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DEVELOPMENT: World’s Poor Offer Lessons in Bank Study

Marina Litvinsky

WASHINGTON, Mar 11 2009 (IPS) - To be successful, poverty-reducing programmes must be informed by the lives and experiences of the millions of poor people around the world and emphasise economic opportunity, says a study released Wednesday by the World Bank.

“Moving out of Poverty: Success from the Bottom Up” is the latest and most comprehensive study on attitudes about poverty since its predecessor, “Voices of the Poor”, was released in 2000. The study is one of the few large-scale comparative research attempts to analyse mobility out of poverty rather than poverty alone.

“In the midst of the worst financial crisis since the Great Depression, we need to understand the dynamics of poverty better by listening to what the poor themselves have to say,” said Danny Leipziger, World Bank vice president for poverty reduction and economic management. “Their stories show us how it is possible to move out of poverty, especially when there are local opportunities available. But they also show us how easy and quick it is to become poor.”

The study is based on narratives from 60,000 people: poor or formerly poor women, men, and youths in over 500 communities across 21 study regions in 15 countries of Africa, South Asia, East Asia, and Latin America.

The core tools used in the study include individual life stories, the ladder of life exercise, focus group discussions on various topics, and household interviews using questionnaires. The ladder of life exercise was done in order to establish each community’s own definition of poverty and wealth and determine who in the community qualifies as poor.

In this exercise, six to 15 participants create a figurative ladder of well-being, with the bottom step representing the poorest or worst-off people found in that community and the top step the wealthiest or best-off. The group then sorts up to 150 households in the community onto the ladder steps. They identify each household’s placement initially (approximately 10 years ago, around 1995) and currently (in 2005).

Based on these rankings, the bank developed a community mobility matrix that shows which households moved up or down the ladder or stayed at the same step over the 10-year study period.

The study was conducted to understand in some depth the processes through which people rise out of, or fall into, poverty. In exploring the dynamics of poverty mobility, researchers assumed that each individual is the expert on her or his own life and that data is most valid when considered, not just under an individual, but also a local context, over time.

The study defined four mobility categories: movers, households that were poor in 1995 but had moved out of poverty by 2005; chronic poor, households that were poor in 1995 and remained poor in 2005; never poor, households that were not poor in 1995 and remained not poor in 2005; and fallers, households that were not poor in 1995 but fell into poverty by 2005.

One of the key findings of the study points out that equal opportunity remains a dream for many people.

“(Poor people) face a lot of exclusionary practices,” said Nora Dudwick, senior social scientist at the poverty reduction group in the poverty reduction and economic management department of the bank.

Referring to disadvantaged people’s inabilities to get into job markets and receive financial aid, she said, “They don’t encounter a level playing field.”

The study also suggests that collective action helps poor people cope but not get ahead.

While pooling together their labour, cash or skills may give poor people a way to survive, the real benefit of this collective action is to society. Working together fosters a sense of citizenship essential to functioning, stable and cohesive democratic societies. The study points out that it is responsive local democracies that come out of such societies that can help reduce poverty.

Also, though microcredit can help the poor subsist from day to day, in order to lift them out of poverty, larger loans are needed so that the poor can expand their productive activities and thereby increase their assets.

The research debunks some myths and prejudices about the poor, whom many see as passive and without ambition or aspirations. When asked by researchers how one could move out of poverty, nearly all groups emphasised individual effort, self-reliance and initiative.

“We find little evidence that poor people are poor because of laziness or disinterest in work and savings,” said Deepa Narayan, the lead author of the study. “Even in very poor and conflict-prone areas, poor people seldom seem apathetic. Instead they take initiatives, often pursuing many small ventures simultaneously to survive and get ahead.”

The study concluded that the focus of poverty reduction strategies must therefore shift to increasing economic, social and political opportunities in the local communities where the poor live. These local opportunities include the provision of business know-how, basic access to health and education and the improvement of local governance.

“Individual hard work and belief in self can take people far, but it cannot make up for lack of economic opportunity and blocked access to opportunity in the communities where poor people live,” said Narayan.

In addition, efforts must also be directed to preventing people from becoming poor in the first place when they sell off assets or become indebted because of illness, unemployment, natural disasters or, more recently, the impact of the world financial crisis. New strategies are needed to increase their resilience through social and health insurance programmes, as well as better access to credits, local markets and infrastructure projects.

As far as formulating programmes during this time of economic crisis, “local conditions matter a lot,” said Dudwick. “Any kind of stimulus package has to reach the local level in a way that people will have access.”

The study has garnered praise from other independent organisations, like Oxfam International.

“There are some important lessons to be taken from this report,” said Marita Hutjes, senior policy advisor at Oxfam International.

“A lot of the reports that deal with poverty deal with income, but a (better criterion) is looking at resilience, which this report does,” she said. “It shows the importance of empowering people. And how empowering people and organisations is the way to get people out of poverty.”