Why is the question of poverty so high on global agenda? Why a global action is necessary to address it?
Poverty exists in many places on Earth, both in developed and developing countries. However, there are regions and even entire continent particularly affected by it. As the Red Cross informs, millions of people living in Africa need “sustained emergency food assistance, medicine help combined with longer term support to help people recover their livelihoods, save their children lives and guarantee access to food and water” (Red Cross Africa, 2009, “Want to Help People?”).
The continued increase in the population of developing countries is placing great strain on their limited resources. Infant mortality rate is very high in those countries, therefore families tend to have a large number of children. Fertility rates are especially high in the poorest countries of the world. The population in these countries is very young. Governments incur great expenses for education, however, many young people die of malnutrition, poor health protection and armed conflicts before they are able to pay back to the government.
The reasons why poverty should be addressed at the global level are both pragmatic and ethical. For pragmatic reasons, absence of abject poverty translates into greater stability and peace on the international arena. For instance, the surge in piracy off Somali shores has brought home the threat failed states pose to the international community. By ensuring a decent standard of living everywhere, developed countries can tackle the root causes of such problems as illegal migration and sometimes even ethnic hatred. On the ethical level, it is necessary to note the ongoing shift from material values to post-material values (e.g. solidarity and mutual help) that is happening in many European countries and Canada and catches on in the U.S (Mohan, 1992).
How can poverty and social inequality be quantified?
Given that that wellbeing is a subjective category, it is important to keep in mind that relative and objective perceptions on the distribution of income may differ considerably. Commentators frequently point out the ambiguity of the commonly accepted definition of poverty as the inability to attain the minimum standard of living. There is a set of statistical tools that is designed to quantify the distribution of wealth in society. Models that are commonly employed to measure poverty and inequality include the functional distribution of income (the distribution of income among the factors of production) and the size distribution of income (the distribution of income among economic units, such as households or individuals, visualized through mathematical models, e.g. Lorenz curve and Gini coefficient). Furthermore, there exist various theories of distribution, namely neoclassical tradition (including classical theories and marginal productivity theories) and structuralist tradition (including dual economy models and neo-Keynesian models) (Poulson, 1994).
How should public policy be conducted in order to reduce poverty and inequality?
Public policy should always be analyzed in relation to the distribution of income and wealth. Dirigiste perspective implies that the state should aim at achieving a more egalitarian society. In reality, such policies often have the opposite effect. To the contrary, public choice perspective suggests that building an egalitarian society is not the primary function of the government. Some empirical examples suggest that land reform in Kenya resulted in the concentration of wealth within the smallholder economy instead of providing fully equitable distribution of land and income, while in China the replacement of collectivization policy by the responsibility system (in the spirit of public choice perspective) has, in fact, benefited the poor peasants (Poulson, 1994).
Thus, public policy aimed at eliminating poverty should be implemented with caution. According to the Kuznets inverted U-hypothesis, levels of inequality rises during the earlier stages of development, peaks, and eventually begins to fall. Various scientists have attempted to prove or discredit this hypothesis with time-series data, yet it proved to be ambiguous. There also exists immiserizing growth theory, which holds that the welfare of the poor deteriorates at the early stages of industrialization. Thus, an in-depth knowledge of theories of poverty is needed to design effective public policies. One of such theories is Human Capital Theory, which views such things as education, training, health wellness, ad nutrition as investment into human capital. The example of education can show how this model works in the developed countries: higher level of education increases community well being and self-reliance and contribute to sustainable growth better than foreign aid. In the developing countries, however, it is not always the case, since the investment in education can be coupled with greater inequality in access to it. Such factors as risk, uncertainty, and random chance are also analyzed. As for the structuralist models, they include Marxist theory, dependencia, job screening and job ladder models (Poulson, 1994).
Why different countries have different levels of well being? Why countries in the North are richer than countries in the South?
Looking at the reasons for the existing disparity in the levels of welfare in different countries, it is possible to observe that the most accurate predictors of welfare are the environment, institutional arrangements, and international relations of a certain country. First of all, it is necessary to acknowledge that the later two factors are to a large extent responsible for the pace of economic development of a certain state. Institutional design has become the most prominent determinant of economic success; the choice of macroeconomic policies, the mode of governance, and the overall business and investment climate are among the crucial elements of economic success.
International relations also matter. Looking at it from the historical perspective, the U.S. has become the world’s superpower following World War II through economic help to Europe, which also secured American influence in the region and globally.
However, in the cotemporary world, environment should cease to be regarded as a determinant of economic success and welfare. In fact, countries with the least favorable climatic conditions are faring extremely well economically. Nordic countries boast the highest standard of living, and climatic conditions there leave much to be desired. On the contrary, many African and Latin American countries have favorable climate, yet poverty and economic insecurity persist there.
There is also little evidence that the size of population can affect welfare positively; in fact, the opposite appears to be true. Looking at the example of Nordic countries again, it is possible to see that these countries have small populations residing at relatively small territories. Another example might come in handy: out of all the EU countries that joined in 2004, the countries that have the highest GDP per capita are Slovenia and Malta, and they are both among the smallest member states of the EU. Therefore, institutional arrangements and international relations of a certain country might influence welfare, yet the environment does not. Furthermore, large populations should not be regarded as an impediment for economic growth, but equitable distribution of wealth is harder to achieve in extremely populous countries.
What are the examples of effective practical initiatives to alleviate poverty?
There are numerous international aid organizations, either government-sponsored or independent, that work to eradicate abject poverty and provide a decent standard of living to the entire world population. Some of them are particularly effective at what they do. For instance, Heifer International undertakes to “work with communities to end hunger and poverty and to care for the earth” (Heifer International, n/d., “Heifer’s Mission to End Hunger”). Its underlying philosophy is to provide struggling families in developing countries with a source of income instead of offering them short-term relief; the organization believes that “[s]elf-sufficiency is a better long-term solution than handouts for fighting hunger” (Fast Company, 2007, “What it does”). The activities of the organization are centered on three main thematic areas: first of all, Heifer International gives livestock and other material goods (“gifts”) to the communities in need; secondly, the organization carries out training and extension work; thirdly, it assists communities with various aspects of organizational development, such as planning, management, record keeping, passing on the gift, reporting and evaluation. However, prior to the arrival of livestock a community should engage in a careful assessment of needs and challenges facing its members. After the arrival of animals, every recipient family undertakes to give an offspring of the donated animal to another family in need in line with the principle of “Passing on the Gift” (Heifer International, n/d.).
Such an approach encourages self-reliance and community self-help. Rather than providing one-off handouts, it teaches communities how to provide for themselves and assists them at the initial stage. This approach offers hope for the eradication of poverty among the most vulnerable societies on Earth.
Fast Company. (2007). Heifer International. Retrieved June 16, 2009, from http://www.fastcompany.com/social/2006/statements/heifer.html
Heifer International. (n/d). Home Page. Retrieved June 15, 2009, from http://www.heifer.org
Mohan, B. (1992). Global Development: Post-Material Values and Social Praxis. Praeger Publishers.
Poulson, B. (1994). The Distribution of Income, Wealth, Poverty Economic Development: Private and Public Choice. In Economic Development: Private and Public Choice, Minneapolis/St Paul, New York, Los Angeles and San Francisco: West Publishing Company. pp. 144-190.
Red Cross Africa. (2009). Home Page. Retrieved June 15, 2009, from http://www.bishacas.org