvement has helped to link rural producers with the global market. Also, China has used Information technology to a considerable extent to support poverty alleviation initiatives.
Their poverty alleviation intervention is a comprehensive package covering temporary relief, basic human needs, sustainable income/employment generation and mainstreaming the poor. It is not just a welfare expenditure for poverty relief but also a contributor to the national and regional economy in the short and long term. Countries like Sri Lanka can learn many lessons from the Chinese experience to make poverty alleviation programs contribute to national economic growth and achieve equitable distribution of income and wealth.
To be continued
Sirisena Amarasekara is a Sri Lankan public servant and diplomat. He is the former Sri Lankan High Commissioner to South Africa, Mozambique, Namibia, Zambia, Zimbabwe, Lesotho, Angola, Botswana, and Eswatin. He had functioned as the secretary to the Prime Minister on two occasions, and as the secretary to the Cabinet of Sri Lanka. Having completed more than 50 years of public service, Amarasekara is one of the most senior Sri Lankan public servants.
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