Sunday, September 18, 2011
Poverty Reduction and Inclusive Growth
.
The following opinion piece was published in Republica on September 18, 2011. The direct Republica link is here.
In 2010, a report for UNDP prepared by Oxford University caused a furor in Nepal when it mentioned that 65 percent of us lived under poverty. The report made its calculations by observing factors like nutrition, electricity, food, energy, drinking water and sanitation, maternal mortality, student enrollment, livelihood and availability of property. The study defined an MPI index—Multi-dimensional Poverty Index—as a measurement of poverty.
The MPI had two parts: Incidence of Poverty and Average Intensity of Deprivation. Incidence of poverty recorded the proportion of the Nepali population that was multi-dimensionally poor. The average intensity of deprivation recorded the average proportion of the indicators in which the population was deprived. The study claimed that 64.7 percent of Nepali households were poor, and 54 percent deprived.
Needless to say, the National Planning Commission (NPC) countered the findings of that report, and suggested that the national poverty was only 25.4 percent. The basic difference between the two numbers arises out of the mechanics of measurement. The Oxford measurement was clearly influenced by Prof Amartya Sen’s ideas of measuring poverty levels by observing overall human development and access to facilities. On the other hand, NPC’s measurement is pretty straightforward in specifying a poor person as being somebody who consumes less than 2144 calories per day. The NPC should have bothered to learn this difference before countering the findings.
However, despite the mechanics involved in measuring poverty, it is undeniable that poverty is still a problem, and a constant hindrance to our economic growth. The fact remains that our political, social and economic problems all arise out of, and contribute to, one common factor: Poverty. In addition, what the Oxford study highlighted was a lack of inclusiveness in our economic growth because of which marginalized groups and minorities in Nepal continue to suffer under poverty.
There are certain factors that have significant impact on whether we are poor or vulnerable to becoming poor. Variances in poverty level depend on rural-urban divide, ecological zones, ethnic groups, castes, literacy level, and gender. For example: According to the findings of the Nepal Living Standard Survey (NLSS), a rural household is more likely to be under poverty than an urban household. NLSS 2004 showed that 95 percent of the poor lived in rural areas.
Looking at the raw numbers, it seems that poverty is declining in Nepal. If the past trends hold true, it is safe to say that we are less poor today, and less vulnerable compared to our situation a decade or two ago. For example, in 1996, people in the mountains were more likely to live under poverty than those in the Terai or the hills. In 2004, those in the hills were more likely to be poor than those in the mountains.
However, an improvement in poverty in one scenario does not necessarily indicate improvement in all other fronts. Incidence of poverty reduction in the mountains today could be the result of declining mountain population due to migration downwards to the hills. Many people from the mountains and hills migrated because of Maoist insurgency, lack of economic opportunities, and changing environment and climate. Migration is also the main reason for drastic decline in poverty incidence in the mid-western and far-western regions since 1996.
Among the factors that have been observed to reduce poverty in households, education is the most important. Around 42 percent of illiterate households were poor in 2004. But, if at least one member of the household had more than 11 years of schooling, there was only 1.6 percent chance that the household would still be poor. The good news for us in this regard is that youth literacy rate is increasing today. As our youths become more literate, we can expect that to have an impact in lowering our poverty rates.
However, despite becoming more literate and educated, our youths are struggling to find jobs at home. As a result, they find themselves unemployed and disillusioned. Our inability to create jobs for them has a tendency to undo the progress that we have made by educating them. Our inability to harness the youth education and energy severely hinders our fight against poverty. If Nepal is to follow an inclusive growth approach, inclusion of our youths is vital to that approach.
There is a general consensus among Nepali experts that inclusive growth brings forth sustained and equitable development, social inclusion, empowerment of women, and security in the country. However, this consensus has not been translated into results. Experts have raised their concerns on issues such as integration of trade policy into overall development goals and strategies; export-led growth strategy with a human face; promotion of employment-intensive economic activities; making aid more inclusive and productive; and effective leadership. Until these desired results can be obtained, critics believe that Nepal will not see a proper inclusive growth.
The critics are right to some extent. A 2008 research by Magnus Hatlebakk, prepared for the Norwegian Embassy in Nepal, showed that Tamang and Rai people of eastern hills have high poverty rates. The highest poverty rates are found among the minorities like Magars, Dalits, and Tharus. NLSS I and II show high poverty among the minorities, and low among the upper caste Brahmins and Chhetris. 46 percent of Dalits, 41 percent of Muslims, and 43 percent of Janajatis were poor in 2004. According to a 2005 UNDP report, poverty rates for Dalits were 15 percent higher than the national poverty rate.
Therefore, there clearly exists a strong link between social exclusion—as defined by the caste hierarchy—and economic poverty. In recent years, remittance income has reduced the poverty incidence on female headed households. So, gender dimension in poverty could be reducing. However, despite some improvements in recent years, we have many more miles to go in achieving inclusive growth.
The following opinion piece was published in Republica on September 18, 2011. The direct Republica link is here.
In 2010, a report for UNDP prepared by Oxford University caused a furor in Nepal when it mentioned that 65 percent of us lived under poverty. The report made its calculations by observing factors like nutrition, electricity, food, energy, drinking water and sanitation, maternal mortality, student enrollment, livelihood and availability of property. The study defined an MPI index—Multi-dimensional Poverty Index—as a measurement of poverty.
The MPI had two parts: Incidence of Poverty and Average Intensity of Deprivation. Incidence of poverty recorded the proportion of the Nepali population that was multi-dimensionally poor. The average intensity of deprivation recorded the average proportion of the indicators in which the population was deprived. The study claimed that 64.7 percent of Nepali households were poor, and 54 percent deprived.
Needless to say, the National Planning Commission (NPC) countered the findings of that report, and suggested that the national poverty was only 25.4 percent. The basic difference between the two numbers arises out of the mechanics of measurement. The Oxford measurement was clearly influenced by Prof Amartya Sen’s ideas of measuring poverty levels by observing overall human development and access to facilities. On the other hand, NPC’s measurement is pretty straightforward in specifying a poor person as being somebody who consumes less than 2144 calories per day. The NPC should have bothered to learn this difference before countering the findings.
However, despite the mechanics involved in measuring poverty, it is undeniable that poverty is still a problem, and a constant hindrance to our economic growth. The fact remains that our political, social and economic problems all arise out of, and contribute to, one common factor: Poverty. In addition, what the Oxford study highlighted was a lack of inclusiveness in our economic growth because of which marginalized groups and minorities in Nepal continue to suffer under poverty.
There are certain factors that have significant impact on whether we are poor or vulnerable to becoming poor. Variances in poverty level depend on rural-urban divide, ecological zones, ethnic groups, castes, literacy level, and gender. For example: According to the findings of the Nepal Living Standard Survey (NLSS), a rural household is more likely to be under poverty than an urban household. NLSS 2004 showed that 95 percent of the poor lived in rural areas.
Looking at the raw numbers, it seems that poverty is declining in Nepal. If the past trends hold true, it is safe to say that we are less poor today, and less vulnerable compared to our situation a decade or two ago. For example, in 1996, people in the mountains were more likely to live under poverty than those in the Terai or the hills. In 2004, those in the hills were more likely to be poor than those in the mountains.
However, an improvement in poverty in one scenario does not necessarily indicate improvement in all other fronts. Incidence of poverty reduction in the mountains today could be the result of declining mountain population due to migration downwards to the hills. Many people from the mountains and hills migrated because of Maoist insurgency, lack of economic opportunities, and changing environment and climate. Migration is also the main reason for drastic decline in poverty incidence in the mid-western and far-western regions since 1996.
Among the factors that have been observed to reduce poverty in households, education is the most important. Around 42 percent of illiterate households were poor in 2004. But, if at least one member of the household had more than 11 years of schooling, there was only 1.6 percent chance that the household would still be poor. The good news for us in this regard is that youth literacy rate is increasing today. As our youths become more literate, we can expect that to have an impact in lowering our poverty rates.
However, despite becoming more literate and educated, our youths are struggling to find jobs at home. As a result, they find themselves unemployed and disillusioned. Our inability to create jobs for them has a tendency to undo the progress that we have made by educating them. Our inability to harness the youth education and energy severely hinders our fight against poverty. If Nepal is to follow an inclusive growth approach, inclusion of our youths is vital to that approach.
There is a general consensus among Nepali experts that inclusive growth brings forth sustained and equitable development, social inclusion, empowerment of women, and security in the country. However, this consensus has not been translated into results. Experts have raised their concerns on issues such as integration of trade policy into overall development goals and strategies; export-led growth strategy with a human face; promotion of employment-intensive economic activities; making aid more inclusive and productive; and effective leadership. Until these desired results can be obtained, critics believe that Nepal will not see a proper inclusive growth.
The critics are right to some extent. A 2008 research by Magnus Hatlebakk, prepared for the Norwegian Embassy in Nepal, showed that Tamang and Rai people of eastern hills have high poverty rates. The highest poverty rates are found among the minorities like Magars, Dalits, and Tharus. NLSS I and II show high poverty among the minorities, and low among the upper caste Brahmins and Chhetris. 46 percent of Dalits, 41 percent of Muslims, and 43 percent of Janajatis were poor in 2004. According to a 2005 UNDP report, poverty rates for Dalits were 15 percent higher than the national poverty rate.
Therefore, there clearly exists a strong link between social exclusion—as defined by the caste hierarchy—and economic poverty. In recent years, remittance income has reduced the poverty incidence on female headed households. So, gender dimension in poverty could be reducing. However, despite some improvements in recent years, we have many more miles to go in achieving inclusive growth.
Labels: inclusive growth, poverty
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