Concepts of Poverty, Poverty Reduction, Poverty Alleviation and Poverty Targeting

Lecturer: Einhard Schmidt-Kallert

Key Concepts 14.10.2011

Contents:
1. What is Poverty? 2. Measures and Indicators of Poverty 3. The Millennium Development Goals 4. Poverty Targeting at Different Levels

Key Concepts

Lecturer: Einhard Schmidt-Kallert

1. What is Poverty?

Key Concepts

Lecturer: Einhard Schmidt-Kallert

What is Poverty?

Concepts of Poverty:
- Income Concepts

- Basic needs
- Capabilities

Key Concepts

Lecturer: Einhard Schmidt-Kallert

 Income Concepts:
Defined by the family income or the consumption budget
Rowntrees approach: Study on poverty in York, published in 1901 with 1899 data. Based on survey data of working class families, he calculated the weekly minimum expenditure (e.g. food, rent, clothing etc.) and determined the poverty line. The World Banks approach: - WB has estimated income poverty for all countries since 1990 using a similar approach - The estimates are based on household income or expenditure surveys - Data for most countries are available - Based on 1993 prices - Poverty line set at 1.08 US$/day (commonly dubbed 1 Dollar a day)

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Lecturer: Einhard Schmidt-Kallert

Income Concepts:
Poverty line represents the officially determined minimum family income or consumption budget to meet basic needs. Absolute poverty is the poverty of those who fall below the poverty line in a society or community.

Relative Poverty measures the income gap or economic distance between the poor and the non-poor.
Headcount and poverty incidence represent the number and percentage of the absolutely poor.

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Lecturer: Einhard Schmidt-Kallert

Basic Needs:
Robert McNamaras Nairobi speech of 1973: poverty is defined by illness, illiteracy, malnutrition... The basic needs approach goes directly to the necessities themselves rather than to the income representing them. Income may not adequately reflect basic needs, including public services. The approach makes it possible to improve the well-being of the poor ahead of their money income. Basic needs may vary with circumstances and change with time, particularly in urban areas. Absolute income poverty may disappear, but relative poverty may persist along several dimensions.

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Lecturer: Einhard Schmidt-Kallert

Minimum Basic Needs Survival Needs Food and Nutrition Health Water and Sanitation Clothing Example of Requirements No severly and moderately underweight children under 5 Pregnant women given at least 2 doses of tetanus toxoid Access to potable water Access to sanitary toilet At least 3 sets of internal and external clothing

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Lecturer: Einhard Schmidt-Kallert

Minimum Basic Needs Security Needs Shelter Peace and Order/Public Safety Example of Requirements House owned, rented or shared housing durable for at least 5 years No family member victimized by crime against person

Income and Employment

Head of family employed. Family income above subsistence level

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Lecturer: Einhard Schmidt-Kallert

Minimum Basic Needs Enabling Needs Basic Education & Literacy Peoples Participation Example of Requirements Children 3-6 years attending day care / preschool Family members able to vote at elections

Family Care/ Psychosocial Needs

Children 18 years and below not engaged in hazardous occupation

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Lecturer: Einhard Schmidt-Kallert

Capabilities:
A new approach of welfare economics, introduced in the 1980s by Amartya Sen:

Capabilities are the alternative combinations of functionings a person is able to achieve. Formulations of capability have two parts: functionings and opportunity freedom the substantive freedom to pursue different functioning combinations. Ultimately, capabilities denote a persons opportunity and ability to generate valuable outcomes, taking into account relevant personal characteristics and external factors. The important part of this definition is the freedom to achieve. Higher level human capabilities for a better life may remain unfulfilled due to various reasons, e.g., illiteracy among the poor.

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Lecturer: Einhard Schmidt-Kallert

Capabilities:
These include capabilities to lead a long, healthy creative life and to enjoy a decent standard of living, freedom, dignity, self-respect and the respect of others. Development conceps have thus been re-orientated to encompass human development of a wider range as the end rather than just a means. Amartya Sens development as freedom includes free speech and political participation as well as good health and education.

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Lecturer: Einhard Schmidt-Kallert

Theories of Poverty:
Poverty may be explained in terms of economic, social and political factors that lead to deprivation of the income, assets, basic needs an capabilities of a large number of people. Natural, cultural and technological factors have an impact as well.

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Lecturer: Einhard Schmidt-Kallert

2. Measures and Indicators of Poverty

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Lecturer: Einhard Schmidt-Kallert

Measures and Indicators of Poverty:

IDA 1980: five key indicators: - Annual per capita income of less than 150 US$ - Daily caloric intake of less than 2160 - Life expectancy below 55 years - Infant mortality above 33 per thousand - Birth rate above 2.5% Poverty line: income / consumption: 1 US$ / day Poverty line: daily caloric intake of less than 2250

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Lecturer: Einhard Schmidt-Kallert

Population below the Poverty Line

Country Chile Ecuador Year 2003 1998 Population below 1,25 US$ / day < 2,0 $ 15,8 $ Population below 2 US$ / day 5,3 $ 37,2 $

Ghana
Guatemala Honduras India Kenya Malawi Pakistan

1998-99
2002 2005 1999-00 1997 1997-98 2001-02

39,1 $
16,9 $ 22,2 $ 34,7$ 19,6 $ 83,1 $ 35,9 $

63,3 $
29,8 $ 34,8 $ 79,9 $ 42,7 $ 93,5 $ 73,9 $

Sri Lanka
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1995-96

16,3 $

46,7 $
Source: World Development Report 2010

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Population below the Poverty Line

(Based on Data from the World Development Report 2010)

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Basic Needs Related Indicators

Country Under-five mortality Literacy Rate of Adults rate (2007) per above 15 years (2007) 1000 22 84 %

Ecuador

Ghana
Guatemala Honduras India Kenya Malawi Pakistan

115
39 24 72 121 111 90

65 %
73 % 84 % 66 % .. 72 % 54 %

Sri Lanka

21

91 %
Source: World Development Report 2010

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Basic Needs Related Indicators

(Based on Data from the World Development Report 2010) 20 Key Concepts Lecturer: Einhard Schmidt-Kallert

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Lecturer: Einhard Schmidt-Kallert

The Human Development Index:

This index attempts to measure the complex concept of human development by tracking the progress of three selected aspects of human life: Life expectancy, knowledge and real per capita income.

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Lecturer: Einhard Schmidt-Kallert

Source: Human Development Report 2009

Human development index

Country Norway HDI rank (2007) (from 182 total) Very high, 1 Human develoment index value (2007) 0.971

USA
Germany Chile Mexico Philippines India Nepal Kenya Tanzania Ghana Ethiopia

Very high, 13
Very high, 22 High, 44 High, 53 Medium, 105 Medium, 134 Medium, 144 Medium, 147 Medium, 151 Medium, 152 Low, 171

0,956
0.947 0.878 0.854 0.747 0,612 0.553 0.541 0.530 0,526 0.414

Afghanistan
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Low, 181

0,352
Source: Human Development Report 2009

Lecturer: Einhard Schmidt-Kallert

Human development index aggregates

Aggregate Human develoment index value (2007)

World
- Central and eastern Europe and the CIS - Arab States - East Asia & Pacific - Latin America & Carribean - South Asia - Sub-Saharen Africa

0.753
0,821 0.719 0.770 0.821 0.612 0.514
Source: Human Development Report 2009

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Lecturer: Einhard Schmidt-Kallert

Human development index aggregates

Aggregate Human develoment index value (2007)

World
- Very high human development - High human development - Medium human development - Low human development

0,753
0,955 0.833 0.686 0.423
Source: Human Development Report 2009

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Lecturer: Einhard Schmidt-Kallert

The Global Hunger Index

Purpose: international monitoring and advocacy

= composite index which captures three dimensions of criteria:

- Insufficient availability of food - Shortfalls in the nutritional status of children - Child mortality

Developed by IFPRI, New York

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Lecturer: Einhard Schmidt-Kallert

Source: Welthungerindex 2010

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Source: Welthungerindex 2010 28 Key Concepts Lecturer: Einhard Schmidt-Kallert

The Global Hunger Index Winners and Losers

Source: Welthungerindex 2010

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Lecturer: Einhard Schmidt-Kallert

3. The Millenium Development Goals

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Lecturer: Einhard Schmidt-Kallert

The Millenium Development Goals:

In September 2000, 189 member states of the United Nations gave an undertaking in the Millenium Declaration to tackle the problems of the world population in a proactive manner. One key concern of the Declaration is the reduction of worldwide poverty.

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Lecturer: Einhard Schmidt-Kallert

Goal 1: Eradicate extreme poverty and hunger

Target 1: Halve, between 1990 and 2015, the poverty of people whose income is less than one dollar a day. Target 2: Achieve full and productive employment and decent work for all, including women and young people Target 3: Halve, between 1990 and 2015, the proportion of people who suffer from hunger.

Indicators for the achievement: Proportion of population below $1

(1993 PPP) per day. Poverty gap ratio [incidence x depth of poverty].
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Goal 2: Achieve universal primary education

Target 4: Ensure that, by 2015, children everywhere, boys and girls alike, will be able to complete a full course of primary schooling. Indicators for the achievement of Goal

Net enrolment ratio in primary education

Proportion of pupils starting grade 1 who reach grade 5. Literacy rate of 15-24 year-olds.

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Goal 3: Promote gender equality and empower women

Target 5: Eliminate gender disparity in primary and secondary education, preferably by 2005, and in all levels of education no later than 2015.

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Lecturer: Einhard Schmidt-Kallert

Goal 4: Reduce child mortality

Target 6: Reduce by two thirds, between 1990 and 2015, the under-five mortality rate.
Indicators for the achievement: Under-five mortality rate Infant mortality rate

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Goal 5: Improve maternal health

Target 7: Reduce by three quarters, between 1990 and 2015, the maternal mortality ratio. Target 8: Achieve universal access to reproductive health

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Lecturer: Einhard Schmidt-Kallert

Goal 6: Combat HIV/AIDS, malaria and other major diseases

Target 9: Have halted by 2015 and begun to reverse the spread of HIV/AIDS. Target 10: Achieve, by 2010, universal access to treatment for HIV/AIDS for all those who need it

Target 11: Have halted by 2015 and begun to reverse the incidence of malaria and other major diseases.
Indicators for the achievement:
HIV prevalance among pregnant

women aged 15-24 years.

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Lecturer: Einhard Schmidt-Kallert

Goal 7: Ensure environmental sustainability

Target 12: Integrate the principles of sustainable development into country policies and programmes and reverse the loss of environmental recources. Target 13: Halve, by 2015, the proportion of people without sutainable access to safe drinking water and sanitation. Target 14: By 2020, to have achieved a significant improvement in the lives of at least 100 million slum dwellers.

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Lecturer: Einhard Schmidt-Kallert

Goal 8: Develop a global partnership for development

Target 15: Adress the special needs of the least developed countries. Target 16: Adress the special needs of landlocked developing countries and small island developing states. Target 17: Deal comprehensively with the debt problems of developing countries through national and international measures in order to make debt sustainable in the long term.

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Lecturer: Einhard Schmidt-Kallert

Strengths and Weaknesses of the MDGs:

They represent binding goals, but they do not lay down guidelines for the act in (The How-question). Poverty reduction requires a holistic approach.

No individual state can achieve the MDGs on its own, need for a concerted effort by the international community.
Need for coordination of countries and stakeholders.

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Lecturer: Einhard Schmidt-Kallert

4. Poverty Targeting at Different Levels

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Lecturer: Einhard Schmidt-Kallert

Poverty Targeting at Different Levels

International and multi-national Bi-lateral (e.g.: Germanys contribution to Achieving the Millenium Development Goals) National (e.g. PRSPs) Regional Sub-regional

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Lecturer: Einhard Schmidt-Kallert

PRSPs Weaknesses:
In most cases no involvement of parliaments and civil society.
Impact on national budgets frequently ignored.

No realistic strategies that have the support of the population.

No donor coordination. In some cases: Effective growth strategies, but little redistribution within the society of the country.

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Lecturer: Einhard Schmidt-Kallert