Dynamics of poverty reduction and BD

A few days ago the world observed the United Nations International Day for Eradication of Poverty, 2015. We had interesting articles in our print media as well as comments from analysts in the electronic media. They not only tried to define the connotations of poverty but also gave their observations on the varied denotations of this word with regard to alleviation or reduction of this state within the context of consolidating development and building a sustainable future. In this context it was reiterated that everyone must come together to end poverty and discrimination so that the needs of the present can be met without compromising the expectations of future generations.

Consequently, we have to ensure the success of this transition within the paradigm towards a greener and fairer economy by not confining ourselves only within factors like better technology and greater investment. We need to move forward by enhancing social, economic and environmental interdependence among the stakeholders. This will require a ‘mutually respectful’ relationship between individuals, communities and nations and also the sharing of knowledge as it continuously evolves. This will assist us to better evaluate the economic and social policies, strategies and priorities adopted over the last two decades. It will also enable us to avoid repeating the mistakes that, in more ways than one, have contributed to environmental degradation, unsustainable growth, emergence of different inequalities and social injustice. We can then identify the activities that need to be nurtured.  

Poverty reduction measures as those suggested by Henry George in his “Progress and Poverty”, are those ‘that raise, or are intended to raise, enabling the poor to create wealth for themselves as a means of ending poverty’. This view assumes significance because poverty occurs in both developed and developing countries. It might be more widespread in developing countries, but both types of countries need to undertake poverty reduction measures. This will involve improving the living conditions of people who are considered relatively poor and in need of a relatively better life within the framework of their own community.

Social scientists and economists agree that one method for reducing existing poverty is to encourage the creation of opportunities- be it in the form of new micro-entrepreneurship or through the potential of new employment. However, the prospect of new enterprises and foreign investment can be driven away because of inefficient institutions, corruption, the weak rule of law and excessive bureaucratic burdens. For example it is important to note that it takes two days, two bureaucratic procedures, and $280 to open a business in Canada while an entrepreneur in Bolivia must pay $2,696 in fees, wait 82 business days, and go through 20 procedures to do the same. Unfortunately, such challenges also exist in South Asian countries including Bangladesh.  These barriers regrettably favour big firms at the expense of small enterprises where most jobs are created. They are able to bribe relevant officials even for routine activities, which translates into becoming a tax on business.

We need to remember that long run economic growth per person is achieved through increases in capital (factors that increase productivity), both human and physical, and technology. Improving human capital, in the form of health, is particularly needed for economic growth and nations, according to most economists associated with the health sector do not comparatively need large investments to gain this additional factor. This has already been demonstrated by Bangladesh and Sri Lanka in the manner in which they have reduced their maternal mortality rate. Knowledge on the cost effectiveness of healthcare interventions can be elusive but educational measures to disseminate what works and what is available for disease control can make a major difference. Effective projects like promoting hand washing is cost effective as a health intervention measure but can cut deaths from the major childhood diseases like diarrhea and pneumonia by half.  Such simple measures will be especially helpful in South Asian rural areas where personal hygiene is sometimes overlooked.

We must not forget that better health among children, particularly those studying at the primary and secondary levels has crucial relevance in the equation for creating human capital. Education is an important determinant for economic growth and reduction of poverty. Any disruption in that process can harm the creation of physical capital. This has been noticed not only in many countries in Africa and Latin America but also in certain areas of rural South Asia including Bangladesh. There have also been most unfortunately attacks carried out by fundamentalist Islamic extremists in Pakistan on workers assigned for expanding immunization against some diseases. This has definitely affected educational continuity among children there. On the other hand, efforts undertaken in  this regard by some governments, including Bangladesh, with the assistance of WHO, have started paying dividends in the expansion and containing of disruption among students. Deworming of children costs about 50 cents per child per year and reduces non-attendance in educational institutions from anemia and illness. This process needs to be followed rigorously in Bangladesh, particularly in the coastal areas and also in the northern and north-western Districts.

There are two other areas where Bangladeshi authorities, particularly the present government have been attaching attention.  That needs to be carried forward more extensively to reduce poverty within our country. They relate to improvement in our infrastructure such as roads and information networks. These two factors play a significant role in helping to achieve market reforms. China is understood to have claimed that it is investing in railways, roads, ports and rural telephones in African countries as part of its formula for economic development. This is beginning to work over there and also in South Asia, particularly Bangladesh. Digitalization and improvement in connectivity are today expanding our horizons just as the technology of the steam engine, a century and half ago, helped to spur the dramatic decreases in poverty levels.

Today, cell phone technology is bringing the market to poor or rural sections. With necessary information, remote farmers can now produce specific crops to sell to the buyers that bring the best price. Such technology also helps bring economic freedom by making financial services accessible to the poor. It is also facilitating those below the poverty line to having a safe place not only to save money but also to receiving loans. Mobile banking is also addressing the problem of the heavy regulation and costly maintenance of saving accounts. This is also helping to create entrepreneurship at the grass-roots level and also contributing towards reduction of poverty. We need to focus seriously as to how this process can be moved forward in Bangladesh within a more accountable framework.  

While we take necessary steps with regard to reduction of poverty, we also need to remember that increases in employment without increases in productivity might lead to a rise in the number of “working poor”. This is why some economists are now underlining that reduction of poverty must also in parallel take precaution about promoting the creation of “quality” and not just “quantity” pertaining to labour market policies. This approach highlights how higher productivity has helped reduce poverty in East Asia. Other analysts have also drawn attention to the fact that just as it is important to reduce unemployment through manufacturing, it is equally imperative that attention is paid to effective translation of productivity growth into employment growth.  This suggests that there be a more nuanced understanding of economic growth and quality of life and poverty reduction.

In Bangladesh, our authorities have been focusing on our rural hinterland for some time. Our anti-poverty effort in this regard has quite correctly addressed itself towards the amelioration of living standards among those involved principally in agriculture- our farmers. This is being done because it is clear that growth in the agricultural productivity of small farmers is, on average, at least twice as effective in benefiting the poorest half of a country’s population as growth generated in nonagricultural sectors. Keeping this factor in view, Bangladesh has started improving water management as an effective way to help reduce poverty among farmers. With better water management, they can improve productivity and potentially move beyond subsistence-level farming. Access to irrigation has provided families living in the former ‘Monga’ areas with opportunities to diversify their livelihood activities and potentially increase their incomes. It has also enabled crop diversification. Our authorities, in this regard need to seriously consider using renewable energy- solar power to facilitate this dynamics.

Any consideration on reduction of poverty in general and Bangladesh in particular would not be complete without reference to the question of development or tied aid as provided by donor countries. A major proportion of aid from donor nations is ‘tied’, mandating that a receiving nation buy products originating only from the donor country. Consequently some NGOs, especially in Africa have argued that Western monetary aid often only serves to increase poverty and social inequality, either because it is conditioned with the implementation of harmful economic policies in the recipient country or because it’s tied with the importing of products from the donor country over cheaper alternatives.

In Bangladesh also we have sometimes observed foreign aid serving the interests of the donor more than the recipient. Critics have also argued that some of the foreign aid is stolen by corrupt governments and officials, and that higher aid levels sometimes erode the quality of governance.  Economists also sometime refer to some other drawbacks within the aid system- that aid is excessively directed towards the salaries of consultants from donor countries and that aid is sometimes not spread properly, neglecting vital, less publicized areas and that aid is not sometimes properly coordinated among donors, leading to a plethora of disconnected projects rather than unified strategies. One hopes that our experience from the past will help us to overcome such challenges- particularly in the eradication of poverty- both rural and urban.

The last issue that needs to be addressed for poverty eradication in Bangladesh as in other developing countries is the question of gender equality and mainstreaming. We have already moved forward in this regard and are ahead of the others in south Asia. We have done so because addressing gender equality and empowering women are necessary steps in overcoming poverty and furthering development as supported by the human development and capabilities approach and the Millennium Development Goals. Disparities in the areas of education, mortality rates, health and other social and economic indicators can impose large costs on well-being and health of the poor, which diminishes productivity and the potential to reduce poverty. We have already taken several inter-active and positive steps and I am confident that our authorities will continue to enable the women to access services to enhance their well-being. The decision to fix the lowest age of marriage at 18 will be a reassuring measure and will help us to attain the SDGs.

We have to also remember that within the poverty reduction matrix, making employment opportunities available is just as important as increasing income and access to basic needs. In this context, Bangladesh has focused on universal public education. This plays a significant role in preparing youth for basic academic skills and many trade skills as well. Apprenticeships clearly build needed trade skills. If modest amounts of cash and land can be combined with a modicum of agricultural skills, subsistence can give way toward modest societal wealth. Similarly, education for women will allow for reduced family size-an important poverty reduction event in its own right. While all components mentioned above are necessary, the portion of education pertaining to the variety of skills needed to build and maintain the infrastructure of a developing (moving out of poverty) society: building trades; plumbing; electrician; well-drilling; farm and transport mechanical skills (and others) are clearly needed in large numbers of individuals, if the society is to move out of poverty or subsistence.

Source: http://old.thefinancialexpress-bd.com/2015/11/15/117762