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Poverty
Facts
- The International Day for the Eradication of Poverty is 17 October.
- Half the world's population, nearly three billion people, live on less than US$2 a day
- Over 800 million people do not get enough food to meet their energy needs.
- More than 840 million adults, of whom 538 million are women, are illiterate.
- In developed countries more than 100 million people live below the poverty line, more than 5 million people are homeless and 37 million are jobless.
- The Gross Domestic Product (GDP) of the poorest 48 nations (ie a quarter of the world's countries) is less than the wealth of the world's three richest people combined.
- Since 1960 child death rates in developing countries have halved, malnutrition rates have declined by a third, the proportion of children out of primary school has fallen from more than half to less than a quarter, access to safe water has almost doubled, from 36% to nearly 70% and the extension of basic immunisation has saved the lives of three million children.
For further information: http://hdr.undp.org/, http://www.worldwatch.org |
Background
What is poverty?
Poverty is hunger and not knowing where your next meal is coming from, because
you have already eaten the seeds you had stored for next year's planting. Poverty
is not having a roof over your head and having nowhere to go. Poverty is being
sick and not being able to see a doctor. It is the death of a child from a preventable
illness because you are unable to pay for medicine or clean water. Poverty is
not being able to read and not being able to go to a school. Poverty is being
unemployed and having little chance of getting a job even if there are any because
you have no training. Poverty is powerlessness, lack of representation and freedom
with no hope of change. Poverty is living one day at a time. Poverty is not
being able to bury your dead.
Poverty at a national level means a country may have insufficient economic resources to invest in education, health, infrastructure, political and legal systems and public institutions, which can lead to instability and civil unrest. In developed countries, deep and persistent poverty is a serious social problem but is less widespread than in developing countries. Poverty is often concentrated in certain segments of society, generally defined by region, by age, or by social group.
How is poverty measured?
Finding a suitable measure which captures the depth and breadth of poverty, at a national and individual level, is an enormous challenge. There are difficulties with each of the following commonly used methods. Collecting data is complicated and costly, so accuracy and comparisons between countries may not be reliable.
GDP and GNI per capita
The most common way to measure a country's wealth or poverty is Gross Domestic Product (GDP) or Gross National Income (GNI) per capita. GDP measures the value of the goods and services that a country produces. GNI is slightly different, because it measures the value of goods and services produced by the assets that a country and its citizens own, even if the production takes place elsewhere. So GDP/GNI tells us how much income a country has in total, but it doesn't work perfectly as a measure of poverty and wealth. This is because it measures costs which may not impact on a household level, and it fails to consider such costs as unpaid labour and environmental damage.
A country's total GDP or GNI is often divided by the population to give an indication of the average income per person; however, this gives no indication of actual distribution of the income within a nation. A few people may be extremely rich while the majority may be very poor.
Also, international comparisons require conversions into a common currency (usually US$) using the average official exchange rate reported by the International Monetary Fund. This may produce inaccurate results, and does not take proper account of how prices vary between countries. Sometimes GDP or GNI figures are adjusted to take account of price differences – this is known as purchasing price parity (PPP). It is very difficult, however, to measure accurately the differences between countries or communities where consumption patterns are very different.
The figure also does not measure how well-off people are in terms of their human development or standard of living. Subsistence farmers may be able to provide most of their needs even though they contribute only a very small amount to the GDP/GNI.
Population below US$1 per day
Another way to measure poverty is by the percentage of the population whose income or consumption falls below a certain level. Such a level is usually called the poverty line. One example of a poverty line is US$1 per person per day, measured at 1985 purchasing power parity. The figure of US$1 a day was chosen because it is typical of the poverty lines in low-income countries, but it is much lower than the poverty lines found in middle-or high-income countries.
Human Development Index (HDI)
The HDI is a ‘summary composite index’; that is, it combines a number of indicators into a single figure. It is based on life expectancy at birth, educational attainment (adult literacy and school enrolment rates) and income per capita. It attempts to give an indication of standard of living beyond simple economic factors.
Access to basic needs
The basic needs approach to poverty measurement includes access to such necessities as food, shelter, schooling, health services, potable water and sanitation facilities and employment opportunities, and even touches on opportunities for community participation. These provide a sense of human wellbeing, but there is no way to aggregate them meaningfully.
Who are the poor?
Rural
The majority of the world's poor live in rural areas, and are disproportionately dependent on natural resources for their livelihoods. They are especially vulnerable to climate changes and natural disasters and soil degradation. They have to travel big distances on poor roads to markets and health and education services, which are often lower in quality.
Women and girls
In most societies, women are more likely to be poorer than men, even though they may contribute more to the economy. From an early age, they perform all domestic duties including carrying water long distances, growing all the food and caring for younger children and the aged. They often work other jobs, some involving hard labour, and often for less pay than men, and the heavier workload affects their health. They are less likely to go to school, or for as many years, as boys. Often cultural constraints mean that they have limited legal rights, lack opportunities for training or a say in community affairs, and lack access to land, credit and employment.
Children
More than half a billion children – representing a staggering 40 per cent of all children in developing countries live in poverty. Poverty causes of millions of preventable child deaths through hunger and disease each year. Millions of children miss out on school or are forced into child labour, causing lifelong damage to children's minds and bodies and continuing the cycle of poverty into the next generation.
Marginalised groups
The aged, disabled, indigenous and displaced people generally lack education and social connections to earn an adequate income. In developing countries there are few social services to protect these groups.
How can poverty be reduced?
Poverty is a complex issue and needs to be tackled on a range of fronts including, but not limited to, improving economic growth. To alleviate poverty, countries must attain basic thresholds in several key areas: governance, health, education, infrastructure, debt levels and access to markets. Some of the ways this can be done are:
Aid
Aid is necessary to assist developing countries develop sound governance, effective infrastructure, and quality health and education services. Investment in people is necessary before countries are able to attract foreign investment for commercial development. Aid also assists community development, helping people to work together for shared improvements. Micro-enterprise, low interest loans and training provide opportunities for men and women to undertake new and/or expanded ways to earn an income and greatly improve their economic and social welfare.
Debt relief
Many countries have debt levels which are much higher than their GDP. This means that they must use their limited financial resources just to pay interest on loans. They have no resources for investing in basic services to improve their wellbeing. Debt relief assists developing countries to invest in the future. It can include buybacks, debt exchanges, debt service reduction, forgiveness, rescheduling and refinancing. Often debt relief is conditional on investment in health and education services to improve the lives of the poor. As aid levels have been falling, debt relief is a way to support future development.
Private sector development
A dynamic private sector creates jobs and income, generates wealth and ensures resources are used efficiently, as well as providing governments with tax revenues to fund basic essential services and infrastructure development. As net private flows are now about four times the size of aid flows, their role in development, along with domestic savings, is crucial. The private sector in developing countries includes many forms of enterprise. Large-scale businesses may be locally owned (including privatised state enterprises), or they may be local branches of multinational corporations, or joint ventures between foreign owned companies and local businesses. Small- to medium-sized enterprises may be family-based, but often also employ some non-family members. The smallest businesses are micro-enterprises typically consisting of 1–3 people, often family members and often female, and usually engaged in activities such as farming, handicraft production, street trading, services or small-scale manufacturing.
Trade
Trade relations allow developing countries to sell their goods and services abroad and create jobs, generating income for local businesses and citizens as well as revenue for governments. Developing countries often have many advantages and resources that allow them to be competitive in world trade. However many developing countries encounter problems in gaining access to overseas markets due to trade barriers, such as tariffs (taxes on imports) and quarantine regulations. Also, many developed countries heavily subsidise their own producers, making it harder for developing countries to compete.
Australia 's responses
Australia 's approach to poverty reduction embraces four closely connected and mutually reinforcing pillars:
- strengthening frameworks for sustainable and inclusive economic growth which will benefit the poor
- supporting interventions which enable the poor to improve their productivity
- encouraging governments, institutions and donors to be more accountable to the poor
- reducing the vulnerability of the poor.
These pillars indicate the range of areas of possible assistance from the aid program following a poverty analysis. Each pillar incorporates key aspects of good governance, reflecting the pivotal importance of transparent, accountable and participatory government for the development process. Supporting fundamental elements of good governance, such as social norms and legal systems that respect contract and property rights, will provide a solid foundation on which to implement activities aimed at poverty reduction.
Economic growth supported by public policies which enable the poor to access the benefits of growth is an important factor in reducing poverty. Enabling the poor to increase their productivity, through access to credit, markets, property rights, technology, and health and education systems is important. So, too, is strengthening systems of governance to improve accountability and provide better access to services, resources and decision making by the poor. Addressing the vulnerability of the poor to illness, conflict, natural disasters and economic crisis is also necessary to ensure that development gains are not undermined.
For further information
www.ausaid.gov.au
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The global agenda
Multilateral institutions are reinforcing their commitment to poverty through a wide range of initiatives, including the following:
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