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WHY THE SHIFT TOWARDS THE EXTREME POOR? THE CHRONIC, IN TRANSIT AND THE VULNERABLE.

foto extreme poverty foto poor

After the staggering poverty reduction witnessed in the last decade the agenda has now shifted, looking at the ones still left behind, the poorest. The reason for this came from the evidence that although growth has pushed out of poverty an easy to reach poor near the poverty line, it may not be sufficient to benefit the ones lagging far behind below the poverty line, namely the extreme poor and the marginalised. As growth based poverty reduction may have diminishing returns in the future, growth may not be able to tackle some frictional poverty that remains at a very low level. Indeed in many developing countries the poverty of certain subgroups of the population is relatively insensitive to overall rising income levels, so as poverty declines it may be relatively more difficult to reduce poverty in hard-to-reach geographic pockets or among population groups that are somehow excluded from broader economic participation. These pockets of poverty emerge from a variety of reasons such as geographic remoteness, patterns of social stratification or discrimination as well as market failures that generate poverty traps. They can also be difficult to reach because they are affected by conflict or climate change or because they are simply  trapped in poverty due to failures in credit, land, or key markets access, or low levels of education, skills, or health which prevent them from succeeding themselves. The extreme poor or so  called ultra-poor suffer from severe material deprivation and several vulnerabilities, are socially excluded and/or belong to a minority, and are commonly, children, elder, sick and mostly women.

As overall poverty levels fall and these pockets come to represent the majority of those who remain poor, progress in further reducing poverty not only will be slower, but will demand addressing poverty in all its new forms. The rhetoric of the extreme poverty ultimately means that there are several types of poverty that need to be addressed differently. Thus a further mind stretching in poverty conceptualization is necessary that goes beyond classic absolute poverty and lead us to considerations about its depth and severity. Extreme poverty also tends to be as severe as resilient throughout time, so it is highly correlated with chronic poverty. Addressing extreme poverty is not only to focus on the most precarious type of poverty but also to recognize that it is the most persistent over time, so tackling extreme poverty requires ultimately looking at issues related with transitory and chronic poverty.

According to the CPRC chronic poverty is described as “those individuals and households who experience poverty for extended periods of time throughout their lives, usually for five years or more; a poverty that is often intergenerational in nature” (Hulme, 2003a:399; Hulme et al., 2001; Sen and Hulme, 2004).

Who are the Chronically Poor?

Most spend their whole life in poverty, and their children — if they survive the early years of life — are likely to be as poor as themselves. They suffer multiple-deprivations, not only little income but poor health, dying an early (and preventable) death. If they reach old age, their remaining years are often miserable ones marked by chronic illness. They are often trapped in environmentally-stressed regions, remote from infrastructure and markets. Many live in chronically-deprived countries (CDCs) marked by geographical disadvantage, inequality, war and political turmoil, and there is some overlap with the “bottom billion” discussed by Professor Paul Collier. However, many others live in countries experiencing economic growth at a national level, but with great regional or social inequality. For example, we estimate that perhaps one third of the world’s chronically poor people live in India alone. Within huge countries like India and China, there is enormous variation: several populous Indian states are larger than most African countries and suffer widespread persistent poverty and intractable development problems.A key point to understand is that most chronically poor people are working. They are not ‘unproductive’. Even if they are at a stage in their life-cycle when they might be expected not to be working — whether childhood or old age — many will be forced through hardship to engage in economic activity of some kind. Processes of exploitation and exclusion keep many millions in poverty by limiting access to assets, services and positive social relationships.Many slide into chronic poverty after a shock or series of shocks (e.g. ill health and injury, natural disasters, violence, economic collapse) that they cannot recover from. These are not very different from what drives poverty in general: but when shocks are severe and/or repeated, when people have few private or collective assets to ‘fall back’ on, and when institutional support (social protection, basic services, conflict resolution) is ineffective, such processes are likely to trap people in chronic poverty.”

Source: Policy Brief CPRC

Chronically poor represent today nearly half a billion people. The gravity of this kind of poverty does not lie only in the numbers, but mostly on the length of poverty representing usually long periods of their lives or even an entire lifetime but also on its contagious effect to future generations. These features make chronic poverty the most complex and more resistant kind of poverty which poses distinct or additional policy responses. Furthermore tackling chronic poor is also to understand poverty as a transitory process over time. Please look at the figure 2 to understand the difference between chronic and transitory poor.

Figure 3: The Chronically Poor, Transitory Poor and Non-Poor

box chronically poor

           Source: CPRC 2005

Previous static measurements of absolute poverty analysis focusing in one point in time   provide no insights on phenomenon that are associated with extreme poverty such as transitory and chronic poverty neglecting  movements of individuals that fall in and out of poverty or households that are chronically trapped in poverty. Poverty Dynamics has been an increasingly alternative empirical tool to study the movements of poor, escaping and falling into poverty providing its transitory path and a tracking system that may show the way in and out of poverty through time. (See Fig. 3) It goes beyond the uni-dimensional approach additionally looking at poverty duration, poverty severity, poverty dynamics and household vulnerability, (Hulme and Shepherd, 2003). This poses additional monitoring challenges because traditional household census normally enables construct poverty profiles that year and sometimes it takes several years to have the following survey. During this time gap monitoring is not possible and precious information gets lost that are crucial to understand the trajectory of poverty.  Panel datasets are therefore decisive econometric tools to analyse poverty dynamics as they allow the comparison of data from households over a period of time. Although very costly and difficult to implement with consistence they shall be fundamental to understand one of the features of extreme poverty as they allow the study of persistence of poverty over time promoting better understanding of chronic and transitory poverty.

Furthermore in future endeavours to reduce extreme poverty it is also fundamental to understand what specific context they live in and what are the challenges poor face. Globally in recent years we have witnessed that conflict has intensified dramatically and in new complex forms and climate change has affected all continents with no exemption. These external shocks will expose poor which are the most vulnerable to all hazards. Again poverty dynamics shall be important because it may be useful to analyse specifically the impact of multiple fragilities into poverty. It is widely recognized that conflicts and climate change can reverse gains made in poverty reduction, throwing large numbers of vulnerable and marginalised households, previously above the poverty line, into poverty. Conflicts and climate change affect the poor and vulnerable disproportionately, especially women, children, the elderly and those recovering from external shocks. Very often, it is those living on the fringe of society without adequate coping mechanisms (savings, insurance, social safety nets or social protection) who are most vulnerable to the impacts of conflict and instability, and are most likely to fall into poverty through the consequences of war or environmental shocks.

Thus increasingly poverty literature will take on board the concept of vulnerabilities and economic resilience into poverty analysis as the recognition of the impact of external shocks on poor. Technically there are some conceptual changes: poverty becomes a stochastic phenomenon and the current poverty level of a household, may not necessarily be a good guide to the household’s expected poverty in the future. In conventional poverty analysis a household’s observed poverty level is an ex-post measure of a household’s well-being while the forward-looking anti-poverty interventions should go beyond cataloging who is currently poor and who is not and look at the future poverty through households’ vulnerability assessments.

Absolute poverty analysis that chooses a welfare indicator, identifies the poor through a poverty line and aggregates them fails to take vulnerability into account assuming that poor live in the “world of certainty” neglecting the different risks that they face and how vulnerable they are to crises/conflict throwing them into deeper poverty. (Dercon 2005:20)

 “There are many different definitions of vulnerability, but are all consensual about the link between vulnerability and risk. Coudouel and Hentschel (2000:34) argue that vulnerability goes beyond income vulnerability but also incorporates risks related to health, violence and social exclusion. But within the study of vulnerability on the opposite side there is the underlining principle of resilience. Indeed Chambers (1989:1) stated that vulnerability refers not only to the exposure to contingencies and stress, but to a defenselessness status due to a lack of means to cope without damaging loss. Poor coping strategies such as lack of assets, insurance or safety-nets increase vulnerability in the face of repeated disasters natural or political instability that can push someone from relative wealth to poverty and from poverty to extreme poverty or destitution. Wood (2003:455) believes that the poorest cannot apply risk management and strategic preparation for the future to ensure their security.” 

Definitions of Vulnerability

Vulnerability assessments may be relevant to study extreme poverty because they allow understanding the impact of several external shocks on poor by creating a profile on the scale and intensity of risks that poor face. This approach allows to account damage to assets such as crops, livestock or infrastructure as well as to identify the coping strategies available such as assets; insurance and safety nets that demonstrate resilience. It may also show the impact on different groups of poor for e.g. the chronically poor. It allows policy-makers to understand the dynamics of vulnerability in fragile contexts useful to set policy recommendations in areas of provision of insurance, social protection, human rights and legal protection.

Either our goal is total poverty eradication or the target of 3% residual poverty, tackling extreme poverty means to address poverty in all its forms, namely phenomenon related with chronic and transitory poverty, vulnerability and resilience.

For full article please see the Research Essays page.

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