Poverty Reduction: In Search Of A New Economic Format PERSPECTIVES
By PREM MISIR
Guyana Chronicle
February 16, 2004

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THE comments in this article are based on some aspects of a paper on poverty I presented at the recently concluded University of Guyana and Clark Atlanta University's International Conference on Governance, Conflict Analysis and Conflict Resolution at Le Meridien Pegasus. The full paper is available.

Statistics on poverty
Given the difficult economic baseline situation inherited by the People's Progressive Party/Civic (PPP/C) Administration, and the now expected post-elections violence since 1992, it's impressive to see a dramatic statistical reduction in poverty. Yes, sustained conflict is a cause of poverty!!

Here are some statistics on poverty, as follows:

50% of the people earned less than 55% of the average income in 1971 (PAHO).

Based on this PAHO distribution of income, 38% of the population lived below the poverty line in 1971.

65% lived below the poverty line in 1988, and which reached 75% in 1989 (Boyd).

86% lived below the poverty line in 1991 (Ramprakash).

The Household & Income Expenditure Survey/Living Standards Measurement Survey found that 43% of the population lived below the poverty line in 1993 (Government of Guyana, UNDP, World Bank).

The 1999 Living Conditions Survey found that 35% of the population lived below the poverty line.

Poverty gap measures the intensity of poverty. What happened between 1992 through 1999? Georgetown and other urban towns together reduced their depth of poverty at an average of 45%, Rural Coastal only by 21%, and Rural Hinterland, by as little as 2%. Guyana, as a whole, saw a 26% reduction in poverty depth. The policy implication is clear that rural areas including the hinterland need an urgent developmental focus exceeding the urban development spotlight.

In the U.S., the poverty rate dropped, with some fluctuations, from 22 percent in 1959 to 13.8 percent in 1995. The poor numbered about 38 million in the U.S. in 1995 to 35 million today. In 1999, New York City's residents experienced a 29% depth of poverty. In Guyana, only the Rural Hinterland exceeds this U.S. figure. But let's not get too excited because the standards in both countries are different and so methodologically, the comparison may not hold. Still, it gives a sense of the poverty depth in the U.S. which may titillate the imagination of the Guyana 'poverty' policy makers. But we can take heart in that given the persistent difficulties of considerably reducing poverty in the U.S., with enormous resources at its command, we may do well to appreciate the significant poverty reductions achieved in Guyana in a mere eight (8) years.

The 1999 Living Conditions Survey showed that 19% of Guyanese lived in extreme poverty, but this represented a reduction of 34% incidence in extreme poverty from 1992. In the table below, compare this with our Latin American and Caribbean neighbors and then we may appreciate the strides made in poverty reduction in Guyana.

Incidence of Extreme Poverty

Region Population below

US$1 per day (%)

East Asia 27.58
East Asia (excluding China) 18.51
Eastern Europe and Central Asia 1.56
Latin America and Caribbean 16.80
Middle East and North Africa 2.39
South Asia 44.01
Sub-Saharan Africa 47.67
Source: Chen & Ravallion (2000)

What is poverty?
The World Bank defines poverty "as multidimensional and a situation in which people are unable to fulfill their basic human needs as well as lack of control over resources, lack education and skills, poor health, malnutrition, lack of shelter, poor access to water and sanitation, vulnerability to shocks, violence and crime and the lack of political freedom and voice." This definition sees poverty as extending beyond economics to include indicators that will reduce deprivation to enhance a person's life chances in society. The poor are:

* people cannot work because of skill deficiencies, or are employed in low-paying jobs, either at or below the minimum wage;

* people who cannot work due to old age, physically or mentally handicapped, or mothers with dependent children;

* people who are children of the poor.

Explanations of poverty
Two competing explanations generally are given for explaining causes of poverty. The first is the individual explanation which purports that some people are trapped in poverty because of inadequacies, as laziness and lack of education. This perspective blames the poor for their poverty. Over time, people develop a culture of poverty which traps the poor, encouraging resignation to poverty as having to do with a person's destiny. Here, a lower-class subculture evolves where personal ambition and achievement take a back seat, and 'living for the moment' is advocated. The other school of thought is that society is the producer of poverty. Here, the focus is on the structural aspects of society, such as, employment opportunities. Society is blamed for poverty because it is the society and not the people themselves who distribute resources. Generally, it is accepted that poverty is a consequence rather than a cause of a person's position in society.

Poverty/inequality connection
The economic and inequality processes create poverty. Traditionally, however, inequality and poverty were perceived as separate issues, but they really are inextricably linked. Any decisive poverty reduction, such as, the Poverty Reduction Strategy Program (PRSP), will require policies that incorporate the connection between inequality and poverty itself. Keep in mind that the non-linking of inequality with poverty in poverty reduction programs has its genesis in excluding the poor from inputting such programs.

Capitalism as an economic system of production may be driving many poverty-reducing programs. Historically, capitalism has not measured up to the task of combating economic inequality. In fact, it creates greater economic inequality. Further, if the goal of reducing poverty is achieving a higher self-sufficiency for all through economic growth and full employment (Hurst), then the search for other economic systems to assist capitalism in reducing poverty will continue. This approach is consistent with Amartya Sen's suggestion of a paradigm shift away from a spotlight on income, growth and utility to an increased focus on individual entitlements, capabilities, freedoms and rights. The PRSP will benefit from a new economic format.

At this time, we need periodic comprehensive empirical and ethnographic research on the Socioeconomic Status (SES) of the population. Merely spilling out data on how resources have been allocated is necessary but not sufficient. Allocation is only part of the process; we now need to find out how resources are being consumed, in order to assess their impact on people's SES. Several previous poverty studies in Guyana mainly used income data; we could now collect poverty data through education, occupation and income indicators to determine a person's class position and simultaneously establish that person's life chances in society.

Ministries, and Government Agencies, including The Government Information Agency (GINA), have to move beyond mere data collection to extend their work toward analysis and interpretation. The Census is only one important data source, but we now have to analyze and interpret the data from other sources, too. The Census is not intended for that purpose. The University of Guyana, too, especially its Department of Social Work, urgently should undertake a national research on families to track poverty trends by economic, education, race, ethnicity, location, among other appropriate indicators. Ethnographic research, especially, will tell us about the well being of Guyanese based on their human and financial assets, economic and living conditions, and their experience with the society's institutions. The research must report periodically on the gap between rich and poor, and whether or not self-sufficiency for all is achieved. But first any poverty-reducing program must inject into its structure and function the principle of the connection between poverty and inequality inclusive of a new economic format. Exclusion of this principle will retard self-sufficiency for all.