Poverty reduction

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Poverty reduction (or poverty alleviation) is any process which seeks to reduce the level of poverty in a community, or amongst a group of people or countries. Poverty reduction programs may be aimed at economic or non-economic poverty. Some of the popular methods used are education, economic development, and income redistribution. Poverty reduction efforts may also be aimed at removing social and legal barriers to income growth among the poor.

Economists such as Hernando de Soto see improvement in property rights as being instrumental in poverty reduction. Other economists also highlight government corruption as a chief problem in reducing poverty in the developing world.

1 How Poverty May Be Reduced
2 Organizations That Promote Poverty Reduction
3 Fields of Study That Deal With Poverty Reduction
4 See also
5 References
6 External links

[edit] How Poverty May Be Reduced

[edit] Free Trade

What could broadly be called free market reforms are another strategy for reducing poverty. For example, the most dramatic reductions in poverty in the 20th century have been in India and China, where hundreds of millions of people in the two countries grew out of poverty, mostly as a result of the abandonment of collective farming in China and the cutting of government red tape in India. This was critical in fostering their dramatic economic growth.^[1] However, UN economists argue that for the market reforms to work, good infrastructure is needed. For example, today, China is investing in railways, roads, ports and rural telephony in various African countries as part of its formula for economic development.^[2]

[edit] Economic growth

Image:World GDP per capita (1000-1998).png

World GDP per capita rapidly increased beginning with the Industrial Revolution.

The anti-poverty strategy of the World Bank depends heavily on reducing poverty through the promotion of economic growth^[3]. The World Bank argues that an overview of many studies show that:
- Growth is fundamental for poverty reduction, and in principle growth as such does not affect inequality.
- Growth accompanied by progressive distributional change is better than growth alone.
- High initial income inequality is a brake on poverty reduction.
- Poverty itself is also likely to be a barrier for poverty reduction; and wealth inequality seems to predict lower future growth rates.^[4]
The Global Competitiveness Report, the Ease of Doing Business Index, and the Index of Economic Freedom are annual reports, often used in academic research, ranking the worlds nations on factors argued to increase economic growth and reduce poverty.
Business groups see the reduction of barriers to the creation of new businesses ^[5], or reducing barriers for existing business, as having the effect of bringing more people into the formal economy.
The 2007 World Bank report "Global Economic Prospects" predicts that in 2030 the number living on less than the equivalent of $1 a day will fall by half, to about 550 million. An average resident of what we used to call the Third World will live about as well as do residents of the Czech or Slovak republics today. However, much of Africa will have difficulty keeping pace with the rest of the developing world and even if conditions there improve in absolute terms, the report warns, Africa in 2030 will be home to a larger proportion of the world's poorest people than it is today.^[6] However, economic growth has increased rapidly in Africa after the year 2000.[3]
Microfinance, banking services for poor people, is now a powerful player in poverty reduction throughout Asia and Latin America.

[edit] Direct aid

The government can directly help those in need. This has been applied with mixed results in most Western societies during the 20th century in what became known as the welfare state. Especially for those most at risk, such as the elderly and people with disabilities. The help can be for example monetary or food aid.

Image:Manila shanty.jpg

A shanty town in Manila, Philippines.

Private charity. This is often formally encouraged within the legal system. For example, charitable trusts and tax deductions for charity.
The Copenhagen Consensus is a listing of the most cost-effective methods for advancing global welfare.

[edit] Improving the social environment and abilities of the poor

Subsidized housing development and urban regeneration.
Subsidized education.
Subsidized health care.
Assistance in finding employment.
Subsidized employment (see also Workfare).
Encouragement of political participation and community organizing.
Community practice social work.

[edit] Millennium Development Goals

Eradication of extreme poverty and hunger by 2015 is a Millennium Development Goal. In addition to broader approaches, the Sachs Report (for the UN Millennium Project) ^[7] proposes a series of "quick wins", approaches identified by development experts which would cost relatively little but could have a major constructive effect on world poverty. The quick wins are:

Access to information on sexual and reproductive health.
Action against domestic violence.
Appointing government scientific advisors in every country.
Deworming school children in affected areas.
Drugs for AIDS, tuberculosis, and malaria.
Eliminating school fees.
Ending user fees for basic health care in developing countries.
Free school meals for schoolchildren.
Legislation for women’s rights, including rights to property.
Planting trees.
Providing soil nutrients to farmers in sub-Saharan Africa.
Providing mosquito nets.
Access to electricity, water and sanitation.
Supporting breast-feeding.
Training programs for community health in rural areas.
Upgrading slums, and providing land for public housing.

[edit] Development aid

Most developed nations give some development aid to developing nations. The UN target for development aid is 0.7% of GDP; currently only a few nations achieve this. Some think tanks and NGOs have argued, however, that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient countries ^[8], or because it's tied with the importing of products from the donor country over cheaper alternatives,^[9] or because foreign aid is seen to be serving the interests of the donor more than the recipient.^[10] Critics also argue that much of the foreign aid is stolen by corrupt governments and officials and that higher aid levels erode the quality of governance. Policy become much more oriented toward what will get more aid money than it does towards meeting the needs of the people.^[11]

Supporters argue that these problems may be solved with better audit of how the aid is used.^[12] Aid from non-governmental organizations may be more effective than governmental aid; this may be because it is better at reaching the poor and better controlled at the grassroots level.^[13] As a point of comparison, the annual world military spending is over $1000 billion.^[14]

[edit] Commodities Exchange

Another method in helping to fight poverty is to have commodity exchanges that will supply necessary information about national and perhaps international markets to the poor who would then know what products and where it is sold will bring better profits.

For example, in Ethiopia, remote farmers do not know have this information. Ethiopian farmers produce crops that may not bring the best profits. When they sell their procucts to a local trader, who then sells to another trader, and another, the cost of the food rises before it finally reaches the consumer in large cities. Economist, Gabre-Madhin proposes warehouses where farmers could have constant updates of the latest market prices, making the farmer think nationally, not locally. Each warehouse would have an independent neutral party that would test and grade the farmer's harvest, allowing traders in Addis Ababa, and potentially outside Ethiopia, to place bids on food, even if it is unseen. Thus, if the farmer gets five cents in one place he would get three times the price by selling it in another part of the country where there may be a drought. Already, farmers in Ethiopia are switching from their traditional crops to more profitable export crops, such as sesame seeds that are destined for the Middle East, even though they are not used in local Ethiopian cuisine. Over the past three years, sesame-seed production has risen nearly 200 percent, from 199,000 tons in 2001 to 380,000 in 2005.^[15]

[edit] Other approaches

Some argue for a radical change of the economic system. There are several proposals for a fundamental restructuring of existing economic relations, and many of their supporters argue that their ideas would reduce or even eliminate poverty entirely if they were implemented. Such proposals have been put forward by both left-wing and right-wing groups: socialism, communism, anarchism, libertarianism, binary economics and participatory economics, among others.

Inequality can be reduced by progressive taxation, wealth tax, and inheritance tax.^{[citation needed]}

In law, there has been a movement to seek to establish the absence of poverty as a human right.^{[citation needed]}

The IMF and member countries have produced Poverty Reduction Strategy papers or PRSPs.^[16]

In his book"The End of Poverty"^[17], a prominent economist named Jeffrey Sachs laid out a plan to eradicate global poverty by the year 2025. Following his recommendations, international organizations such as the Global Solidarity Network are working to help eradicate poverty worldwide with intervention in the areas of housing, food, education, basic health, agricultural inputs, safe drinking water, transportation and communications.

The Poor People's Economic Human Rights Campaign is an organization in the United States working to secure freedom from poverty for all by organizing the poor themselves. The Campaign believes that a human rights framework, based on the value of inherent dignity and worth of all persons, offers the best means by which to organize for a political solution to poverty.

[edit] Organizations That Promote Poverty Reduction

(please help by expanding this list)

[edit] Fields of Study That Deal With Poverty Reduction

Development economics explains economic growth of developing countries
Macroeconomics deals with entire economies while Microeconomics with individual players in the economy