World Bank Attacking Poverty Overview PDF 2000-2001

OVERVIEW Attacking Poverty: Opportunity, Empowerment, and Security P oor people live without fundamental freedoms of action and choice t...

OVERVIEW Attacking Poverty: Opportunity, Empowerment, and Security P oor people live without fundamental freedoms of action and choice that the better-off take for Basrabai’s story serves as a backdrop to the exploration of the nature and causes of poverty and of what can be granted.1 They often lack adequate food and shelter, done. Poverty is the result of economic, political, and education and health, deprivations that keep them social processes that interact with each other and fre- from leading the kind of life that everyone values. They quently reinforce each other in ways that exacerbate the also face extreme vulnerability to ill health, economic deprivation in which poor people live. Meager assets, in- dislocation, and natural disasters. And they are often accessible markets, and scarce job opportunities lock peo- exposed to ill treatment by institutions of the state and ple in material poverty. That is why promoting society and are powerless to influence key decisions opportunity—by stimulating economic growth, mak- affecting their lives. These are all dimensions of ing markets work better for poor people, and building poverty. up their assets—is key to reducing poverty. The experience of multiple deprivations is intense But this is only part of the story. In a world where and painful. Poor people’s description of what living political power is unequally distributed and often in poverty means bears eloquent testimony to their pain mimics the distribution of economic power, the way (box 1). For those who live in poverty, escaping it can state institutions operate may be particularly unfa- seem impossible. But it is not impossible. The story vorable to poor people. For example, poor people fre- of Basrabai—the chair of a local council in an Indian quently do not receive the benefits of public investment village—illustrates both the many facets of poverty and in education and health. And they are often the vic- the potential for action (see page 2). tims of corruption and arbitrariness on the part of the 1      ⁄  Basrabai’s story Basrabai lives in Mohadi, a village 500 kilometers from Ahmed- fishers seemed to be paying the price. The big trawlers could con- abad, in the Indian state of Gujarat, on the shores of the Ara- tinue to fish as long as they paid the right officials. bian Sea.2 She is the first woman to be sarpanch of the In the middle of the meeting a commotion occurred at the side. panchayat—chair of the local council—as a result of constitutional Basrabai’s brother had been gored in the face while trying to sep- amendments that reserve a third of local council seats and a third arate two fighting cows. Without immediate treatment the wound of headships for women. was bound to become infected. But it was late at night, and the Arriving in her village after a long drive, we crossed a small nearest doctor was in the next big settlement, 10 kilometers sea inlet on a road impassable at high tide. The first building away. Normally, this would have made immediate treatment im- we saw was a recently built concrete structure—the primary possible. As it happened, however, our Jeep was there and could school. In last year’s cyclone, the worst in living memory, as take Basrabai’s brother to the doctor. the villagers’ straw huts were blown away, they took shelter During our stay we also saw the craft work that the village in the only stable structure in the village—the school. When women have been doing for generations. Demand for their tra- the cyclone relief operation arrived, the villagers asked for ditional embroidered and tie-dyed products is high, thanks to the more concrete buildings, and the village now has about a international love affair with things Indian and the rediscovery dozen of them. by the growing Indian middle class of its roots. But the traders We arrived at Basrabai’s one-room concrete house, next to get away with offering very low prices because of the women’s a straw hut. After the usual greetings, talk turned to the school. isolation. Since it was a weekday, we wondered if we could sit in on a The national and state governments have countless schemes class. Basrabai informed us that the master (the teacher) was to support traditional crafts, none very effective. So SEWA is step- not there and had not been there for a while. In fact, he came ping in to organize the home-based craft workers and to provide only once a month, if that. Protected by the district education direct access to international markets. One piece of embroidery officer, he did pretty much what he pleased. we looked at would fetch 150 rupees in the international market, The master came the next day. Word had gotten to him that 60 rupees in government outlets, and 20 rupees from traders. the village had visitors. He came into Basrabai’s house, and we On the last day of our stay we went to Basrabai’s field, an hour’s began talking about the school and the children. Believing the walk from her house. The risks of agriculture were plainly visible. educated guests to be kindred spirits, he launched into a litany The lack of rain had left the ground hard and dry. If it didn’t rain of his troubles and the difficulties of teaching the children. He in the next few days, her millet crop would be lost, and with it referred to them as junglee—”from the jungle.” her outlay to a hired tractor driver to till her field, an investment This was too much for Meeraiben, a member of the Self- made possible by the sale of her crafts. When we met her in Employed Women’s Association (SEWA), who had arranged our Ahmedabad days later, it still had not rained. visit. She pointed out that his salary was 6,000 rupees a month The interactions with Basrabai and the many thousands of (more than six times the Indian poverty line) in a secure job and poor people consulted in preparing this report bring to the fore that his responsibility was at least to show up for work. The par- recurrent—and familiar—themes. Poor people mention the lack ents wanted their children to learn to read and write, even if at- of income-earning opportunities, the poor links with markets, and tending school meant that the boys could not help their fathers the failure of state institutions to respond to their needs. They with fishing and the girls could not help their mothers fetch water mention insecurity, such as health risks, the risk of being out and wood and work in the fields. of work, and the agricultural risks that make any gains always Later in the evening Basrabai conducted the village meeting. fragile. Everywhere—from the villages in India to the favelas of There were two main topics. The first was compensation for the Rio de Janeiro, the shantytowns outside Johannesburg, and the cyclone: despite the great fanfare with which relief schemes had farms in Uzbekistan—the stories bring forward similar issues. been announced in the state capital, local delivery left much to be But talking to Basrabai and other poor people also reveals what desired and local officials were unresponsive. SEWA organizers is possible. Although local officials and state structures are still took down the names of those who had not yet received the com- not accountable to Basrabai and her village, an explicit affirma- pensation to which they were entitled, and it was agreed that they tive action policy allowed Basrabai’s election as sarpanch, show- and Basrabai would meet with local officials the following week. ing what can be done through state action. And SEWA shows The second issue was a fishing ban that the government had how poor people can make a difference if they organize them- imposed on coastal waters to protect fish stocks. It was the big selves to defend their rights, take advantage of market oppor- trawlers that were responsible for the overfishing, but the small tunities, and protect themselves from risks.   : , ,    Box 1 The voices of the poor The Voices of the Poor study, based on realities of more than scarce, there is no money and we feel poor. If there were 60,000 poor women and men in 60 countries, was conducted as money... background for World Development Report 2000/2001. It consists —From a discussion group of poor men and women, Ecuador of two parts: a review of recent participatory poverty studies in 50 countries involving about 40,000 poor people, and a new compar- We face a calamity when my husband falls ill. Our life comes ative study in 1999 in 23 countries engaging about 20,000 poor peo- to a halt until he recovers and goes back to work. ple. The study shows that poor people are active agents in their —Poor woman, Zawyet Sultan, Egypt lives, but are often powerless to influence the social and eco- nomic factors that determine their well-being. Poverty is humiliation, the sense of being dependent on them, The following quotations are an illustration of what living in and of being forced to accept rudeness, insults, and indiffer- poverty means. ence when we seek help. —Poor woman, Latvia Don’t ask me what poverty is because you have met it outside my house. Look at the house and count the number of holes. At first I was afraid of everyone and everything: my husband, Look at the utensils and the clothes I am wearing. Look at the village sarpanch, the police. Today I fear no one. I have my everything and write what you see. What you see is poverty. own bank account, I am the leader of my village’s savings —Poor man, Kenya group... I tell my sisters about our movement. And we have a 40,000-strong union in the district. Certainly our farming is little; all the products, things bought —From a discussion group from stores, are expensive; it is hard to live, we work and of poor men and women, India earn little money, buy few things or products; products are Source: Narayan, Chambers, Shah, and Petesch 2000; Narayan, Patel, Schafft, Rademacher, and Koch-Schulte 2000. state. Poverty outcomes are also greatly affected by social birthday, while in the poorest countries as many as a fifth norms, values, and customary practices that, within the of children do not. And while in rich countries fewer than family, the community, or the market, lead to exclusion 5 percent of all children under five are malnourished, in of women, ethnic and racial groups, or the socially dis- poor countries as many as 50 percent are. advantaged. That is why facilitating the empowerment This destitution persists even though human condi- of poor people—by making state and social institutions tions have improved more in the past century than in the more responsive to them—is also key to reducing poverty. rest of history—global wealth, global connections, and Vulnerability to external and largely uncontrollable technological capabilities have never been greater. But the events—illness, violence, economic shocks, bad weather, distribution of these global gains is extraordinarily un- natural disasters—reinforces poor people’s sense of ill- equal. The average income in the richest 20 countries is being, exacerbates their material poverty, and weakens their 37 times the average in the poorest 20—a gap that has bargaining position. That is why enhancing security— doubled in the past 40 years. And the experience in dif- by reducing the risk of such events as wars, disease, eco- ferent parts of the world has been very diverse (figure 2; nomic crises, and natural disasters—is key to reducing see also table 1.1 in chapter 1). In East Asia the number poverty. And so is reducing poor people’s vulnerability to of people living on less than $1 a day fell from around risks and putting in place mechanisms to help them cope 420 million to around 280 million between 1987 and with adverse shocks. 1998—even after the setbacks of the financial crisis.3 Yet in Latin America, South Asia, and Sub-Saharan Africa Poverty in an unequal world the numbers of poor people have been rising. And in the countries of Europe and Central Asia in transition to mar- The world has deep poverty amid plenty. Of the world’s ket economies, the number of people living on less than 6 billion people, 2.8 billion—almost half—live on less than $1 a day rose more than twentyfold.4 $2 a day, and 1.2 billion—a fifth—live on less than $1 a There have also been major advances and serious set- day, with 44 percent living in South Asia (figure 1). In rich backs in crucial nonincome measures of poverty. India has countries fewer than 1 child in 100 does not reach its fifth seen marked progress in girls attending school, and in the      ⁄  Figure 1 Figure 2 Where the developing world’s poor live Where poverty has fallen, and where it has not Distribution of population living on less than $1 a day, Change in number of people living on less than $1 a day, 1998 (1.2 billion) 1987–98 Millions Europe and Central Asia Middle East and North Africa 100 2.0% 0.5% Latin America and 75 the Caribbean 50 6.5% 25 East Asia 0 and Pacific South Asia 23.2% 43.5% –25 –50 –75 –100 Sub-Saharan –125 Africa 24.3% –150 East Asia Europe Latin Middle South Sub- Source: World Bank 2000s. and and America East and Asia Saharan Pacific Central and the North Africa Asia Caribbean Africa most advanced state, Kerala, life expectancy is greater than Source: World Bank 2000s. in other places with many times the level of income (such as Washington, D.C.). Yet in countries at the cen- ter of the HIV/AIDS epidemic in Africa, such as Botswana and Zimbabwe, one in four adults is infected, AIDS or- Figure 3 phans are becoming an overwhelming burden on both Infant mortality rates vary widely across the world traditional and formal support mechanisms, and all the gains in life expectancy since the middle of the 20th Infant mortality rate, 1998 century will soon be wiped out. The varying infant mor- Per 1,000 live births tality rates across the world—Sub-Saharan Africa’s is 15 100 times that of high-income countries—give an idea of 90 this widely differing experience (figure 3). 80 Experiences are also vastly different at subnational 70 levels and for ethnic minorities and women. Different re- 60 gions in countries benefit to very different extents from 50 growth. In Mexico, for example, total poverty fell— though modestly—in the early 1990s, but rose in the 40 poorer Southeast. Inequalities also exist across different 30 ethnic groups in many countries. In some African coun- 20 tries infant mortality rates are lower among politically pow- 10 erful ethnic groups, and in Latin American countries 0 indigenous groups often have less than three-quarters East Europe Latin Middle South Sub- High- the schooling on average of nonindigenous groups. And Asia and America East and Asia Saharan income and Central and the North Africa countries women continue to be more disadvantaged than men. In Pacific Asia Caribbean Africa South Asia women have only about half as many years Source: World Bank 2000s. of education as men, and female enrollment rates at the secondary level are only two-thirds the male rates.   : , ,    Box 2 A better world for all: international development goals Reduce the proportion of People living on less than The goals for international development 1 people living in extreme $1 a day (%) 30 address that most compelling of human poverty by half between desires—a world free of poverty and free Progress 1990–98 1990 and 2015 of the misery that poverty breeds. 20 Each of the seven goals addresses an Average path to goal aspect of poverty. They should be viewed 10 1990 2015 together because they are mutually re- inforcing. Higher school enrollments, es- Enroll all children in primary pecially for girls, reduce poverty and Net primary enrollment rate (%) 2 school by 2015 100 mortality. Better basic health care in- Average path to goal creases enrollment and reduces poverty. Progress 1990–98 75 Many poor people earn their living from the environment. So progress is needed 50 on each of the seven goals. 1990 2015 In the past decade on average the world has not been on track to achieve Make progress toward the goals. But progress in some countries Ratio of girls to boys in primary 3 gender equality and and secondary school (%) 100 and regions shows what can be done. empowering women by eliminating gender Average path to goal China reduced its number in poverty from disparities in primary and Progress 1990–98 75 360 million in 1990 to about 210 million secondary education by 2005 in 1998. Mauritius cut its military budget 50 and invested heavily in health and edu- 1990 2005 cation. Today all Mauritians have access to sanitation, 98 percent to safe water, Reduce infant and child and 97 percent of births are attended by Under-5 mortality rate 4 mortality rates by two-thirds (per 1,000 live births) 100 skilled health staff. And many Latin Amer- between 1990 and 2015 Progress 1990–98 ican countries moved much closer to 50 gender equality in education. The message: if some countries can Average path to goal 0 make great progress toward reducing 1990 2015 poverty in its many forms, others can as well. But conflict is reversing gains in so- Reduce maternal mortality cial development in many countries in Births attended by skilled health 5 ratios by three-quarters personnel (%) 100 Sub-Saharan Africa. The spread of between 1990 and 2015 Average path to goal HIV/AIDS is impoverishing individuals, 50 families, and communities on all conti- Progress 1988–98 nents. And sustained economic growth— 0 that vital component for long-run 1988 2015 reductions in poverty—still eludes half the world’s countries. For more than 30 Provide access for all who of them, real per capita incomes have Contraceptive prevalence rate (%) 6 need reproductive health 80 fallen over the past 35 years. And where services by 2015 Progress 1993–98 there is growth, it needs to be spread 70 more equally. 60 The goals can be met—with a combi- 50 nation of effective domestic and interna- 1993 1998 tional actions. Implement national Countries with environmental 7 strategies for sustainable strategies (%) 50 development by 2005 so as to reverse the loss of Progress 1984–97 environmental resources by 25 2015 0 1984 1997 Note: Data are for low- and middle-income countries except for those on environmental strategies, which refer to all countries. Source: IMF, OECD, United Nations, and World Bank 2000 (www.paris21.org/betterworld/).      ⁄  Faced with this picture of global poverty and in- liver more health services, and ensuring that technolog- equality, the international community has set itself sev- ical progress in the medical field spills over to benefit the eral goals for the opening years of the century, based on developing world.5 And meeting the gender equality discussions at various United Nations conferences in the goals in education will require specific policy measures 1990s (box 2). These international development goals, to address the cultural, social, and economic barriers most for 2015, include reducing income poverty and that prevent girls from attending school.6 Furthermore, human deprivation in many dimensions (the bench- actions to ensure greater environmental sustainability marks are figures for 1990): will be crucial in augmenting the assets available to poor Reduce by half the proportion of people living in ex- people and in reducing the long-term incidence of treme income poverty (living on less than $1 a day). poverty.7 These actions will all interact to push toward Ensure universal primary education. the achievement of the goals. Hence the need for a Eliminate gender disparity in primary and secondary broader, more comprehensive strategy to fight poverty. education (by 2005). Reduce infant and child mortality by two-thirds. A strategy for poverty reduction Reduce maternal mortality by three-quarters. Ensure universal access to reproductive health services. The approach to reducing poverty has evolved over the Implement national strategies for sustainable devel- past 50 years in response to deepening understanding of opment in every country by 2005, so as to reverse the the complexity of development. In the 1950s and 1960s loss of environmental resources by 2015. many viewed large investments in physical capital and in- These will have to be achieved in a world whose popu- frastructure as the primary means of development. lation will grow by some 2 billion in the next 25 years, with In the 1970s awareness grew that physical capital was 97 percent of that increase in developing countries. Stud- not enough, and that at least as important were health and ies of what must be done to achieve these goals reveal the education. World Development Report 1980 articulated this magnitude of the challenge. For example, cutting income understanding and argued that improvements in health and poverty by half between 1990 and 2015 would require a education were important not only in their own right but compound rate of decline of 2.7 percent a year over those also to promote growth in the incomes of poor people. 25 years. The World Bank’s latest estimates indicate a re- The 1980s saw another shift of emphasis following the duction of approximately 1.7 percent a year between 1990 debt crisis and global recession and the contrasting ex- and 1998. Much of the slow progress observed in some re- periences of East Asia and Latin America, South Asia, and gions is due to low or negative growth. In some cases ris- Sub-Saharan Africa. Emphasis was placed on improving ing inequality compounded this effect; this was particularly economic management and allowing greater play for so in some countries in the former Soviet Union. The cur- market forces. World Development Report 1990: Poverty rent pace of educational enrollment is unlikely to bring uni- proposed a two-part strategy: promoting labor-intensive versal primary education, especially in Sub-Saharan Africa. growth through economic openness and investment in Reducing infant mortality rates by two-thirds between infrastructure and providing basic services to poor peo- 1990 and 2015 would have required a 30 percent decline ple in health and education. between 1990 and 1998, far greater than the 10 percent de- In the 1990s governance and institutions moved to- veloping countries experienced. In some parts of Sub-Sa- ward center stage—as did issues of vulnerability at the local haran Africa infant mortality is actually on the rise, partly and national levels. This report builds on the earlier as a result of the AIDS epidemic. And maternal mortality strategies in the light of the cumulative evidence and ex- ratios are declining too slowly to meet the goals. perience of the past decade—and in the light of the Attaining the international development goals will changed global context. It proposes a strategy for at- require actions to spur economic growth and reduce in- tacking poverty in three ways: promoting opportunity, come inequality, but even equitable growth will not be facilitating empowerment, and enhancing security. enough to achieve the goals for health and education. Re- Promoting opportunity. Poor people consistently em- ducing infant and child mortality rates by two-thirds phasize the centrality of material opportunities. This depends on halting the spread of HIV/AIDS, increasing means jobs, credit, roads, electricity, markets for their the capacity of developing countries’ health systems to de- produce, and the schools, water, sanitation, and health   : , ,    services that underpin the health and skills essential for There is no hierarchy of importance. The elements are work. Overall economic growth is crucial for generat- deeply complementary. Each part of the strategy affects un- ing opportunity. So is the pattern or quality of growth. derlying causes of poverty addressed by the other two. For Market reforms can be central in expanding opportu- example, promoting opportunity through assets and mar- nities for poor people, but reforms need to reflect local ket access increases the independence of poor people and institutional and structural conditions. And mechanisms thus empowers them by strengthening their bargaining need to be in place to create new opportunities and com- position relative to state and society. It also enhances secu- pensate the potential losers in transitions. In societies rity, since an adequate stock of assets is a buffer against ad- with high inequality, greater equity is particularly im- verse shocks. Similarly, strengthening democratic institutions portant for rapid progress in reducing poverty. This re- and empowering women and disadvantaged ethnic and racial quires action by the state to support the buildup of groups—say, by eliminating legal discrimination against human, land, and infrastructure assets that poor peo- them—expand the economic opportunities for the poor and ple own or to which they have access. socially excluded. Strengthening organizations of poor peo- Facilitating empowerment. The choice and implemen- ple can help to ensure service delivery and policy choices tation of public actions that are responsive to the needs responsive to the needs of poor people and can reduce cor- of poor people depend on the interaction of political, ruption and arbitrariness in state actions as well. And if poor social, and other institutional processes. Access to mar- people do more in monitoring and controlling the local de- ket opportunities and to public sector services is often livery of social services, public spending is more likely to strongly influenced by state and social institutions, help them during crises. Finally, helping poor people cope which must be responsive and accountable to poor peo- with shocks and manage risks puts them in a better posi- ple. Achieving access, responsibility, and accountability tion to take advantage of emerging market opportunities. is intrinsically political and requires active collabora- That is why this report advocates a comprehensive ap- tion among poor people, the middle class, and other proach to attacking poverty. groups in society. Active collaboration can be greatly fa- cilitated by changes in governance that make public ad- From strategy to action ministration, legal institutions, and public service delivery more efficient and accountable to all citizens—and by There is no simple, universal blueprint for implementing strengthening the participation of poor people in political this strategy. Developing countries need to prepare their processes and local decisionmaking. Also important is own mix of policies to reduce poverty, reflecting national removing the social and institutional barriers that result priorities and local realities. Choices will depend on the from distinctions of gender, ethnicity, and social status. economic, sociopolitical, structural, and cultural context Sound and responsive institutions are not only impor- of individual countries—indeed, individual communities. tant to benefit the poor but are also fundamental to the While this report proposes a more comprehensive ap- overall growth process. proach, priorities will have to be set in individual cases based Enhancing security. Reducing vulnerability—to on resources and what is institutionally feasible. Progress economic shocks, natural disasters, ill health, dis- in reducing some aspects of deprivation is possible even ability, and personal violence—is an intrinsic part of if other aspects remain unchanged. For example, inex- enhancing well-being and encourages investment in pensive oral rehydration campaigns can significantly re- human capital and in higher-risk, higher-return ac- duce infant mortality, even if incomes of poor people do tivities. This requires effective national action to man- not change.8 But actions will generally be necessary in all age the risk of economywide shocks and effective three clusters—opportunity, empowerment, and security— mechanisms to reduce the risks faced by poor people, because of the complementarities among the three. including health- and weather-related risks. It also re- The actions of developed countries and multilateral or- quires building the assets of poor people, diversify- ganizations will be crucial. Many forces affecting poor peo- ing household activities, and providing a range of ple’s lives are beyond their influence or control. Developing insurance mechanisms to cope with adverse shocks— countries cannot on their own produce such things as in- from public work to stay-in-school programs and ternational financial stability, major advances in health and health insurance. agricultural research, and international trading opportu-      ⁄  nities. Actions by the international community and de- had major reductions in income poverty have made use of velopment cooperation will continue to be essential. international trade. But opening to trade can create losers Here are the suggested areas for action, first national as well as winners, and it will yield substantial benefits only and then international. when countries have the infrastructure and institutions to underpin a strong supply response. Thus the opening Opportunity needs to be well designed, with special attention to coun- The core policies and institutions for creating more op- try specifics and to institutional and other bottlenecks. The portunities involve complementary actions to stimulate sequencing of policies should encourage job creation and overall growth, make markets work for poor people, and manage job destruction. A more pro-poor liberalization is build their assets—including addressing deep-seated in- not necessarily a slower one; moving fast can create more equalities in the distribution of such endowments as opportunities for the poor. And explicit policies should off- education. set transitory costs for poor people, as the grants for small Encouraging effective private investment. Investment and Mexican maize producers did in the wake of the North technological innovation are the main drivers of growth American Free Trade Agreement (NAFTA). in jobs and labor incomes. Fostering private investment re- The opening of the capital account has to be managed quires reducing risk for private investors—through stable prudently—in step with domestic financial sector fiscal and monetary policy, stable investment regimes, development—to reduce the risk of high volatility in sound financial systems, and a clear and transparent busi- capital flows. Long-term direct investment can bring ness environment. But it also involves ensuring the rule of positive externalities, such as knowledge transfer, but law and taking measures to fight corruption—tackling short-term flows can bring negative externalities, partic- business environments based on kickbacks, subsidies for ularly volatility. Policies need to address them separately. large investors, special deals, and favored monopolies. Building the assets of poor people. Creating human, Special measures are frequently essential to ensure physical, natural, and financial assets that poor people own that microenterprises and small businesses, which are or can use requires actions on three fronts. First, increase often particularly vulnerable to bureaucratic harassment the focus of public spending on poor people in particu- and the buying of privilege by the well-connected, can lar, expanding the supply of basic social and economic participate effectively in markets. Such measures include services and relaxing constraints on the demand side ensuring access to credit by promoting financial deepening (through, for example, scholarships for poor children). and reducing the sources of market failure; lowering the Second, ensure good quality service delivery through in- transactions costs of reaching export markets by expanding stitutional action involving sound governance and the use access to Internet technology, organizing export fairs, of markets and multiple agents. This can imply both re- and providing training in modern business practices; forming public delivery, as in education, or privatizing and building feeder roads to reduce physical barriers. in a fashion that ensures expansion of services to poor peo- Creating a sound business environment for poor house- ple, as often makes sense in urban water and sanitation. holds and small firms may also involve deregulation and Third, ensure the participation of poor communities complementary institutional reform, for example, reducing and households in choosing and implementing services restrictions on the informal sector, especially those affecting and monitoring them to keep providers accountable. women, and tackling land tenure or registry inadequacies This has been tried in projects in El Salvador, Tunisia, and that discourage small investments. Uganda. Programs to build the assets of poor people Private investment will have to be complemented by include broad-based expansion of schooling with parental public investment to enhance competitiveness and cre- and community involvement, stay-in-school programs ate new market opportunities. Particularly important is (such as those in Bangladesh, Brazil, Mexico, and Poland), complementary public investment in expanding infra- nutrition programs, mother and child health programs, structure and communications and upgrading the skills vaccinations and other health interventions, and of the labor force. community-based schemes to protect water resources Expanding into international markets. International mar- and other elements of the natural environment. kets offer a huge opportunity for job and income growth— There are powerful complementarities between actions in agriculture, industry, and services. All countries that have in different areas. Because of close linkages between   : , ,    human and physical assets, for example, improving poor etal benefits of pro-poor public action and build politi- people’s access to energy or transport can increase their cal support for such action. access and returns to education. And improving the en- Laying the political and legal basis for inclusive devel- vironment can have significant effects on poverty. This opment. State institutions need to be open and account- is well documented in terms of the substantial gains in able to all. This means having transparent institutions, health from reduced air and water pollution—which with democratic and participatory mechanisms for mak- have a major influence on some of the most important ing decisions and monitoring their implementation, diseases of poor people, including diarrheal problems of backed up by legal systems that foster economic growth children and respiratory infections. and promote legal equity. Since poor people lack the re- Addressing asset inequalities across gender, ethnic, racial, sources and the information to access the legal system, and social divides. Special action is required in many so- measures such as legal aid and dissemination of infor- cieties to tackle socially based asset inequalities. Although mation on legal procedures—for example, by the Ain-O- political and social difficulties often obstruct change, Salish Kendra (ASK) organization in Bangladesh—are there are many examples of mechanisms that work, using especially powerful instruments for creating more inclu- a mix of public spending, institutional change, and par- sive and accountable legal systems. ticipation. One is negotiated land reform, backed by Creating public administrations that foster growth and public action to support small farmers, as in Northeast equity. Public administrations that implement policies ef- Brazil and the Philippines. Another is getting girls into ficiently and without corruption or harassment improve school, such as by offering cash or food for schooling, as service delivery by the public sector and facilitate growth in Bangladesh, Brazil, and Mexico, and hiring more fe- of the private sector. Appropriate performance incentives male teachers, as in Pakistan. A third is support for mi- are needed to make public administrations accountable crocredit schemes for poor women. and responsive to users. Access to information such as bud- Getting infrastructure and knowledge to poor areas—rural gets, participatory budget mechanisms, and performance and urban. Special action is also needed in poor areas, where rating of public services all enhance citizens’ capacity to a combination of asset deprivations—including at the shape and monitor public sector performance while re- community or regional level—can diminish the material ducing opportunities and scope for corruption. Reform- prospects for poor people. Tackling this again requires pub- ing public administrations and other agencies such as the lic support and a range of institutional and participatory police to increase their accountability and responsiveness approaches. It requires providing social and economic to poor people can have a major impact on their daily lives. infrastructure in poor, remote areas, including transport, Promoting inclusive decentralization and community de- telecommunications, schools, health services, and electricity, velopment. Decentralization can bring service agencies closer as in China’s poor areas programs. It also requires broad- to poor communities and poor people, potentially en- based provision of basic urban services in slums, within hancing people’s control of the services to which they are an overall urban strategy. Also important is expanding ac- entitled. This will require the strengthening of local capacity cess to information for poor villages, to allow them to par- and devolution of financial resources. It is also necessary to ticipate in markets and to monitor local government. have measures to avoid capture by local elites. Decentral- ization needs to be combined with effective mechanisms for Empowerment popular participation and citizen monitoring of government The potential for economic growth and poverty reduc- agencies. Examples include decentralization that fosters tion is heavily influenced by state and social institutions. community-driven choices for resource use and project Action to improve the functioning of state and social in- implementation. There is also a range of options for involving stitutions improves both growth and equity by reducing communities and households in sectoral activities—such bureaucratic and social constraints to economic action and as parental involvement in schooling and users associa- upward mobility. However, devising and implementing tions in water supply and irrigation. these changes require strong political will, especially Promoting gender equity. Unequal gender relations are when the changes fundamentally challenge social values part of the broader issue of social inequities based on so- or entrenched interests. Governments can do much to in- cietal norms and values. But gender equality is of such per- fluence public debate to increase awareness of the soci- vasive significance that it deserves extra emphasis. While      ⁄  patterns of gender inequity vary greatly across societies, in Supporting poor people’s social capital. Social norms and almost all countries a majority of women and girls are dis- networks are a key form of capital that people can use to advantaged in terms of their relative power and control over move out of poverty. Thus it is important to work with material resources (in most countries land titles are vested and support networks of poor people and to enhance in men), and they often face more severe insecurities (for their potential by linking them to intermediary organi- example, after the death of their husband). Poor women zations, broader markets, and public institutions. Doing are thus doubly disadvantaged. Moreover, the lack of au- this also requires improving the legal, regulatory, and in- tonomy of women has significant negative consequences stitutional environments for groups representing poor for the education and health of children. people. Since poor people usually organize at the local level, Greater gender equity is desirable in its own right actions will also be needed to strengthen their capacity to and for its instrumental social and economic benefits for influence policy at the state and national levels, such as poverty reduction. There has been progress—for exam- by linking local organizations to wider organizations. ple, in education and health—but much more needs to be done. Experience indicates that a mix of political, Security legal, and direct public action is required. Thirty-two coun- Achieving greater security requires a heightened focus on tries, from Argentina to India, have measures to promote how insecurity affects the lives and prospects of poor peo- women’s representation in local and national assemblies, ple. It also takes a mix of measures to deal with econo- and this is already transforming women’s ability to par- mywide or regionwide risks and to help poor people ticipate in public life and decisionmaking. Some coun- cope with individual adverse shocks. tries are correcting gender biases in the law, as in the 1994 Formulating a modular approach to helping poor peo- Colombian Agrarian Law. Use of public resources to ple manage risk. Different interventions—at the com- subsidize girls’ education has been shown to pay off in munity, market, and state levels—are needed to address Bangladesh and Pakistan. A range of measures in pro- different risks and different segments of the population. ductive activities, notably microfinance and farming in- A mix of interventions may be needed to support the man- puts, have produced documented benefits in terms of agement of risks for communities and households, de- increased yields (in Kenya, for example) and increased au- pending on the type of risk and the institutional capacity tonomy for women and better nutritional status of chil- of the country. Microinsurance programs can complement dren (in Bangladesh and in virtually every setting where microcredit programs for poor women, built around this issue has been examined). their organizations, as in the schemes SEWA runs in Tackling social barriers. Social structures and institutions India for women in the informal sector. Public work form the framework for economic and political relations schemes can expand in response to local or national and shape many of the dynamics that create and sustain shocks. Food transfer programs and social funds to help poverty—or alleviate it. Social structures that are exclu- finance projects identified by communities can also be sionary and inequitable, such as class stratification or gen- effective in coping with disaster. der divisions, are major obstacles to the upward mobility Developing national programs to prevent, prepare for, and of poor people. Governments can help by fostering debate respond to macro shocks—financial and natural. Economy- over exclusionary practices or areas of stigma and by sup- wide shocks are often the hardest for poor communities porting the engagement and participation of groups rep- and households to cope with, especially when the shocks resenting the socially excluded. Groups facing active are repeated, deep, or persistent. To manage the risk of fi- discrimination can be helped by selective affirmative ac- nancial and terms of trade shocks, sound macroeconomic tion policies. Social fragmentation can be mitigated by policy and robust financial systems are fundamental. But bringing groups together in formal and informal forums they have to be complemented by prudent management and channeling their energies into political processes in- of the opening of the capital account, to reduce the risk stead of open conflict. Other actions could include removing of volatile short-run flows. Special measures are also needed ethnic, racial, and gender bias in legislation and the oper- to ensure that spending on programs important to poor ation of legal systems and encouraging the representation people—social programs and targeted transfers—does not and voice of women and disadvantaged ethnic and racial fall during a recession, especially relative to the rising need. groups in community and national organizations. Equally important, countercyclical safety nets should be   : , ,    permanent and ready to be deployed when countries are Tackling the HIV/AIDS epidemic. HIV/AIDS is already hit by a shock. These and other actions can also help in one of the most important sources of insecurity in severely coping with natural shocks. “Calamity funds” can finance afflicted countries in Africa. While the immediate, dev- relief efforts following natural disasters and support new astating effects are at the individual and household level, technology and training for better risk assessment. Mak- the consequences are much broader, from intolerable ing investments and insurance arrangements in normal strains on traditional child fostering mechanisms to times can reduce personal costs when a disaster occurs. extreme pressures on health systems and loss of produc- Designing national systems of social risk management that tive labor affecting whole communities and nations. are also pro-growth. There is demand across the world for More than 34 million people are infected with HIV (90 national systems of social risk management. The challenge percent in the developing world), with 5 million more is to design them so that they do not undercut compet- infected each year. More than 18 million people have al- itiveness and so that poor people benefit. Some examples: ready died of AIDS-related illness. Action at the inter- systems that both provide insurance for the nonpoor national level to develop an AIDS vaccine is crucial for and include social pensions for the poor, as in Chile; health the future, but differing experiences show that what will insurance that protects against catastrophic illness that really make a difference now is effective leadership and could wipe out a family’s assets, as in Costa Rica; and un- societal change to prevent the spread of HIV and care for employment insurance and assistance that do not com- those already infected. This can involve confronting promise the incentive to work. To gain the full benefits taboos about sexuality, targeting information and support of such schemes, however, economies need the institu- to high-risk groups such as prostitutes, and providing tional capacity to manage them effectively. compassionate care for AIDS sufferers. Brazil, Senegal, Addressing civil conflict. Civil conflict is devastating Thailand, and Uganda all illustrate what can be done when for poor people: the bulk of conflicts are in poor coun- there is a will to act decisively. tries and most are civil wars—more than 85 percent of all conflicts were fought within country borders between International actions 1987 and 1997. In addition to the direct loss of life, they Action at national and local levels will often not be enough wreak social and economic havoc and create a terrible legacy for rapid poverty reduction. There are many areas that re- of psychological and social trauma. Child soldiers are quire international action—especially by industrial coun- often recruited to fight—as in Sierra Leone—and many tries—to ensure gains to poor countries and to poor more children suffer the loss of family, disruption of people within the developing world. An increased focus schooling, and psychological scars that permanently di- on debt relief and the associated move to make develop- minish their prospects. ment cooperation through aid more effective are part of While it is immensely important to sustain the focus on the story. Of equal importance are actions in other areas— rebuilding societies after conflict, such as in Cambodia trade, vaccines, closing of the digital and knowledge di- and Rwanda, it is equally urgent to take measures to pre- vides—that can enhance the opportunity, empowerment, vent conflict. There is some evidence that strengthening plu- and security of poor people. ralist institutions—supporting minority rights and providing Opportunity. Within a rule-based trading system, in- the institutional basis for peaceful conflict resolution— dustrial countries could expand opportunities by open- has a significant influence. Also important for averting ing their markets more completely to imports from poor conflict are efforts to get different groups to interact through countries, especially in agriculture, labor-intensive man- more inclusive and participatory political institutions and ufactures, and services. It has been estimated that OECD through civil institutions. As noted below, international ac- tariffs and subsidies cause annual losses in welfare of tion to reduce access to the resources to finance conflict and almost $20 billion in developing countries, equivalent to to reduce international trade in armaments is also neces- about 40 percent of aid in 1998. Many developing coun- sary. If countries can get onto a path of inclusive economic tries feel that while they are liberalizing their trade regimes, development, they have the potential to shift from a vicious key dimensions of the trade regimes of rich countries are to a virtuous cycle. Violent conflict constitutes one of the putting them at a disadvantage. Furthermore, donor most urgent and intractable areas for action affecting some countries could strengthen developing countries’ ability of the poorest people in the world. to pursue poverty reduction, by increasing aid flows to      ⁄  countries with a sound policy environment supportive of Working together to fight poverty poverty reduction and by financing the Enhanced Heavily Indebted Poor Countries Debt Relief Initiative with The strategy in this report recognizes that poverty is funds additional to aid budgets. more than inadequate income or human development— Empowerment. Global action can empower poor it is also vulnerability and a lack of voice, power, and rep- people and poor countries in national and global forums. resentation. With this multidimensional view of poverty Aid should be delivered in ways that ensure greater own- comes greater complexity in poverty reduction strategies, ership by recipient countries, and it should go increas- because more factors—such as social and cultural forces— ingly to country-driven, results-oriented poverty need to be taken into account. reduction programs, developed with the effective en- The way to deal with this complexity is through gagement of civil society and private sector agents. Poor empowerment and participation—local, national, and people and poor countries should have greater voice in international. National governments should be fully international forums, to ensure that international accountable to their citizenry for the development path priorities, agreements, and standards—such as in trade they pursue. Participatory mechanisms can provide voice and intellectual property rights—reflect their needs and to women and men, especially those from poor and interests. excluded segments of society. The design of decentralized The international financial institutions and other in- agencies and services needs to reflect local conditions, ternational organizations should continue their efforts to social structures, and cultural norms and heritage. And ensure full transparency in their strategies and actions— international institutions should listen to—and promote— and open, regular dialogue with civil society organizations, the interests of poor people. The poor are the main ac- particularly those representing poor people. International tors in the fight against poverty. And they must be brought organizations should also support the ongoing global center stage in designing, implementing, and monitoring coalitions of poor people so that they may inform global antipoverty strategies. debates. Actions by multinational corporations, such as There is an important role in this for rich countries adhering to ethical investment practices and adopting and international organizations. If a developing coun- labor codes, can also empower poor groups. try has a coherent and effective homegrown program of Security. Actions are also needed to reduce risks from poverty reduction, it should receive strong support—to adverse international forces. Jointly with governments and bring health and education to its people, to remove the private sector, the international financial institu- want and vulnerability. At the same time global forces tions must strengthen the international financial archi- need to be harnessed for poor people and poor countries, tecture and improve its management to lessen economic so that they are not left behind by scientific and med- volatility, which can be devastating for poor people. In- ical advances. Promoting global financial and environ- dustrial country governments, often in cooperation with mental stability—and lowering market barriers to the the private sector, should also provide more support for products and services of poor countries—should be a core international public goods—for developing and dis- part of the strategy. tributing vaccines for HIV/AIDS, tuberculosis, and A divergent world? Or an inclusive one? A world with malaria and for producing and disseminating agricultural poverty? Or a world free of poverty? Simultaneous actions advances for tropical and semiarid conditions. to expand opportunity, empowerment, and security can International action to protect the environment can re- create a new dynamic for change that will make it pos- duce the harmful effects of environmental degradation, sible to tackle human deprivation and create just societies which can be severe in some poor countries. And the that are also competitive and productive. If the developing international community should seek to stem armed world and the international community work together conflict—which affects poor people the most—by taking to combine this insight with real resources, both finan- measures to reduce the international arms trade, promote cial and those embodied in people and institutions—their peace, and support physical and social reconstruction after experience, knowledge, and imagination—the 21st conflicts end. century will see rapid progress in the fight to end poverty.