IISPPR

Beyond Economic Growth : Strategies for Sustainable Poverty Reduction

Priyanka Chauhan

Beyond Economic Growth: Strategies for Sustainable Poverty Reduction 

Poverty means when people lack the means to support their basic needs. In this context, it is important to understand basic needs first. Basic needs stand for housing, food and clothes. Poverty is associated with poor health, low levels of education, inability to work, etc. Several reasons cause poverty. Broadly they are: 

 1)Inequality based on caste or income causes limited participation, leaving groups without a voice.

2) Poor healthcare system in an economy, causes easily treatable diseases fatal. When individuals do not get access to a good healthcare system, they become vulnerable.

3) Lack of education and poverty go hand in hand. An economy where the majority is illiterate is bound to suffer financially, as they are unable to make wise decisions due to a lack of knowledge and intellect.

Poverty is a major issue that hinders economic growth at several levels, this calls for the need to eradicate poverty. Two centuries ago, the majority of the global population was under poverty since then, there have been relentless efforts to reduce poverty. In this journey, economic growth has t helped in reducing poverty. When an economy functions smoothly, an increase in output has a direct impact on employment, thus contributing to lower poverty rates. This has been one of the methods to eradicate poverty at various levels. The poorest people today live in countries that have very low rates of economic growth. 

The current state of Poverty-

Currently, the rate of poverty is lower than it was a few centuries back. However, there are still a certain number of people living below the poverty line. Charts and graphs from legitimate websites prove that the Sub-Saharan African region is the poorest region in the world. Almost 40% of the population lives below poverty there. 

Some African countries are still struggling as their economy is stagnant, they have been struggling to maintain themselves financially. However, many African countries have shown significant progress and have successfully reduced poverty. Globally, during the COVID-19 pandemic, the world has seen the worst of poverty cases, which is called “extreme poverty”, which lasted roughly from 2020-23 and still some of its traces can be found in some areas of developing and developed countries. 

Next, as we proceed with the strategies that have been implemented to eliminate poverty and reduce its impacts. Since poverty is an underlying problem and has serious impacts on the economy of a country, there have been efforts to remove poverty at all levels. The first method/initiative is “economic growth and job creation”. 

  • Economic growth has been a proven method to eradicate poverty. When a country focuses on improving its economy and moving towards stable economic growth, it improves its infrastructure for better transportation and freight. They work to improve their output level, therefore, increasing employment and solving poverty issues. 

Increasing output implies increasing labor and capital input. Capital input requires huge investment from various sources. Labor input requires human input and adds to increasing employment opportunities for the population. This adds substantially to the economy of the country. 

Data from (Open Knowledge Repository) states that a 10% increase in economic growth can reduce the proportion of people living in poverty by 26%, further a paper from the “ScienceDirect” website states that, the rate of poverty reduction also depends on how economic growth is defined. A 10% decline in poverty is associated with approximately a 3.1% increase in per capita income. This result is calculated and concluded by conducting two strategies. The first is, by assuming growth to be determined by one year lagged multidimensional poverty to partially correct for the reverse causality. Second, by conducting a standard instrumental variables approach where the instrument is defined as the duration of free cooked Mid-Day Meal scheme implementation in each Indian state. Another paper on economic growth and poverty, states that “certain specific actions to reduce poverty can create a virtuous circle by increasing economic growth in a way that reinforces the reduction in poverty and inequality and benefits the population at large while, in turn promoting higher growth”.

  • Education and Human Development, the emphasis here is on education and how it helps in eradicating poverty. Educated / literate people are aware of their expenses and income, and they manage their finances better than people who lack financial knowledge. Education is linked to better health outcomes, as educated individuals are more likely to have access to healthcare, make informed health decisions and adopt healthier lifestyles. This can reduce healthcare costs. Education can foster critical thinking, problem-solving skills and civic responsibility. This can encourage individuals to participate in their communities and contribute substantially to social justice. Data from “Concern Worldwide” states that, “if all students in low-income countries had just basic reading skills, an estimated 171 million people could escape extreme poverty. This proves how education plays an important role in solving poverty. 

There have been substantial poverty reduction initiatives, they are:

Food for Work Programme, this initiative was brought in the 2000s by the Ministry of Rural Development. The goal of this Programme was to enhance food security through wage employment. Under this program, food grains are supplied to states free of cost. 

National Food Security Mission, this initiative was brought in 2007 by the Ministry of Agriculture. The goal of this program was to increase the production of rice, wheat, pulses and coarse cereals through expansion of production area to increase productivity. These schemes have helped in eradicating poverty at several levels. 

Before concluding this article, we will see the interconnectedness of SDG 1: No Poverty, with the other 16 SDGs.

“No Poverty” SDG is interconnected to other Sustainable Development Goals, such as

  • SDG 2: Zero Hunger, this goal aims to end hunger and ensure equal access by all people to safe and sufficient food. The aims of this goal somewhere share a common ground with SDG 1, as both goals aim to solve the issue of hunger which is one of the main sources of poverty.
  • SDG 3: Good Health and Well-Being, this goal aims to ensure healthy lives for people of all ages. This broadly covers maternal mortality, infectious diseases, child mortality and many more. The aims of this SDG and “No Poverty” coincide with each other, as providing good healthcare facilities to the economy, not only improves living standards but also helps in solving poverty. 

In conclusion, Sustainable Development Goal 1: No Poverty, has been deeply researched and worked upon. In some areas, poverty has been completely eradicated, this indicates the dedication and efforts towards materializing this goal. It becomes important, to understand the interconnectedness of poverty with other global challenges as well, such as climate change, inequality, hunger and to adopt integrated solutions to address these issues collectively. 

References:

“Yanxi Bao” and “Tingxuan Liao” 

Multidimensional poverty and growth: Evidence from India 1998 – 2021, published in January, 2024

https://www.sciencedirect.com/science/article/abs/pii/S026499932300398X.

“Lustig Nora”, “Arias Omar”, “Rigolini Jamele”

Poverty Reduction and Economic Growth: A Two-Way Causality, published in March 2022.

https://publications.iadb.org/en/poverty-reduction-and-economic-growth-two-way-causality#:~:text=The%20report%20argues%20that%20certain,in%20turn%2C%20promoting%20higher%20growth.

“Garbis Iradian” and “J. Erik De Vrijer”

Inequality, Poverty and Growth: Cross-Country Evidence, published in February 2005

https://www.imf.org/external/pubs/ft/wp/2005/wp0528.pdf.

Websites: The World Bank Poverty Data Portal

The Human Development Report 

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