Economics-based views of poverty alleviation in development

This was written with specific references in mind, but suffice it to say that most of the people mentioned (Collier, Novogratz etc.) can be found on TED talks talking about my favourite thing.. economics. Ha.

 

The value, to my mind, of large scale and top-down schemes to reduce the impact of poverty in developing countries is overstated. Although the merits of small-scale entrepreneurial projects like drip-irrigation in India championed by (amongst others) NGO economist Jacqueline Novogratz are noteworthy, it must also be noted that other, less capital-driven measures to eradicate the root causes and symptoms of poverty are of equal, or in some cases, greater significance.

Greatest focus is often put on large-scale aid-driven poverty reduction plans because it is easier to bolster support, such as was the case in the 2006 Boxing day tsunami or the earthquake and resulting flooding that devastated Haiti in 2010. 9 billion children under the age of 5 die each year due to malaria; the same number of people, every 8 days, who died in the earthquake. The high profile intervention of leading figures and governments, such as the US, promulgates an impression amongst the public that governance-based solutions to these problems are the most effective, and indeed, the only strategy to tackling problems in sectors like health, education, sanitation, housing, safety and government. The reliance on innovation via government, markets and corporations is misplaced.

Although mechanisms led by markets and corporations have a place in poverty reduction, the overall impression taken from history has been one of imperialism and superficial change. Market driven approaches serve to ameliorate only one aspect of poverty definitively, and can often hide the reality of the situation beneath statistics that reveal an increase in income, but shy away from the actuality of poverty. In the same way that governments once colonised and imposed certain values upon developing countries in the first half of the century, corporations can impose specific conditions on poverty reduction. This capitalistic strategy has a place in encouraging young economies to grow, but it must be kept in check. The presence of checks and balances, cited by Paul Collier in the ‘Bottom Billion’ as being an intrinsic and essential benefit to government-led poverty policies, are not as present in the free market as they are in the regulation of governments. A comparison can be struck here between the lack of regulation of corporations in the markets and their influence in developing countries, and the regulation (or lack of) of financial institutions and traders in the past decade contributing to the huge global financial collapse seen from 2008 onwards.

Although also flawed, less economically-driven methods of dealing with poverty can provide a real solution in some instances. More socially-centred bottom-up schemes can encourage entrepreneurship in the same way as Novogratz’s “patient capital” for instance, but can also offer an alternative to the more economically-centred schemes that are often advocated by corporations, governments or markets who may have a vested interest in investment in a particular solution. Community-led projects encourage small-scale local control that provides people with an incentive and opportunity to improve their situation without reliance on aid or dictatorial top-down schemes. By forging links between projects, this can eventually lead to a network of syndicates of communities and individuals who can strive to better the circumstances and work in a more holistic and in-touch way than is possible with large top-down governmental schemes which can often feel patronising and imposing. A strategy like this also creates a necessary distance from a capitalist mechanism that has proven to be unstable and could potentially jeopardise any progress made in a fledgling and fragile economy. Solutions that are founded more in improving social conditions and relieving poverty on a far more human level will ultimately take more time and effort to implement and string together, but can create a more strongly interconnected and stable society that provides an alternative to the heavily capital-driven developed world view.

A movement away from poverty alleviation mechanisms that are dominated by ideological and cultural imperialism created by corporate, financial and governmental intervention in developing countries is necessary, but that is not to say that top-down approaches have no place in the armoury of those who seek to eradicate deprivation. These kinds of interventions can cover a greater scale with greater efficacy and this can be incredibly useful in providing a large range of coverage. However, these kinds of projects fail to fill the gaps at the bottom, relying on the ‘trickle-down’ effects of solving poverty at the top. This is where bottom-up schemes can be most effective; by filling the gaps and encouraging grass-roots poverty alleviation and community resistance to its causes and symptoms, small-scale socially-driven strategies fulfil a far more important role in providing a structure and social infrastructure for creating a more sustainable society that is free of hardship. A transition to a more individualistic approach that also takes into account the broader picture is essential.

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About shakkka

Londoner, climate scientist, extremist. All views are my own.

2 responses to “Economics-based views of poverty alleviation in development”

  1. Shakti Ghosal says :

    Hi Shakkkha,

    Liked your post.

    I also try to envison economic and developmental trends as I try to make sense of it all. To me a poverty alleviation strategy would need to employ competence development and support thereof, more ownership in Governance and a more transparent mechanism of wealth distribution.

    Cheers

    Shakti

    • shakkka says :

      Definitely; it’s about broader participation that encompasses and involves all sections of society, not just those who already exert power and dominance. Without transparency, it is virtually impossible to hold to account those who do not act in a way that is conducive to development.

      S

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