A Balance Sheet on Fighting Human Poverty
An Overview of
Fighting Human Poverty: Bangladesh Human Development Report 2000
Bangladesh Institute of Development Studies (BIDS)
What do we learn from the "Success" Stories?
In the preceding section we have provided the balance sheet of achievements and challenges facing Bangladesh. Reviewing these success stories some general patterns emerge. First, for a long time Bangladesh was seen as a case of stagnant development. It was labeled in donor-circles as the "test case of development". Its success in the areas mentioned above provided yet another confirmation that impressive social gains can be achieved through social/public action, even at a low levels of income, which can then contribute to higher economic growth and yet higher levels of social progress. Second, these successes cannot be claimed to be the exclusive privilege of any particular stakeholder--state, market, NGO or private sector. They were achieved through the combined—often loosely integrated--efforts of many actors, government and non-government institutions as well as through an evolutionary process of social diffusion involving market, media, local community, formal and informal private sectors. Ultimately it is the creative capacity of the poor that made the difference, manifested in the way they responded pro-actively to the policies, programs and incentives that were made available to them. Third, these successes cannot be apportioned to successive political regimes. Continuity played an important role in the overall success: this applies to all areas whether it pertains to fertility, mortality, malnutrition, or disaster management.
Realising Higher Social Possibilities at Lower Income Level
What is the key message that emerges from the review of the development experience of Bangladesh? The various chapters included in the report seem to revolve around one common story line. The discussion brings to the fore the proposition that higher social/ human development outcomes can be achieved even at lower level of per capita national income. One need not wait for the per capita national income to grow to a relatively high level (however defined) first for realising social opportunities. The proposition was forcefully argued two decades earlier by Amartya Sen who also elaborated the underlying idea in a number of works since then. Sri Lanka and the Indian State of Kerala are by now the very well known examples of this strategy of development. It appears that Bangladesh’s experience is in tandem with this line of reasoning. Here are some of the striking findings.
Bangladesh’s growth performance was relatively modest through out the period of post-Independence, per capita GDP growth was about 2 per cent per annum. The growth performance has started improving only in the recent years, with per capita income growth at about 3.8 per cent per year over the 1996-99 period. Similarly, the pace of income-poverty reduction was extremely slow since the early eighties. During the period between 1991/92 and 1995/96, the proportion of rural population below the poverty line declined by about 0.8 per cent per year, having dropped from 52.9 to 51.1 per cent. This is a modest achievement by any standard. The recent PMS survey data show similar pace of progress on this score (about 1 percentage point per year). There has been a total of 3-percentage points decline in three years, as the poverty rate in rural areas went down from 47.9 per cent in 1996 (April) to 44.9 per cent in 1999 (May).
Notwithstanding the relatively slow income growth and modest pace of income poverty reduction, Bangladesh’s achievements in the broad area of human development were faster, and in some respects, were truly remarkable. The winds of change that swept the Bangladesh society over the past two decades were truly remarkable on many counts.
First, by the late 90s Bangladesh is well into the third phase of the demographic transition from a "high mortality-high fertility" regime to a "low mortality-low fertility" one. This transition in Bangladesh departs from the classic Western pattern in that the significant decline in fertility was achieved at a rather low level of income. Indeed, the pace of reduction of TFR between 1975-97 was highest in Bangladesh vis-à-vis the South Asian average as well as the average for the developing countries (2.1 vs. 1.5 per cent in South Asia as a whole and 1.6 per cent for average developing countries). The level of TFR currently stands at 3.1-3.3, which may be compared with the 3.3 for South Asia and 5 for the LDCs.
Second, there has been an impressive decline in infant and child mortality rate since the mid-1980s. Indeed, the pace of reduction in under-five mortality rate was about 2 per cent per year over 1975-90, higher than the matched figure for South Asia (1.8), average for developing countries (1.6) and LDCs (1.2). The current level of under-five mortality in Bangladesh is 94 per thousand live births compared to 162 for LDCs, 106 for South Asia, and 94 for developing countries.
Third, in recent years there has been a significant progress in reducing child malnutrition despite slow progress in income-poverty. However, the level of food security during the lean season and backward areas has improved in the decade of nineties. Besides, a large part of the improvements took place in response to the progress made in the non-food environment. Thus, better preventive health care (vaccination coverage, for example), promotive health care (spread of knowledge about safe drinking water, preparation of ORS, greater access to nutritional information), and in general improvement in environmental health (such as water and sanitation) have contributed to this progress. The trend of improvement is robust to the choice of survey data and nutritional indicators. All three anthropometric measures such as stunting (height for age, a measure of long-term status), wasting (weight for height, a measure sensitive to the recent change in nutrition), or underweight (weight for age, which combines both long-term and short-term effects) support this over 1996-99.
Fourth, impressive progress has been achieved in reducing adult illiteracy and in expanding primary education. The level of adult literacy has risen to 61 per cent by 1999, while the net enrollment rate at the primary level has exceeded 75 per cent. Of particular importance is the spread of female education, with very little difference in primary enrollment rate between boys and girls. Consequently, the gender gap in adult literacy is closing over time.
Public Action and Private Economic Growth for Faster Human Development
All these impressive successes show that improvement in living standards need not be mediated through private income growth. There is room—to a considerable extent—for public action to directly influence the pace of social progress, human development, or, for that matter, human poverty reduction. This is not to de-emphasise the importance of rapid growth in per capita income as a vehicle for social transformation. But, growth is not an end itself. It is a means for achieving higher social goals (human development, or a creative, "contemplative life" as Aristotle argued in Nicomachean Ethics).
Economic growth matters for faster human development in so far as it facilitates expansion of public allocations for social sectors, rapid increase in the private purchasing power of the poor, and greater empowerment of women. With empowerment, women can take increasing control over their own lives and by the same token have the capacity to play a vitally important "agency" role in transforming the face of the society. Economic growth matters for faster human development in so far as it also helps to maintain social peace and strengthen social cohesion and build bonds and bridges among social groups (social capital). And lastly economic growth would be truly in line with the spirit of social progress if it can protect and care for a healthy and decent environment. If the agenda for economic growth becomes increasingly intolerant to any of these goals then it makes sense to revise the growth-targets and alter the nature of growth process in a way so as to maximise the ultimate gains to society in terms of higher human development.
Key Ingredients of Effective Anti-Poverty Strategy
The findings presented in this study point to some key ingredients of an effective anti-poverty strategy. Such a strategy aims to reduce poverty in the shortest possible time. It must address the following areas of key challenges and potential interventions.
Three Major Challenges in Anti-Poverty Strategy
As the country approaches the new millennium, it faces three major challenges in the broad area of equity. The first challenge relates to the income-dimension of poverty: the pace of reduction has been rather slow; it needs to be accelerated and sustained. The incidence of malnutrition remains at an unacceptably high level, notwithstanding some recent progress. It is no longer adequate to engage in debate about the directionality of change in poverty. The question that looms large is: how to eradicate income-poverty in the shortest possible time?
The second challenge pertains to the human poverty dimensions. Income-poverty and human-poverty dimensions need to be tackled independently important as they are in their own rights. While some considerable progress has been made over the last two decades in the areas of fertility decline, literacy and school enrollment, and mortality rates, the quality of human development leaves much to be desired. There are also notable failures in some critical dimensions of human well-being such as maternal health, child nutrition, violence against women, to name the salient few. The contrast between income and non-income dimensions of poverty is particularly sharp in urban areas. In urban areas, there has been a faster decline in income-poverty, but the human-poverty dimensions of the urban poor have shown very little signs of improvement. This mismatch needs to be addressed on the policy front given the rapid pace of urbanisation in Bangladesh.
The third challenge is about having a society where distribution of incomes and social opportunities would become more equitable and democratic over time. Policies that promote equity are also good for higher growth and faster rate of poverty reduction. Investment in human capital (education, health, and nutrition) and development of rural non-farm sectors can be compensatory in promoting greater equity in the system.
Six Major Routes to Reducing Poverty
Poverty can be reduced in different ways. This is because poverty is caused by many factors. Despite the diverse nature of causes of poverty, one can group them into some broad policy-relevant categories. Poverty can be influenced via six channels, namely, macro-stability, growth projects, human development, microcredit-based self-employment, income transfer programmes (often known as "safety nets"), and social mobilisation (empowerment at both gender and institutional levels).
The role of macroeconomic stabilisation can hardly be overemphasised. The strategy of non-inflationary pro-poor economic growth requires a stable macroeconomic framework. This would create an enabling environment for economic sector policies crucial to accelerating the pace of poverty reduction. In this sense, macroeconomic policies matter for poverty reduction. Indeed, inappropriate macro policies can be as disastrous (if not more) for poverty reduction than the shortfall in any of the sector policies mentioned above. The poor are not a static category, as there is a continuous movement in and out of poverty. Wrong macro policies can easily lead to the swelling of the ranks of the poor.
Lack of fiscal prudence can lead to high inflation, discourage private investment, and adversely affect social sector investments. All of these would hurt the poor. Similarly, a wrong exchange rate policy (as with the markedly overvalued exchange rate) would not only have adverse balance-of-payment implications, it would be also harmful for long-term growth and poverty reduction. Long adherence to such policies can lead to declining efficiency in the use of capital through distorted factor prices. Inward-orientation has been cited as the key factor underlying the slow long-term economic growth in South Asia vis-a-vis East Asia over 1960-90. Financial intermediation is crucial for raising saving and investment. It is also important from the viewpoint of overcoming credit market failure acting as a constraint to poor people’s struggle to climb out of poverty. Poorly regulated financial sector is a threat to sustainable poverty reduction strategy, as suggested by the recent episodes of financial crisis in several Asian countries. In short, a stable macro economic policy framework for maintaining internal and external balances is conducive to higher long-term growth and sustainable poverty reduction.
There is little dispute regarding the importance of rapid and pro-poor economic growth for faster poverty reduction. This requires broadening access of the poor to physical capital, human capital, and technological progress, which in turn would have favourable impacts on income and employment of the poor. Investment in growth projects such as physical infrastructures such as road, electricity, gas, telecommunication as well as new technology for both agriculture and non-agriculture are important avenues for increasing access of the poor to physical capital and technological progress. Policies that directly promote human development of the poor include investments in education, health and nutrition, with special attention to the quality of such investments. The focus here is not just on raising capability of the poor, but also on fostering creativity of the poor. Access to capital via diverse microcredit and microenterprise targeted loan schemes helps to remove the credit constraint and hence accelerates the pace of graduation out of poverty.
Measures that provide social safety net to the poor against various anticipated and unanticipated income (or, consumption) shocks are important considerations in anti-poverty strategy. This is true even for countries that historically relied more on growth-mediated security (such as South Korea) than direct public action mediated security (as was the case with Sri Lanka). The importance for having a formal system of social security has been vindicated by the experience of the recent Financial Crisis in East Asia.
Social mobilisation is a pre-condition for improving the access, equity as well as quality of public services available at local level. Effective social mobilisation can help the entire community to get organised to tackle problems of common concerns (ranging from food security to social peace) and tap the full potentials of the available local resources. It also helps to create a demand-driven mechanism "from below", thus contribute to the efficacy of the delivery mechanism "from outside".
One of the key questions here is to define an "optimal mix" of anti-poverty policy instruments ("mix" in terms of both resource allocation as well as non-financial assistance/ service) and see what further steps can be undertaken to enhance the poverty impact of its operations.
Exploring the Synergies in Anti-Poverty Interventions
The analysis of cross-household and cross-district data points to the importance of developing human capital, investments in physical infrastructures such as road, electricity, and telecommunication, microcredit, and adoption of new technology (including information technology and biotechnology). Available evidence is also suggestive of the synergies that exist among different growth projects (road, electricity, new HYV technology in agriculture, information technology, for instance), between growth and social sector projects (the idea of combining physical infrastructure and human development follows from this), and between growth and microcredit. Further expansion of credit for the poor should be seen in the broader context of infrastructure development. Such a packaging (along with rural and human development) will not only enhance the return to microcredit schemes and contribute to its viability, but also accelerate the rate of poverty reduction.
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