Economic Growth and Poverty Reduction - Making Growth Work For the Poor

1. Introduction

The question of whether economic growth leads to poverty reduction is a subject of major contention today. The neo-liberal view to this issue is that growth is good for the poor, and that poverty can be alleviated through economic growth. In this essay, I argue that unless the poor participate meaningfully in the economy and the constraints that hinder their participation are removed, growth on its own cannot help in poverty reduction. The state should also play a major role in making the poor benefit from growth by pursuing pro-poor policies. In the subsequent paragraphs, I define what pro-poor growth is; spell out the constraints to pro-poor growth and what can be done to make growth benefit the poor.

2. Definition of concept: pro-poor growth

According to Ravillion and Datt (1991:19), pro-poor growth can be defined as ‘growth that involves and benefits the poor’. In other words, pro-poor growth requires the maximum participation of marginalized groups in all sectors. Ravallion and Datt further argue that pro-poor growth is, inter alia, characterized by what they call ‘deliberate transfers to the ultra poor who are not able to lift themselves out of poverty. In essence, the argument that they are advancing is that the poor need help or intervention in order for them to benefit from growth. This means that pro-poor growth is a deliberate intervention to make the poor benefit from growth rather than leaving the poor to the fate of the ‘invisible’ hand of the market. It has to do with setting an enabling environment in which the poor have the opportunity to participate meaningfully in the economy.

According to Kydd et al (2001:10) pro-growth will occur when the following conditions exist:

 Price or productivity increases in tradable products with high average share in the poor’s expenditure.
 Price and productivity increase in tradable products with high labour inputs by the poor.
 Changes in technology or reduced barriers of entry, allowing the poor to engage in production of non-tradables which they could not previously engage in or
 Gains in the significant numbers of non-poor, which lead to expanded demands for goods or services, produced by the poor as a result of upstream or expenditure linkages.

It is important to note that not all growth is pro-poor. Here are some of the characteristics or aspects of growth which are not pro-poor:

 Disparities in wealth distribution
 Increases in rural poverty
 Growth that ignores agricultural development despite the role that it plays in poverty alleviation
 Lack of investment in health and education, which play a critical role in poverty alleviation
 Failure to mitigate inequalities and lack of programmes aimed at addressing the needs of the poor (www.seurities.com).

As Acocella (1998:162) notes, it is critical to remember that growth does not always lead to human development. Growth may occur without any significant impact on human development, especially with regard to the poor. Acocella further argues that real development or growth occurs when there is improvement in the well being of people. Growth that does not lead to improvement in the welfare of people cannot be said to be developmental in nature. Genuine growth, as Ferro et al (2002:4) note, should lead to human development, and this entails ‘empowering the poor to contribute to and benefit from this growth’. It is clear that pro-poor growth does not occur automatically without the implementation of the right policies that will be instrumental in facilitating its manifestation. There are polices and practices that may hinder pro-poor growth from taking place. I examine a few in the next section.

3. Constraints to pro-poor growth

For pro-poor growth to occur in any society, it is important to ensure that all the barriers that prevent the poor from reaching their goals are removed. Failure or reluctance to deal with such barriers may frustrate the progress of poor people and may ultimately hinder any poverty reduction strategy from successfully addressing the issue of poverty. Here are some of the constraints that can negatively affect pro-poor growth:

3.1 Inequality and lack of access to market

It is difficult to pursue pro-poor policies in countries characterized by inequality. Stewart (1995:209) argues that it is difficult to develop pro-poor policies in inegalitarian societies. He gives an example of inegalitarian societies such as Ghana, Mexico and Philippines, where he argues that growth has not made any impact on the poor. These societies are contrasted with Indonesia ‘with a more egalitarian structure to start with and a more pro-poor pattern of growth’. Other examples given are East Asian societies, which due to their effective policies of dealing with inequality were able to reduce the level of poverty in a dramatic way. This means that there is a relationship between poverty and inequality. May (2002:2) also shows that policies of inequality pursued by the apartheid government in South Africa were not good for poverty reduction as they excluded certain groups from participating in the economy of the country. The propagation of inequality led to ‘loss of assets such as land and livestock and simultaneously the denial of opportunities to develop these assets through limiting access to markets, infrastructure and education.

The problem with inequality is that it results in social exclusion where certain groups are denied opportunities or services. The exclusion of the poor from participating meaningfully in the economy can negatively affect their well being. In an economy where inequality is low, the poor will tend to get a higher share of the benefits from growth as compared to an economy which is characterized by a high degree of inequality. As Ravallion and Datt (1997:7) show, ‘inequality in the ownership of physical and human assets are likely to influence the prospects of poor people to participate in economic growth’. Policies that are pro-poor will ensure that the poor have access to markets and infrastructure. It is clear that in cases where there is no equality amongst the different socio-economic classes, reliance on market forces and the invisible hand of Adam Smith to meet basic needs is merely wishful thinking.

3.2 Fiscal constraints

Governments, especially in the developing countries are finding it hard to pursue pro-poor growth policies and approaches for poverty alleviation due to fiscal constraints. Structural Adjustment programmes are in most instances making matters worse. The reality is that governments are usually faced with the challenge of having to reduce expenditure in social services, which are supposed to benefit the poor. This means that less money is spent on important services such as health, education and other basic services. Cuts in government expenditure directly affect the poor (Howard 2001:57). However, it is important to note that the state is faced with global challenges and constraints in its attempt to pursue policies that are good for poverty alleviation. There is global pressure for the state to take a less ‘directive’ role in the economy.

3.3 Reducing the role of the state

The liberalization of markets which goes with globalization is among other things advocating for the rolling back of the state, the repeal of restrictions on prices and on quantities moved and stored. As Howard (2001:57) rightly notes, the ‘liberalization of financial markets increases poverty and inequality’. As part of globalization, governments are forced to liberalize their markets. However, the critical question is whether liberalization of markets benefit the poor. There are mixed reactions to this. There are those who view globalization as beneficial to the poor, especially with regard to opportunities it offers for trade and new markets. On the other hand there are those who view it as harmful.

As Levinson (2001:11) shows, globalization ‘benefits the poor in some countries and harm those in other countries’. Although there is a general call for ‘rolling back the state’, in order to give way to the markets to work (if ever they work), the state has a role to play especially pertaining to things that individuals cannot do for themselves. It is common especially among the poor to find people who cannot participate in the labour market due to old age, infirmity, chronic illness or otherwise incapacitated, socially excluded or discriminated. The poverty of such people according to Streeten (1995:253) cannot be removed or alleviated by relying on the market, but by deliberate ‘pressure for social services and transfer payments and elimination of discrimination’. The emphasis on reducing the role of the state in the economy can have negative impact on pro-poor growth.

For pro-poor growth to take place, the state should play a crucial role in the redistribution of resources and opportunities through the transfer of assets, prioritization of the poor in public spending and in managing market liberalization to protect the livelihoods of vulnerable people. As Ferro et al (2002:19) point out, ‘government is an instrument of the people in the development process’. Hence government can play a crucial role in pro-poor growth by developing the right policies for addressing poverty.

4. What can be done to benefit the poor?

The following are some of the things that can be done to benefit the poor:

 There is need to focus on development of human capital, especially among the poor in order to prepare them to participate meaningfully in the economy.
 The poor must have better access to markets, especially with regard to credit
 There is need to correct biases against the poor in public spending, taxation trade and regulatory environment.

5. Conclusion

Pro-poor growth policies are essential for the meaningful reduction of poverty. The 2015 target of halving income poverty can only be achieved if countries can adopt pro-poor growth strategies. It would be difficult to attain the 2015 target without ‘pro-poor shift in distributional patterns’ (Mutume 2000). Something must be done to improve the position of the poor by providing opportunities that will make access to markets easier for them. Worth noting is that even in cases where markets work, they may not always work in favour of the poor given the constraints discussed above.

If these constraints are not dealt with or removed, growth will have no meaningful impact on the lives of the poor. There is need to learn from past failures regarding the relationship between growth and poverty alleviation. Sen (1986, cited in Sachs 1991:292) illustrate this clearly: ‘country after country has learned the hard way that the so called trickle down theory is fallacious, that growth can be immiserizing, that famines also happen in periods of boom when people’s entitlement does not allow them to buy and/or produce the food necessary to keep them alive’

Given the level of poverty in the world today, there is therefore need for change in strategy or approach in dealing with poverty reduction by making growth pro-poor. This entails, inter alia, an understanding that growth on its own cannot address poverty. The Director of the World Bank, Ian Goldin indicated the importance of pro-poor growth: ‘we have come to understand that economic growth, though necessary, is not enough to deal with poverty’ (Sunday Times, 1 September 2002: 15).

6. References

Acocella, N. 1998. The foundations of economic policy values. Cambridge: Cambridge University Press.

Ferro, M, Rosenbatt, D and Stern, N. 2002. Policies for pro-poor growth in India. http://www.arts.cornell.edu/eco/India.

Howard, J.2001. Making globalization work for people. Fundamental rights at work: overview and prospects, 122: 55-60

Kydd, J, Dorward, A, Marrison, J and Cadisch, G. 2001. The role of agriculture in pro-poor growth. http://www.wye.ac.uk/Ag

Levinson. J. 2000. Globalization and poverty. University of Michigan. Ford School of Public Policy, National Bureau of Economic Research.

May, J. 2000. Growth, development and inequality, in Phillip, D (ed.). Poverty and inequality in South Africa: meeting the challenge. Cape Town and London: Zed Press.

Mutume G. 2001. Finance: are the IMF and the World Bank policies pro-poor? http://www.oneword.org/ips2/angoo.

Pieterse, J.N. 2000. Development theory: deconstruction and reconstruction. London: SAGE Publications.

Ravallion, M and Datt, G. 1999. When is growth pro-poor: evidence from the diverse experiences of India’s states? http://netec.mcc.ac.ukl/wopec/data/papers

Stewart, F. 1995. Adjustment and poverty. London: Routledge

Streeten, P.P. 1995. Thinking about development. Cambridge: Press Syndicate of the University of Cambridge.

Sachs, I. 1991. Poverty, progress and development. London: Kegan Paul International and UNESCO.

www.seurities.com

Gadget - What Is The Meaning Of This Word?

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Static Sparks and Your Comfort

One of the greatest mild discomforts that millions of people go through unknowingly is static sparks. Static sparks or static electricity is the one you generate when you rub plastic pen against your hair and then you bring the pen closer to pieces of paper - the pieces of paper are attracted to the pen. Static electricity can sometimes build to very high voltages in our bodies causing great damage including death. A case in point is in football pitch in Zaire where eleven players of soccer perished leaving intact the eleven players of the opposing team. Each one of us has a certain amount of static electricity but in mild amounts and the discomfort is equally mild. Since we are not aware of it or we do not know what the discomfort is, it does not matter. But it should matter. To the few people who are aware of static electricity in their bodies, the biggest complaints they have is that static electricity causes sparks or gives them mild shocks when they touch things or even other people. Most people experience this problem in the dry weather.

When the weather is dry, it means there is very little water vapour in the air. During winter or during periods that the temperatures are high, then chances are very high that there is very little moisture in the air. In science, moisture in the atmosphere is referred to as Relative Humidity. This Relative Humidity is the ratio of partial pressure of water vapour to the saturated vapour pressure of water at a given temperature. Relative Humidity is measured by an instrument called a Hygrometer.

Dry air is a non-conductor of static electricity - it does not readily let electrons pass through it. In contrast, moist air will slowly allow static electricity or electrons leave your body and fly to the ground. This therefore means that when the air is dry and you do not touch a material that is a conductor of static electricity, then the static electricity will continue to build up in your body to thousands of volts. When you are this much charged you do not feel it but the truth is, you are a great security risk to your own life and to the safety of the others. And to those who remotely check security to airports, fuel deports and other sensitive areas, it would in addition help to look for a decent way to discharge these unsuspecting victims.

But where do the charges come from? They come from the earth or the ground. The earth is neutral with infinite positive and negative charges canceling each other. In as long as you walk bare footed, all is well. But because we must put on shoes, the soles of our shoes become the determining factor. Certain synthetic rubber soles on shoes create a lot of static electricity. Like in a magnet that has North pole on one end and South pole on the other, the synthetic sole of your shoes determines the polarity in that for every step you make, it leaves prints of positive charges on the ground and negative charges goes to your body or the vice versa. The more you move, the more charged you become. If the air is moist, then your body will slowly discharge to the moist air and to the ground. If the air is dry, then the charges will remain in your body until you get your next victim. When it is dry, first and foremost check on the soles of your shoes.

Winter or no winter, you will hear of "electric" people. These are people you will curse shaking their hands. They are people whose skin is usually very dry and, or the surface area of skin hair is very high. The dry skin, skin hair combined with the clothing material and shoes these "electric" people put on causes the buildup of static charges. One thing they should do is try to use sufficient moisturizers and lotions to control the dryness. They can experiment with different types of moisturizers and lotions until this problem is solved. Naturally what people can not understand they result to mysteries, myths and legends to explain these unfortunate situations. And do not loss sight that they may be the ones handling their babies or your baby too. If you have young children who can not be able to explain themselves when you touch them, try using a humidifier to raise the humidity in your house, plus you have to decide if to do away with your carpet. Get yourself those decorative hygrometer and thermometer that you can hung somewhere on the wall. A relative humidity under 30 percent or a temperature above 27 degrees Celsius is sufficient to warrant precaution. If your pajamas and bed sheets are the type of materials that create static electricity when rubbed together, you will be bothered with shocks all night long on a dry weather night. Try using pajamas and sheets made of non-static materials. Cotton does not seem to develop as much static electricity as some artificial fibers. And since mothers like using plastic materials on those children that wet the bed, then care should be taken to cover the plastic material with sufficient cotton material to prevent plastic coming into contact with body.

Static sparks comes with a lot of pain especially when you touch a good conductor like metal. If you drive, perhaps it would help to find if your passengers go through static electricity discomforts. In as long as you are the one holding the keys and the steering wheel, you will never realize. Your passengers do not know what it is and neither do they want to risk to sound silly. They may be suffering quietly and will never tell you. When you are in the car, you are one surface and the car seat is the other. When you sit on a synthetic or plastic car seat in dry weather, the contact between your clothes and the seat causes polarity and electrical charges of the materials are transferred between the surfaces. One surface ends up with more negative charges than positive, and has a negative charge-imbalance. The other surface has more positive charges than negative, and has a positive charge-imbalance.

In as long as you remain seated nothing happens. As long as the surfaces remain near each other, the positives and negatives cancel out, but the fact is you are a great risk to yourself and to others. But when you open the car door and step outside, you take just one polarity of charge along with you, while the car seat retains the opposite polarity. As you step out of the car, you have ten of thousands of voltage with you. Your shoes soles are poor conductor and the charges can not escape fast enough into the earth. You have to close the car door and there you get a zap - the car door is metal and good conductor, the air in between and your fingers are both poor conductors, and because of resistance differential, there is a lot of heating giving you deep hot burn on your fingertips. The guy driving handily gets these as he slowly discharges through the steering wheel and ignition key. Similarly, when there is thunder, avoid holding metallic materials otherwise you and the metallic materials will become the shortest path to the ground, and because there is great resistance differential between your hand and the metal, you will get burnt.

Get yourself a Hygrometer for your car. Whenever the relative humidity goes below 30 percent, then you have a reason to start taking care both for yourself and your passengers. Replace your synthetic plastic car seat covers with cloth or leather. Avoid the specific clothing which makes the problem worse. Things like woolen sweaters, woolen under wares and plastic raincoats.

If for some reason you will purchase gasoline or petrol in a container - perhaps for your home electric generator or for whatever reason, always make sure to place the container on the ground when filling it, otherwise the petrol fumes and static electricity will ignite fire that will burn you and the filling station.

Free things are good and many of us like them but they can turn out to be very costly. In areas where gasoline is transported by trucks, trucks do overturn and the surrounding community will gather with containers to benefit from the free fuel. With the volatile gasoline, there are lots of fumes and with hundreds of people competing for the free gasoline, chance are very high one of them will ignite static spark and then an explosion. It is a pity hundreds of souls are lost this way. And because the communities may not understand where the fire came from, they comfort themselves that one of them must have been smoking a cigarette. The next time it happens, they say, "no smoking", but the explosion still happen.

Static electricity spark will damage electronics including cell phones and computers. Normally, when operating a cell phone or a computer, static electricity is not a problem. But if you find you are having problems with static electricity causing sparks when you touch things, it is logical to take precautions before touching even the computer keyboard. And if you are to venture into the inside of your computers, then you should have a special pad on the floor and use a grounded strap on your wrist that will discharge any excess charges from your body.

Your hair, and especially to the ladies, is a thing of the beauty. We spend a lot of our resources and time so that we can look neat and beautiful. On a dry day, after you attend your hair it can tend to fly up and separate. That is because the hair strands have the same electrical charge and like-charges will repel thus the hair flying up and separating. The solution to this problem is simply to use anti-static sprays that will eliminate this problem.

If static electricity is a serious problem to you, try using a key or a metal object and use it to touch other metal things first with it. This will cause the spark to fly from the key and not your finger. Another thing you should do is to ground yourself before touching something metal or another person. Touch poor conducting surfaces like walls or wood.

In view of the above I have considered only those small scale static electricity discomforts that may affect you. The dangers of large scale static electricity to man are very severe - the guys in the aviation industry places so much caution on this that a report of one thunder and they can no longer lift the aircraft.

The Author's website small scale static sparks and your comfort, as well as dangers of large scale static electricity to man is designed to advice the readers on dangers and discomfort associated with Static Sparks.