printer printer Click on the green icon on the right
Combating Poverty or Promoting Development ? On the growing convergence on the need for other policies
by Francine Mestrum
12 September 2010

Twenty years after the World Bank introduced – for the second time – its proposals for poverty reduction strategies and ten years after the adoption of the Millennium Development Goals and the Poverty Reduction Strategies Papers, some very difficult questions remain: Why is poverty such a persistent problem? What are its root causes? Why do some countries have success and others have not? And most of all: how to correct the situation?

Whatever the recent UN, World Bank and UNDP reports on the MDGs say: extreme poverty may have been reduced, but this is only thanks to China and India. Looking at the World Bank statistics, one has to note that extreme poverty in Subsaharan Africa has almost doubled between 1981 and 2005. The MDG Summit that will take place in New York end of September has nothing to celebrate.

Numerous reports have been published these past years, first in order to conceptualize poverty, then in order to define the strategies, finally looking at the results. Most of the time the conclusion is: yes, there has been progress, but not everywhere and much more has to be done. One question however never is examined: what are the causes of this poverty? Why is it that half of the world population lives in poverty? Why is it that almost one billion and a half people live in extreme poverty? And how can one say that extreme poverty is receding, while hunger is rising?

These are not easy questions, but very important ones.

On Friday 3 September, UNRISD, the UN Research Institute for Social Development, published its flagship report ‘Combating Poverty and Inequality. Structural Change, Social Policy and Politics’. Its results deserve to be widely discussed.

UNRISD sees a couple of shortcomings in the poverty reduction strategies, such as the fact that inflation remains the major priority of macro-economic policies, the fact that imposed social policies are targeting the poor, the fact that the Bretton Woods institutions have no understanding of the policies that are needed for reducing poverty … Well, let us be honest, these are all cautious ways to say that neoliberal policies cannot reduce poverty.

Poverty outcomes, according to UNRISD, are the result of the development trajectories. Or, in other words, it was wrong to dissociate poverty reduction from economic and social development, and this was confirmed by different speakers during the event.
Different speakers pointed to the ‘truths’ about poverty reduction, but also to the failing evidence: there is no evidence that ‘good governance’ contributes to poverty reduction, there is no evidence that micro-credit contributes to poverty reduction, there is no evidence that property rights and land titling contributes to poverty reduction, and there is no evidence that the ‘bottom of the pyramid’ strategies can help poor people…

What is needed, according to one speaker is heterodox macro-economic policies, the development of productive capacity, broad based income growth and a more important role for a developmental state. 80 % of the PRSPs in Africa say nothing about employment, whereas productive employment with decent wages is indeed the road to lift people out of poverty. PRSPs, according to another speaker, are not different from the structural adjustment programs.

This was music in my ears, as you can imagine. All the criticism on these poverty policies was repeated by UN civil servants and academics at a formal event. And in fact a convergence is growing among different UN organisations to demand different policies.

The UNRISD report is particularly strong in demanding universal social policies, in pointing to the need for more policy space and for reducing income inequality, in noting the weaknesses of corporate social responsibility strategies, in elaborating on basic income grants.
Social policies can contribute to economic growth as well as social welfare. In order to be transformative, social polices cannot be confined to a residual role, they must address the broader economic, social and political goals. They aim at redistribution, production and reproduction.

A universal social protection floor, with basic old age and disability allowances, child benefits, access to essential care and social assistance and a 100 days work scheme, does not have to cost more than 3,7 to 10,6 % of the gross domestic Product of low income countries.
The origin of this report is a research of 1995 on the social effects of globalization: ‘States of Disarray’. This was followed by a second report in 2000: ‘Visible Hands. Taking Responsibility for Social Development’. Today, the UN Department for Economic and Social Affairs has also published some very interesting documents on another kind of policies that can tackle development and go beyond poverty reduction. The UN Economic Commission for Latin America has a long tradition of critical reports. UNCTAD and the ILO each demand, from their respective perspectives, different policies in order to promote economic and social development.

We know who is missing and we know who has power: the World Bank and the IMF. How long will they be able to resist this serious research? When will they allow countries to rebuild their states, to introduce progressive income taxes and universal social policies? Let us hope the MDG+10 Summit in New York will take note of this convergence and start to re-orient the policy priorities.

View online : Global Social Justice
Francine Mestrum