Climate change is another complementary subject and undoubtedly a current trend. The beyond 2015 agenda recognized the poor integration between environment and development and stressed the forward need to transform economies through sustainable development. The international community has materialized this idea consecrating the influential Sustainable Development Goals and most recently in December 2015 made an historical step at the Paris Climate conference, adopting the first-ever universal, legally binding global climate deal. An agreement endorsed by 195 countries sets out a global action plan to put the world on track to avoid dangerous climate change by limiting global warming to well below 2°C. To enter into force only in 2020 it will definitely guide the international agenda in years to come. But a trend is not set only by endorsing treaties and goals at the high level, indeed for years climate change was a recognized need but with very low spectrum at the micro-level albeit the macro demarches. The novelty is that climate change has finally soaped in people`s mind as a way of living and even as a fashionable life style. Green culture and agro-ecology is promoting a flourishing inspiration for innovative solutions such as ecological foot washing machines or self-recycling shoes that grow or trendy portable shelters. This is also a precious opportunity to transform poor into an ecological instrument. Indeed the deprivation associated with extreme poverty leads to persistent predatory behaviour towards resources that become continuously scarce. From one side poor are too depending on deteriorating oceans, forest and soils and from the other side are deeply affected by natural disasters.
So there is a great potential to bring the idea of recycling or food-waste management into poor daily lives or promote other innovative solutions such as the production of home-made detergent, eco-shelters, etc.
Furthermore climate change can and will be formulated as a poverty reduction opportunity for example by using plastic cleaning pollution as a second coping strategy for fisherman.
In the future by merging climate change into the terms of reference of poverty reduction policies ending poverty will ultimately mean to tackle environmental challenges. Achieving prosperity will result from the transformative power of small change, as Gandhi once said: “Live simply so that others can simply live.”
This is one of the new ideas floating for 2016. Development will have a more holistic twist than ever and a strong trend is that it will become increasingly multidisciplinary. One of the reasons is conflict. The resurrection of scattered conflict around the globe makes mandatory an integrated approach that combines development and conflict analysis. The worrying scenario of increasing armed conflict since 2011 along with recent Terrorism and new forms of latent conflict has caused the highest level of migrants and uprooted population in decades so we need to incorporate security, migration and refugee policies into the development agenda. Confirming this trend not surprisingly the SDGs include one specific goal on peace and security that albeit obviously vague state this intention. In addition by recognizing that now more than 50% of extreme poor live in conflict-affected countries this shall only be possible if peace and security are combined in an integrated fashion with poverty analysis. The challenge is to promote aid as a conflict resolution tool with a peace-keeping approach, having in mind the overall idea that ultimately development cannot be addressed vertically in an isolated way.
January is now over but this is typically the month when all human beings driven by a sense of renewal felt compelled to set priorities, evaluate progress and define a vision of the future. As this feeling gets usually diluted throughout the year, let`s not lose momentum and take this opportunity to analyse what are the development trends and prospects for 2016. I will start the year with a set of posts on future trends.
This is not an easy task. For those fascinated with economic development as it is my case we need to have a thorough understanding of what stands for this concept to then identify patterns and forecast future trends. Its complexity comes from the fact that it is an intricate process of interrelated variables combined into a secret formula that no one knows. But let´s simplify: to make it basic, economic development in its essence is the process through which a community creates material wealth and uses it to improve the well-being of its members. Sounds simple, but trust me it isn´t. First it is so wide that it becomes vague, it includes all we have in the universe of a country: Governments, Policies, Private sector, NGOs, DFIs, common people and the generally poor resulting in an elusive and unpredictable mixture. Second, as all of us, it is shaped by time, theories of development have evolved creating distinct models generally influenced by politics, ideology or just plain pure history. Third albeit these eclectic bundle of subjects truth is that it all melts down into the specifics: no matter how hard we formulate a framework or a theory it will always be a bouquet of a unique combination of variables that cannot be reproduced in time or place, and that´s exactly what makes it so fascinating.
The only way is Wisdom.
A good way to foresee trends and anticipate what´s next is to rigorously analyse the wisdom that has been accumulated up to now. Indeed a long path has been crossed and we are very far away from President´s Truman speech in 1949 that for the first time recognised poverty as an handicap and clearly stated the need for development. But it is important to understand that the development landscape emerged from this post-war optimism in which the West had a sense of development-bringing mission. This new role of sharing the benefits of the Western´s scientific advances for the improvement and growth of underdeveloped areas was called the Modernisation Theory. The then recently founded Development Financial Institutions, such as the Bretton Woods Organisations were shaped by this theory and in their early actions advocated that development should be achieved through industrialization mostly driven by the state that eventually should lead to a catch up with the rest of the West. The idea of linear models of progress including Rostow´s Take-Off Model was influential up to the 60´s and it materialized on large-scale top-down programs in mostly infrastructure mega-projects. It established economic growth as the main driver of development in which the benefits would trickle down to people through job creation increasing people`s incomes and consequently government revenues. This idea still resonates today as one of several fundamental debates on development, but it´s application has raised (and still does) several criticisms. Indeed some infrastructure Mega-projects such as large dams were disaccredited due to hazardous ecological impacts and resettlement problems, but it was the one-linear route in a one-size fits all fashion that was more difficult to accommodate to the wide diversity of LDCs. The supply –side model based on capital accumulation soon has failed to show the expected trickle-down effects to all. In addition it was slowly perceived mostly as a Western vision that in a biased approach was unrealistic and struggled to understand the specific challenges of a variety of developing countries.
As a reaction to these limitations the Dependency theory tried to switch from the western tone and focus on underdevelopment, but albeit the urge to reject the neoclassical paradigm it ended up mainly criticizing the theory of comparative advantage. It contradicted the principle that expansion of primary exports should promote industrialization and advances in productivity and eventually reduce the price of primary and manufactured goods. Prebish has shown instead with the example of Latin America that prices in the West that should go down due to increases in productivity, instead maintained as they were absorbed by higher wages and profits. On the other hand the prices of primary goods in periphery went slowly downward according to the theory deteriorating the terms of trade of Latin American countries. The reason for that was the great technological gap between both groups or according to Furtado the LDCs had endogenous structural challenges associated to traditional societies such as land tenure, institutions, supply rigidities, lack of foreign exchange, etc that dampened the development of peripheral countries. The novelty of this approach was the homegrown national industries through a strategy that became famous and was called Import Substitution Industrialisation (ISI). Mostly based on an ideological battle the new theory focused mainly on macroeconomic issues related with the balance of payments namely the chronic lack of foreign exchanges of Latin America countries. At a first glance its major concern was the integration in the international trade system and indeed it has highly contributed to the work of today´s World Trade Organisation. Disappointingly reality has shown that ISI was not as successful as expected. In some places it led to isolation creating other internal macroeconomic unbalances and reality was that most countries turned to a combination of national industrial investments combined with integration in global economy and export markets, such as South Korea, Singapure and Hong Kong that progressed from satellites towards metropolis. Adding up to these limitations the theory is more successful in describing post-colonial relations than providing a wide approach to modern development theory. However it was crucial to identify the dependent and drainage relationship between metropolis and periphery and in my view its main breakthrough was the shift of gravity from the West towards developing countries, a trend that remains up today. .
But it was only in the 70´s with WB´s President Robert Mcnamara (1968-81) that we moved away from the focus on development as economic growth and definitely recognized that the benefits of large scale projects were not trickling down to households and individuals. It was the first acknowledgement that albeit good growth performance poor people remained poor and attention was given to the increasing gap between the rich and poor. The 70`s was an exciting decade when several ideas flourished namely the Human Development approach that reflected that people were at the center of policies. It was the first attempt to categorized people´s socio-economic conditions according to the basic needs concept such as health, housing, sanitation or education that still today supports social progress index and most poverty analysis. Influential authors such as Robert Chambers and Amartya Sen have contributed with trends that are still pillars of development. Chamber´s work changed the focus of development: to look at the poorest first rather than last while Sen led studies where development was tackled in an innovative way: as an issue of entitlements and the capacity to choose or act. Both these approaches were the basis for the first Human Development Report released later in 1990 that presented for the first time development as a process of enlarging people´s choices. The Human Development still today very influential with its populist approach has also triggered the rhetoric around participation and empowerment that supports up today most of the NGO´s actions.
In the 80`s we witnessed to the revival of neoliberalism pursued by Thatcher and Reagan with the famous Structural Adjustment Reforms (SAR). It emphasized the importance of markets that should be let alone to sort out prices instead of the distorting influence of the state. Advocating privatization, liberalization of financial markets and reduction of government spending in developing countries it materialized in programs that led to radical alterations to the way developing governments were organized and how budgets were allocated. The rational seemed apparently quite reasonable and simple: increasing the efficiency of resources allocation by opening the economy to competition would produce growth in the long run. However it became disappointingly known by causing instead massive unemployment, social unrest and general chaos and disorganization. Indeed these reforms perceived as ruthlessly painful were associated to this dark-age that according to some was entitled the lost decade of development. But in the face of darkness we can always light a candle. If it is true that SARs reactions were so negative that it became almost indefensible, it is also true that negative things take 7 times more to process in our brain, precisely because we need to always analyse what went wrong. So with the objective to review history instead of demonizing eras let`s try to find a positive contribution to add to the basket of development knowledge by asking what lessons can we learn from it?
First lesson is: too much sacrifice destroyed convergence. Albeit technically well founded one of its fundamental assumptions failed: the miracle of growth convergence to potential growth was elusive because the negative costs at the short-run were so large that discouraged governments and disengaged public opinion from the pursuit of these reforms. Working as a faith trap, by planting doubt the fear of not accomplishing the reward of the expected long-run growth after so much sacrifice worked as a self-fulfilling prophecy failing the model to converge and discrediting the success of reforms after so much pain.
Second, we all agree on the need of reforms, but reforms are difficult to perform. Even the struturalists on the other side of the ideological trench, consensually agreed on the need of structural reforms to dissolve endogenous inefficiencies such as land tenure, institutions, lack of technology or output composition. But structural reforms are difficult regardless of its nature due to the dismantling of power, re-affection of resources and reformulation of administrative structures that are supported by the political establishment and patronage systems. In developing countries highly dependent of the public sector as the main economic provider and characterised by monopolies and incipient private companies the withdrawal of government spending along with the de-regulation of professions, privatization of state enterprises and production rationalization seemed to ruin the very few institutional frameworks in place and felt more like an aggressive destruction rather than an adjustment.
Third, a good reform should never act as a shock. Structural reforms in a short timeframe and tight sequencing acted more as a painful punch rather than a consistent transformation. We need time to accommodate change as much as we need the right sequencing to pick up the priorities that are most strategic and will lead to an enduring structural modification. The broad and economy wide approach within a strict schedule of SAR`s type may be too aggressive while instead promoting a targeted and selective removal of key obstacles organized in a wider timeframe is easier to accommodate.
So albeit the negativity, not all was lost: hopefully it was an interesting exercise to understand reforms and extract some interesting insights from it. Additionally by far its main contribution was the sound principles of macroeconomic management and public financial management, that still rules IMF actions up today namely the idea that macroeconomic stability is a pre-condition for development to prosper in developing countries. Furthermore the withdrawal of the state from several areas made the 80´s the decade when a plethora of NGOs emerged filling up the gap left by the state, a contribution that added diversity to the development landscape.
After the structural reforms there was a strong reaction towards alternative development strategies. Shachs along with Escobar and Esteva rejected the view of western domination building up a discourse of development as an universal aspiration and goal. The 90´s Post-development was a strong shift to the local people´s vision making the individual action the main priority. It rejects grand theories or narratives that were accused of serving more the expectation of the developed world than of developing countries. It argued interestingly that everything was socially constructed and was the basis of what we know as participatory approaches that intend to listen and learn from below. Up today they are still used to incorporate people´s wisdom, view and knowledge into the identification, planning and implementation of development programs performing as an important tool to empower the poor.
The trends for today still engulf this accumulated knowledge of history, as the sand of incoming waves builds up a rock.
Yesterday (6th of July 2015) The Millennium Development Goals Report 2015 was launched in Oslo, Norway by the Secretary-General: “The report provides a final assessment of global and regional progress towards the MDGs since their endorsement in 2000. It shows that significant progress has been made across all goals and that the global efforts to achieve the MDGs have saved the lives of millions and improved conditions for many more around the world. The report also acknowledges uneven progress and shortfalls in many areas, which need to be addressed in the new universal and transformative post-2015 development agenda.”
What are the proposed SDGs?
- End poverty in all its forms everywhere
- End hunger, achieve food security and improved nutrition, and promote sustainable agriculture
- Ensure healthy lives and promote wellbeing for all at all ages
- Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all
- Achieve gender equality and empower all women and girls
- Ensure availability and sustainable management of water and sanitation for all
- Ensure access to affordable, reliable, sustainable and modern energy for all
- Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all
- Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation
- Reduce inequality within and among countries
- Make cities and human settlements inclusive, safe, resilient and sustainable
- Ensure sustainable consumption and production patterns
- Take urgent action to combat climate change and its impacts (taking note of agreements made by the UNFCCC forum)
- Conserve and sustainably use the oceans, seas and marine resources for sustainable development
- Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification and halt and reverse land degradation, and halt biodiversity loss
- Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels
- Strengthen the means of implementation and revitalise the global partnership for sustainable development.
In the post-2015 agenda the SDGs will substitute the MDGs set to be reached by 2030. At the moment there are 169 proposed targets grouped in 17 goals among which donors gladiate to fulfill their own special agenda. They loved so much the MDGs that they want more, 148 more indicators to which each lobby group advocates their interest. The good news is that the proliferation of SGD´s means that finally the international community acknowledges that it cannot tackle the sophisticated dynamics of poverty without looking at it in an integrated way looking at phenomenon such climate change or urbanisation. The bad news is that the more ambitious this exercise gets the messier it becomes, particularly if we increase 149 indicators! For those acquainted with troikas or councils negotiations it is known that the well intentioned virtues of these discussions are often fade away in ruthless elbow policies driven by institutional egos of competing donors. The altruistic view of global prosperity is often dampened by collusions, power relations, underground agendas and erratic pledges making it a much more chaotic than constructive process. Furthermore sometimes these fora are not usually capable to address issues that are complex or multidisciplinary promoting pointless discussions that lead to superficial outcomes. Indeed truth is that up to September, when governments are to approve the final SDGs, donors will be still running around their tales discussing elusive concepts such as multi-stake partnerships, resilient infrastructure or sustainable tourism/industrialisation. But we shouldn´t destroy great missions just because humans have difficulties in putting it in practice. No doubt the MDG’s and now the SDG’s exercise is important for humankind: once we set a goal and measure it half way to achieve it has been accomplished. And if for some reason that fails at least it has set a global vision that drives government’s purposes. Most of all the great achievement of SGDs will be to finally include the climate change in poverty analysis merging both concepts into an integrated development approach. That is already a great step forward.
But we should be cautious about what it may trigger. For example it should be said quite frankly that developing countries should erase from their minds the misconceived idea that the more goals the more aid available. They will be deceived if they think that the SDGs unfeasibly expensive indicators that will cost $2 trillion-3 trillion a year over a period of 15 years representing 15% of annual global savings will be met by donors that can hardly cope with their minimum commitments of 0,7% of GDP in aid.
The SDGs agenda will surely be a serious and fundamental exercise to eradicate poverty at the global level providing commandments that will lead the path, but we also need to tame our expectations with a realistic twist. For example the spectacular reduction of global poverty has much more to do with growth in China than from setting global goals. Also we hope that in the future the SDG´s will not be only simplistic top-down targets when one of most important lessons of development is that everywhere is different and that the local context is vital: one thing that works in one place may not work in another. The MDGs have been vague and open enough to accommodate these niceties of development policies so while the SGDs are being narrowed down until September we hope they will not be conceived only as good intentions or they will be doomed to be only a bureaucratic distraction.
One of the features of the post-2015 agenda is that future poverty reduction will occur in a new context of what was called Big Data. Driven by digital technology such as internet, mobile phones, video surveillance and geo-space mapping this new Data Revolution has allowed to produce and process a vast amount of data very quickly, a phenomenon never witnessed before. Global private companies such as Amazon, Google, Facebook or Twitter lead this high speed and large scale accumulation of data. Google processes more than 24 petabytes of data per day a volume that is thousand times the quantity of all printed material in the U.S. Library of Congress. Facebook is a brand new company that already gets more than 10 million new photos uploaded every hour and receives a click on the like button 3 billion times per day. Amazon made a patent on “item-to-item” collaborative filtering using correlations among products to foresee customers’ tastes. Google is able to predict global trends of contagious diseases such as flu or Ebola through search engines. Facebook provide a digital trail of user´s preferences and consumer profiles and Twitter tell us what is in our minds. The amount of stored information grows 4 times faster than the world economy while the processing power of computer grows nine times faster. This fast and vast data undoubtedly represents a precious opportunity to monitor poverty in the future with great potential for partnerships between public entities and private companies. Thus one of the challenges for the future is to promote efficient public-private strategic collaborations that can offer this unique possibility to use private cellphones, GPS, sensors and even web clicks as monitoring tools of poverty globally.
Big Data is not only scale and speed but using the entire random sample. If before samples were took for granted now it is possible to use all the data providing a granular view able to identify subcategories, submarkets and details with exactitude and less sampling errors. In the past using samples as representative of large number was the result of data scarcity and an artifact to go around informational and technological constraints. While before test hypothesis were defined even before data collection, now we let data speak for itself. This new approach favours the what against the why; more than focusing on causality models we now look at correlations and connections that produce innovative data that we never thought existed. This new mindset based on adaptive dynamics to real life along with the unprecedented scale and velocity of data gathering represents a precious opportunity to have real time data on poverty. For example estimating real time food expenditure based on pay as you go mobile top ups, mapping real time disease trends, such as Ebola or assessing instantly risks and vulnerabilities poor face daily.
But this infatuation with Big Data can have some shortfalls and it needs to be implemented with cautious. No doubt the sample size reduces sampling error but this will not eliminate the bias. A large but biased sample will produce “precisely wrong statistics,” with an extremely small sampling error, but still reflecting biases. For example, mobile phone surveys offer the possibility of much faster, cheaper and more frequent data collection, but it is widely known that the sample of mobile phone users in the developing world is likely to be biased towards wealthier, more educated, younger households, and towards more men than women. One potential pitfalls these tools offer is that we could miss the very people we most seek to reach: those without access to these new technologies as it is very likely that the extremely poor maybe info-excluded from this sample automatically. (Blumenstock and Eagle, 2012). So the Big Data may lead to search answers in places where looking is easiest described by the statiscians as the “Drunkard’s search” to explain this type of observational bias.
“A drunkard is looking for his lost key under a streetlight. A policeman asks “What did you lose”. The man answers “a key, but I can’t find it.” The policeman asks him “Do you remember where you lost the key?” He replies “Yes, over there”. The policeman, who appears confused, asks “Then, why don’t you look for it over there?”. The drunkard answers “because there is no light!”
To address these issues there are proposals of blending the convenience of “Big Data” approaches with the statistical rigor of “Small Data” approaches in what was called the All Data Revolution (Lazer, et. al. 2014). The World Bank Group has promoted various initiatives that precisely blend “Big Data” with “Small Data” for poverty estimation. SWIFT (Survey of Well-being via Instant and Frequent Tracking) is one such initiative. Like typical “Small Data” efforts, SWIFT collects data from samples that are representative of underlying populations of interest. Like typical “Big Data” approaches, SWIFT applies a series of formulas/algorithms, as well as the latest ITS technology, to cut the time and cost of data collection and poverty estimation. For example, SWIFT does not estimate poverty from consumption or income data, which is time-consuming to collect, but uses formulas to estimate poverty from poverty correlates, which can be easily collected. Furthermore, by embedding the formulas into the SWIFT data management system, the correlates will be converted to poverty statistics instantly. To further cut the time for data collection and processing, SWIFT uses Computer Assisted Personal Interview (CAPI) linked to data clouds, and if possible, adopts a cell phone data collection approach. “Big Data” science is still at its early stages and innovations in this field are rolling out at the speed of light, but such innovations might yield entirely new solutions for poverty monitoring in the near future.
For full article please see in Research Essays page.
Household Survey and National Statistics
No matter how ambitious international global goals may be the most important efforts towards poverty reduction will no doubt be down at the national level. Successful assessment of poverty progress will only be possible if recipient countries assume ownership of the process because the responsibility to monitor poverty progress is ultimately of individual countries. To understand if poverty has increased or decreased authorities rely mainly on household surveys that provide consumption and expenditure data that are used to construct poverty profiles. Over the past two decades there has been a significant improvement in the availability of consumption data which has supported the remarkable poverty reduction achievements. Starting with 22 surveys in 1990, the world counts today with 1000 household surveys (Ravallion, Datt, and van de Walle 1991). But albeit this privileged accumulation of knowledge, much has been said on aid coordination but not much has been done in terms of harmonization of data and there are serious challenges in household surveys that need to be overcome in the future to properly monitor poverty. One fundamental condition to infer if poverty has decreased or not, is to have comparable measures of well-being at multiple points in time. But experience has shown that albeit the improvements, the heterogeneity of instruments (for e.g. questionnaires) and methodologies used in surveys can seriously dampen their quality jeopardizing the ability to compare results rigorously. Lack of consensus in survey design for example in questionnaires can have serious consequences in terms of comparability. The questionnaire is the soul of a survey, what we ask is what we get, so changes in questionnaires have dramatic consequences in the capacity to compare poverty throughout time that can lead to misleading conclusions and doubt if poverty has indeed increased or not. For example research in data collection has widely established that factors such as the recall period and the number of food items listed have a large effect on the consumption estimated. For example findings from Beegle in Tanzania show that comparing different recall period to collect data if we increase the recall period of personal daily diary from one week to two weeks poverty also increases from 55% to 63% (Beegle 2012). So sensitivity analysis has shown that the more we increase the recall period of questionnaires the higher are poverty estimates. On the other hand short and collapsed lists of food categories compared with long detailed list of food consumption have greater poverty estimates. In fact on average a 7 day recall with a long list of food items performs better compared with more expensive and onerous methods working as the gold standard. (Beegle et all, 2012)
The implication is that innocuous changes in the survey design have significant impact on poverty estimates, so any change in data collection methods should be looked at with caution to avoid difficulties in comparability and mis-evaluations of poverty. This does not mean that customizing surveys to specificities of the country is an unrecommendable practice, for example tailoring questionnaires with a list of food that reflect local consumption patterns will result in good quality of the measure of food security, but arbitrary changes of household surveys over time will result in spurious estimates of change of absolute poverty. Indeed reality is that in many countries there is no systematic effort to collect and distribute survey data. Most household surveys are collected on an ad hoc basis driven by specific requests of governments or ministry and depending on the availability of donor´s funding. Indeed these very expensive data collection initiatives craving for donors’ funding tend to be customized to donors’ strategic interests rather than produced systematically in a rigorous way. Furthermore new instruments and variables can also be used just due to a turnover of cabinet personnel willing to change questionnaires to improve informational data forgetting the cost they incur in data comparability. Pure administrative issues related with the quality of the training, supervision, enumeration and data entry can also undermine the reliability of the results of household surveys. Additionally as poverty is crucial to the agenda of most developing countries not surprisingly questionnaires can also be changed to accommodate desired political prospects. There are also issues of confidentiality that make access to survey data restricted even in those cases where survey data has been properly collected and compiled. There is great heterogeneity across countries as to when and to what degree the data are made available to analysts outside national statistics offices which makes poverty estimates although well produced not accountable for monitoring purposes. In other situations the time gap between the fielding of household surveys and the release of the data for analysis makes estimates irrelevant or inconclusive. Many reasons may explain these delays. The lengthy process may be a plausible explanation but sometimes the release of poverty estimates can also be managed according to the political agenda namely elections, particularly if poverty is likely to increase or stagnate.
Another issue that is usually overlooked is also the importance of the timing of the survey. 80% of the worlds’ poor reside in rural areas and most of the poor depend on agricultural activities that typically are seasonal. So not surprisingly in most developing countries welfare fluctuates according to seasonal patterns making poor better-off during harvest periods and worse off in lean season. From this follows that if fieldwork for data collection occurs one year during lean season and in the other after harvest it may lead to the mis-perception that poverty has reduced considerably over time when in fact it reflects the seasonal cycle of poverty and not necessarily improvement over the years.
But comparability challenges do not occur only over-time but also within the country. Spatial differences in the cost of living can be dramatic inside one country. Cost of living can be the double or more in the capital compared with rural areas and in addition prices usually differ according to regional patterns. So failure to accommodate the differences in cost of living will result in mis-identification of the poor particularly what concerns the geographic profile of poverty.
Due to panoply of reasons there is lack of a consistent and predictable flow of new household data. In some cases they are not available or come in late or in other situations they are not reliable because they are product of choices and implementation decisions that seriously dampen comparability across countries and throughout time. These are serious challenges that demand an exhaustive assessment and evaluation of each country’s respective household data to guarantee proper calculation of global poverty.
In the last 30 years if it is true that Povcalnet database has accumulated an impressive stock of more than 1000 surveys representing already 129 countries that only correspond to 20 to 40 new surveys available annually. One of the big challenges of monitoring global goals is that it is necessary annual household survey data but it is not realistic to imagine this occurring in the medium term. What do we do meanwhile? One way to move forward is to improve data collection exploiting new software and technologies. Traditionally household surveys were implemented based on Pencil-And-Paper-Interviewing (PAPI), but advances in mobile technology namely in Computer Assisted Personal Interviewing (CAPI) software provide a viable alternative. Comparing both interviewing methods CAPI significantly reduces the variance of consumption and increases the mean reducing poverty measures (Caeyers, Chalmers and De Weerdt, 2011). CAPI main advantage is that it reduces the time lag between data collection and data analysis but also allows automatic checks and quality control at the entry point.
Cell phones represent also an alternative opportunity in data collection. They will not be able to completely substitute the lengthy interviews of LSMS that take 12 months, but may serve as a potential annual monitoring tool for quality control and follow-up. There are several advantages: rapid collection of high frequency and wide data; cost-effective, flexibility on question formulation; minimization of respondents fatigue reduces attrition and non-responses. (Croke and others 2012). Hybrid initiatives such as the WB Listening to Africa providing a face-to-face baseline survey followed by phone interviews give precious data about the dynamics of poverty.
GPS instruments can also be very useful because they will allow tracking extreme poor located in remote areas or disconnected from markets or other services. Distances of land size normally based on self-reports can be updated rigorously. If issues of confidentiality are addressed by for example collecting data based on enumeration area geocoding can point-track households and improve understanding of access to services, seasonal migration patterns and real-time vulnerabilities establishing innovative causal relationships of poverty based on surgical data.
 For example in the case of China access to microdata is restricted, but aggregated data on the distribution of consumption is published in official statistics reports. It is possible to estimate poverty indirectly but under additional assumptions.
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
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.