|
A renewed interest in the contribution of economic growth to poverty reduction
“Development” has many aspects but, clearly, developing countries’ ability to reduce poverty – and donors’ ability to support them to do so – is a natural focus and obvious indicator of development success. The complexity and challenge to implement effective development programmes to tackle poverty explain why the DAC decided in 1998 to set up a Network on Poverty Reduction – POVNET – whose initial work culminated in the 2001 Poverty Reduction Guidelines. These highlighted the multidimensional and interconnected nature of poverty with its political, economic, socio-cultural, human and protective dimensions. This understanding has now taken root in development agencies and ministries in donor and partner countries alike.
It is not by accident that the first of the Millennium Development Goals (MDGs), adopted in 2000, concerns poverty. But faced with too slow progress towards the MDGs in the poorest countries, and particularly that of halving income poverty between 1990 and 2015, the DAC decided that POVNET should pay particular attention to the role and contribution of economic growth to poverty reduction. The economic dimensions of poverty had been neglected during the 1990s, when attention focused more on the social (e.g. health, education) and political/protective (rights, governance, security) dimensions. The aim was to rebalance approaches and bring economic growth back more centrally onto the policy stage and to strengthen synergies with the social, political and other dimensions of poverty. POVNET has achieved considerable progress in this respect. In the view of Richard Manning, the then DAC Chair, its work “has produced consensus within the donor community on an issue that has proved controversial for decades” [Development, 2007, 50(2), 42-47].
Building this consensus was made easier by an evidence base that showed that growth is an essential requirement and, frequently, the major contributing factor in reducing economic poverty. The “Commission on Growth and Development”, for example, has suggested that developing countries require 7% p.a. growth over 25 years to “solve” economic poverty. Such performance would most likely do so, and be pro-poor in terms of both absolute and relative dimensions of poverty. But how likely is this? So far, there has often been a sense of disappointment in developing countries and donors that growth had not been able to make more substantial and sustainable inroads into poverty reduction and that it has often resulted in growing income disparities, between the poorest and the better off segments of society.
POVNET thus decided to look at “pro-poor growth” – a combination of higher and more sustainable rates of growth together with a pattern of growth in which poor women and men are more able to participate, contribute and benefit – and what is required of and for poor people to do so.
The importance of pro-poor growth
In countries as different as China, India, Ghana and Viet Nam, growth rates have been sustained and high and many poor people have been able to participate actively in the growth process and move out of poverty. But in many other developing countries, notably in sub-Saharan Africa, growth has often been only in short-term bursts, narrow in its reach and sporadic in nature, with disappointing impacts on poverty reduction. Now, the outlook is much more positive and growth is beginning to be more firmly rooted in many more developing countries. The IMF, for example, estimates annual growth rates of around 6% to continue in sub-Saharan Africa over the next few years (IMF, World Economic Outlook: Housing and the Business Cycle, April 2008). The challenge is to maintain such growth rates and ensure that measures are taken to increase its impact on poverty reduction.
POVNET’s key policy messages on promoting pro-poor growth are:
-
Rapid and sustained poverty reduction needs pro-poor growth, i.e. both a pace and a pattern of growth in which poor women and men can better participate, contribute and benefit. Growth needs to reach the poor and the poor need to be involved in growth.
-
Past perceptions of policy dichotomies, between e.g. economic growth “versus” social or political development as the key player in poverty reduction, have been misplaced. These dimensions are, in fact, mutually supportive. There are, of course, policy trade-offs, particularly in the short term and when resources and capacities are limited, but these need to be and can be better managed.
-
It is critical to empower and involve the poor in order to bring about the policies and investments needed to support pro-poor growth strategies and instruments and to expand economic activities and opportunities for the poor.
For donors, promoting pro-poor growth is clearly not a “business as usual agenda” and simply doing “more of the same” will not be enough. In fact, it requires some quite significant shifts in agendas.
From principles to practice – field testing the policy recommendations
Getting development policy makers in donor headquarters to think more about pro-poor growth - rather than just growth per se - is already challenging. But it is an altogether different task to find out from staff in the field working closely with developing country governments what they need to promote pro-poor growth and how best to tackle the capacity and political barriers to do so. Implementing the ownership principle of the Paris Declaration on Aid Effectiveness presents a good opportunity to bring pro-poor growth elements more strongly into policy setting processes around locally owned poverty reduction strategies.
POVNET is now undertaking a series of developing country workshops to find what field-level stakeholders need to make growth more pro-poor and where donors (and indeed DAC-POVNET) can better assist them in addressing these challenges. So far, workshops have taken place in Ghana (with a private sector development focus), Cambodia (infrastructure focus) and Mali (agriculture focus) and further workshops are being planned (e.g. in Mauritania). Even at this preliminary stage, some key messages are emerging:
-
The experiences of Ghana and Cambodia show how internal and external factors and sometimes favourable circumstances can combine to have a substantial impact on accelerating growth and reducing income poverty. But, unless these opportunities have a broader impact through increased productivity and the creation of large numbers of more and better jobs, results achieved might not be sustainable.
-
The Ghana workshop reminds us of the importance of the informal economy, which is currently a major source of exports and has been a key driver of growth. Harnessing these resources to promote more sustainable and poverty reducing growth will entail ensuring that the poor have a more effective voice in the formulation and implementation of policies as well as extending social protection measures that help reduce the risk and vulnerabilities that hinder the poor being more fully involved in the growth process.
-
Challenges related to expanding poor people’s access to markets was found in Cambodia in respect of rural roads, where policy attention is on the size of the rural road network, rather than its quality and the services delivered.
-
In Mali, and beyond issues surrounding productivity, risk and vulnerability and financing, key themes relate to implementation of the Paris Declaration principles: how donors can co-ordinate better their support for agriculture, to increase impact and reduce dispersion, and what structures are available to promote “whole of government” dialogues and strategy meetings with the range of Malian institutions involved in agriculture.
POVNET has also developed a practical approach – ex ante Poverty Impact Assessment (PIA) – to help field-level stakeholders assess the expected poverty reduction impacts of planned interventions. As an example, a PIA pilot conducted of Indo-German Natural Resource Management Programmes in India showed which combination of transmission channels was most effective in reaching the poor, decreasing the gender gap and protecting the environment. This knowledge was then used to redesign the programme, increasing attention on the benefits to and role of landless women and men in rural areas. While less sophisticated than the more refined, but also more expensive, time consuming and resource intensive Poverty and Social Impact Analysis (PSIA), a number of pilots are now testing the PIA approach with constructive results.
In addition, a pilot learning event on promoting pro-poor growth, developed in association with the Training for Development (Train4Dev) Network, and connected to the PIA approach, took place in December 2007. This event promoted donor harmonisation by providing development agency staff responsible for designing and implementing pro-poor growth programmes an opportunity to learn from their different approaches and to reflect on the role of donors in complex political processes.
Connecting poor women and men to the growth process
In addition to this field-level testing, POVNET is also following up its policy guidance with explicit attention to better connecting up growth and poor people. In the past, growth did not always reach the masses of poor people, who have not thus been fully involved in contributing to or benefiting from growth.
Accordingly, present POVNET work on social protection and empowerment, together with work on employment and labour markets, aims to have a strong impact on poverty reduction:
-
Work on social protection and empowerment will tackle some of the key impediments, risks and vulnerabilities (e.g. famine, illness, drought) that hold poor people back from taking sometimes more risky but more powerful livelihood strategies to take up the opportunities arising from growth.
-
Based on the key role of employment (including informal and self employment) for poverty reduction, work on employment and labour markets will improve the means, via better functioning markets for their assets and services, for poor women and men to take up such opportunities.
Where to next?
POVNET’s recent work shows that mainstreaming the pro-poor growth agenda is a challenge and the key policy messages still need substantial support before they also take root in development agencies and ministries in donor and partner countries. For the 2009-10 Programme of Work, two proposals submitted by POVNET will be pursued that received both strong and broad support from DAC members, namely:
The challenges for donors and their developing country partners to promote pro-poor growth should not be underestimated. But the need to achieve substantial and sustained poverty reduction means that this challenge needs to be taken up. POVNET is bridging long-standing tensions and dichotomies to achieve policy level consensus on pro-poor growth. With support from its members, POVNET has now embarked on the important step of taking these messages to the field, thus helping to ensure that growth policies are more pro-poor and that implementation allows the poor to participate in and benefit from growth. In a critical area for achieving the MDGs, POVNET is consequently helping donors to harmonise and co-ordinate their pro-poor growth activities at field level, to align their initiatives with locally owned development plans and to support country-based approaches.
|
