Why Does Poverty Persist?

Why the Poor Fall Victim - and How They Can Escape

For this woman in Bangladesh, chronic poverty could be two shocks away. Source: amirjina

Why do some people fall into the trap of chronic poverty and others are able to escape it? IFPRI convened a panel of experts yesterday to shed some light on factors that lead to chronic poverty, and policy actions that may help pull households out of it.

The panel included Bob Baulch from the Chronic Poverty Research Center, IFPRI’s Agnes Quisumbing, and Catherine Porter from Oxford University, and was moderated by IFPRI’s John Hoddinott.

Baulch presented highlights from a new book, “Why Poverty Persists: Poverty Dynamics in Asia and Africa.” Quisumbing and Porter supported these findings with results from research in Bangladesh and Ethiopia, respectively, which are also featured in the book.

As Baulch explained, the process of becoming chronically poor—or poor for an extended duration—is a gradual one. It is often not one sudden “shock” or adverse event that ruins a family’s financial standing, but several smaller negative events in succession. Sometimes these events aren’t even totally unexpected, but predictable, such as a cyclone in an area prone to them or a dowry payment when a daughter is married. Other negative events include illness in the family or the death of a main income earner.

Once a household falls into chronic poverty, lack of education and assets; belonging to a marginalized ethnicity, caste, or race; and customs and social obligations all contribute to keeping it there. Porter’s 10-year study of Ethiopian households found that the two largest ethnic groups were the least poor. Quisumbing discovered that the “double whammy” of dowry and illness expenses were major factors pushing Bangladeshi households into chronic poverty over the last decade.

So what can be done? According to Baulch, there is no “silver bullet.” Economic growth is good, but is not enough to reach disadvantaged and marginalized people: “a rising tide doesn’t raise all boats.” This requires what Baulch called a “transformative approach to development” that emphasizes enabling the poor to build up and trade up assets, social protection and education to lift households out of poverty and prevent them from falling into it. In addition, Baulch suggested that governments invest in measures that help spread growth widely, such as rural feeder roads, improved telecommunications systems, and urban planning.

Employment guarantees, cash transfers—especially ones that are conditional on educational and health goals—and social safety nets prevent people from becoming poor in the first place. Credible and reliable social protection in particular gives people the security to take risks that will ultimately lead them towards a path of upward mobility.

Quisumbing suggested government and civil society interventions to enable households to insure against illness, which tends to take its toll on women’s assets, and to discourage the practice of dowry. According to Porter, social safety nets and weather-related insurance would help the mostly rural and agricultural poor in Ethiopia.

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