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51. Do We Need a New "Great Transformation"? Is One Likely?

Author:
Frances Stewart
Publication Date:
04-2006
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
Karl Polanyi wrote The Great Transformation in 1944 which analysed the double movement Europe experienced, from a situation where the market was heavily regulated and controlled in the eighteenth century to a virtually unregulated market in the nineteenth century, and the huge transformation in which the market was once more brought under control as a reaction to the poverty, unemployment and insecurity brought about by the unregulated market. Yet in both developed and developing countries there has since been a reaction with a new move towards the market. This paper analyses such processes in contemporary developing countries, and considers whether, in the light of the consequences of the unregulated market, a new Great Transformation is needed. It also considers whether such a transformation is likely, reviewing moves towards increased regulation of the market, and also the challenges faced by any contemporary great transformation arising from globalization and the nature of politics.
Topic:
Development, Markets, and Poverty
Political Geography:
Europe

52. Fiscal Policy for Poverty Reduction, Reconstruction, and Growth

Author:
Matthew Smith, Alan Roe, and Tony Addison
Publication Date:
06-2006
Content Type:
Policy Brief
Institution:
United Nations University
Abstract:
An effective state is able to mobilize revenue and spend it on infrastructure, services, and public goods that both enhance human capital and the well-being of communities (especially the poor), as well as stimulating investment and employment creation by the private sector. An effective state also manages public finance to ensure that macroeconomic balance is maintained—with policy neither too restrictive to discourage private investment and growth, nor too accommodative to create high inflation and crowd out private investment. Fiscal issues are therefore at the heart of the state's role in the development process and failure in this policy area—whether it is in taxation, public expenditures, or in managing the fiscal deficit and public debt—can quickly undermine growth and poverty reduction. Fiscal weakness can also be fatal to social peace when one or more ethnic, religious, or regional groups are taxed unfairly—or receives too little in the allocation of public spending.
Topic:
Debt, Development, Economics, and Poverty
Political Geography:
Africa and Asia

53. The Poverty Macroeconomic Policy Nexus: Some Short-run Analytics

Author:
George Mavrotas and S. Mansoob Murshed
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The present paper utilises a short-run theoretical macroeconomic model of a small open economy to look at the impact of macroeconomic policies and financial deepening upon poverty through sectoral changes. This is because an expansion in certain sectors may cause greater poverty reduction. The model involves a non-traded and a traded sector on the formal side of the economy. The former is more capital intensive and the latter more unskilled labour intensive. Increased employment in the traded sector is more pro-poor compared to a similar rise in the non-traded sector as the former draws workers out of poverty in the informal sector. The model in our paper analyses short-run effects of devaluation, a rise in the money supply induced by financial deepening, and taxation to discourage non-traded goods consumption. Financial deepening can induce greater output and reduce poverty. Other results are mixed and taxonomic. We also attempt to differentiate between the stylised experiences of East Asia and Latin America. East Asian economies have relied more heavily on labour-intensive manufactured exports, whereas Latin America has had a relatively greater share of capital intensive and natural resource based exports. In recent decades countries in these two regions have had differing experiences in poverty reduction, with poverty arguably declining more in East Asia.
Topic:
International Relations, Development, Economics, and Poverty
Political Geography:
East Asia and Latin America

54. Financial Sector Development, Savings Mobilization and Poverty Reduction in Ghana

Author:
Peter Quartey
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
The paper primarily investigates the interrelationship between financial sector development and poverty reduction in Ghana. This is done using time-series data from the World Development Indicators from 1970-2001. The main findings are, first, that even though financial sector development does not Granger-cause savings mobilization in Ghana, it induces poverty reduction; and second, that savings do Granger-cause poverty reduction in Ghana. Also, the effect of financial sector development on poverty reduction is positive but insignificant. This is due to the fact that financial intermediaries in Ghana have not adequately channelled savings to the pro-poor sectors of the economy because of government deficit financing, high default rate, lack of collateral and lack of proper business proposals. Another interesting finding is that there is a long-run co integration relationship between financial sector development and poverty reduction.
Topic:
Development, Economics, and Poverty
Political Geography:
Africa and Ghana

55. Consistent Testing for Poverty Dominance

Author:
Bram Thuysbaert and Ricardas Zitikis
Publication Date:
12-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
If uncertainty exists over the exact location of the poverty line or over which measure to use to compare poverty between distributions, one may want to check whether poverty dominance holds. We develop a consistent statistical test to test the null of poverty dominance against the alternative of nondominance. Dominance criteria corresponding to absolute and relative poverty measures are dealt with. The poverty line is allowed to depend on the income distribution. A bootstrap procedure is proposed to estimate critical values for the test. Our results cover both independent and paired samples.
Topic:
Demographics, Development, Economics, and Poverty

56. Poverty Measurement and Theories of Beneficence

Author:
S. Subramanian
Publication Date:
10-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This note points to certain similarities of orientation and outcome between Derek Parfit's quest for a theory of beneficence and Amartya Sen's quest for a suitable real-valued representation of poverty. It suggests th at both projects, in a certain sense, have been instructive failures. Using Sen's own work, the note also suggests a logically natural way of dealing with some of the problems in poverty measurement reviewed in it—but only to reject this way out on other compelling grounds.
Topic:
Demographics, Development, Economics, and Poverty

57. Reckoning Inter-group Poverty Differentials in the Measurement of Aggregate Poverty

Author:
S. Subramanian
Publication Date:
09-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
In a heterogeneous population which can be partitioned into well-defined subgroups, it is plausible that the extent of measured aggregate poverty should depend upon the distribution of poverty across the subgroups. A judgment in favour of an equal inter-group distribution of poverty could arise in two ways. In the first approach, equality is upheld as an intrinsic social virtue, and the aggregate measure of poverty, in line with this view, is 'adjusted' to reflect the extent of inter-group disparity in the distribution of poverty that obtains. In the present paper, this approach is examined, with specific reference to the advancement of a diagrammatic aid to analysis called the group poverty profile. In the second approach, equality is upheld for instrumental reasons which arise from the observed fact that any individual's level of deprivation is a function not only of one's own income, but of the general level of prosperity of the group to which one is affiliated. Individual deprivation functions are specialized to a form which reflects this 'group-affiliation' externality, and the resulting poverty measure is studied with respect to its properties, and its implications for inter-group equity. The analysis is briefly extended to a review of the measurement of literacy, along externality-motivated lines suggested elsewhere by Basu and Foster. The paper concludes that social realism in the measurement of deprivation is often compromised by mainstream approaches to economic theorizing in which both heterogeniety and group-related externalities are generally de-emphasized.
Topic:
Demographics, Economics, Human Welfare, and Poverty

58. Poverty and the Welfare Costs of Risk Associated with Globalization

Author:
Ethan Ligon
Publication Date:
09-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
'Globalization' implies change, and uncertainty over future change may affect household welfare. We use data on Lorenz curves over the last fifty years for a sample of 53 (mostly developing) countries. Treating each country-quintile-year as an observation, we first account for variation in consumption expenditures, finding that global shocks are of less importance than country -level shocks in explaining variation in country-quintile consumption growth. While poorer households experience more rapid consumption growth than do wealthier households, they also bear much more risk. However, we find no evidence that this greater risk is related to globalization.
Topic:
Development, Globalization, Human Welfare, and Poverty

59. Why Do Poverty Rates Differ From Region to Region? The Case of Urban China

Author:
Guanghua Wan and Yin Zhang
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper proposes a semi-parametric method for poverty decomposition, which combines the data-generating procedure of Shorrocks and Wan (2004) with the Shapley value framework of Shorrocks (1999). Compared with the popular method of Datt and Ravallion (1992), our method is more robust to misspecification errors, does not require the predetermination of functional forms, provides better fit to the underlying Lorenz curve and incorporates the residual term in a rigorous way. The method is applied to decomposing variations of urban poverty across the Chinese provinces into three components – contributions by the differences in average nominal income, inequality and poverty line. The results foreground average income as the key determinant of poverty incidence, but also attach importance to the influence of distribution. The regional pattern of the decomposition suggests provincial groupings based not entirely on geographical locations.
Topic:
Demographics, Economics, and Poverty
Political Geography:
China and Asia

60. Out of School and (Probably) in Work: Child Labour and Capability Deprivation in India

Author:
D. Jayaraj and S. Subramanian
Publication Date:
08-2005
Content Type:
Working Paper
Institution:
United Nations University
Abstract:
This paper explores the hypothesis that the phenomenon of child labour is explicable in terms of poverty that compels a household to keep its children out of school and put them to work in the cause of the househol d's survival. In exploring the link between child labour and poverty in the Indian context, the paper advances the view that the nature of the connection is more readily apprehended if both the variables under study are defined more expansively and inclusively than is customarily the case. Specifically, the suggestion is that it may be realistic to include those children who are conventionally categorized as 'non-workers not attending school' within the count of child labourers. It is also suggested that poverty is meaningfully measured in terms of a multi-dimensional approach to the problem, wherein the aim is to assess generalized capability failure—arising from want of access to elementary infrastructural facilities and essential amenities—with respect to a number of basic human functionings. The core of the paper's argument is presented by means of a simple analytical model of child labour and deprivation, and the issues emerging from it are studied in the Indian context with the support of bot h primary and secondary data.
Topic:
Education, Human Rights, and Poverty
Political Geography:
India and Asia