Friday, August 17, 2007

Poverty reduction : Is it the battle impossible to win ?

While in the nineties rich people had thirty times more income than poor ones, actually that difference is even wider:130 times !.1500 million people ( almost a third of world population) live with less than one dollar a day. This is part of the report of 28th Amnesty International council meeting, held recently in Mexico . The preliminary conclusion?: It is highly plausible that the UN millenniums goals, set for the year 2014,(poverty reduction) will not be reached. However, the World Bank economic report 2007, “Global economic prospects”, predicts that by the year 2030 , world population living with less than U$$ 1, will fall by half to 550 million people.
Current global Economic growth pace (2004-2006, 4% - 5%) seems to be insufficient to allow deeper progress in poverty reduction. On the other hand ,new business opportunities closely connected to information and knowledge as the main inputs, creates incentives specially for talented people, making the gap between those on the lead and those on the back, wider. Sure, poor people are among the worse talented on the talent distribution.
What to do about it?. The answer requires a clear understanding ,of the characteristics concerning the economics models applied in those countries which poverty is more concentrated on. At the same time it requires two necessary premises as a working tools:
a.- Economic growth by itself , is not enough for quick poverty reduction unless it is supported by complementary social policies : Since 1990 up to 2001, average world economic growth was roughly 3%, and global poverty felt from 28 % to 21% respectively. This seems to suggest that good social public policies , might imply that whether economic growth is not that much high as it is needed, it is possible to get progress in the battle against poverty.
b.- Additional resources for poverty reduction programs must be allocated properly, supported by control measures against corruption .-
It seems that the second condition, is more difficult to fulfil than the first one. Some of the assistant programs previously implemented for poverty reduction ,ended up in corruption or misuses of such resources . The microeconomics of poverty seems to be more restricted ,than the macroeconomic of it.-
Africa has the highest percentage of world population, living with less than one dollar a day. There is a strong challenge under way , to shape new economic and social policies in that continent .Africa is behind the new emerging economies, making that challenge even more pressing. There is also important levels of poverty in countries like India and China. However ,these two countries are growing at a very fast pace ,which means that they might be able to cope with the problem, as long as they keep the momentum for economic growth, and design good social complementary policies. Latin America also has important levels of poverty (40% of total population),although in the last ten years has made important progress to reduce that percentage because of economic growth .
Poverty as a moral problem means questions and challenges which requires answers , and willingness to overcomes difficulties ,however there is no easy way to get out from it. Poor people themselves are also part of the problem ,instead of being part of the solution. This is so, because there are incentives which they are not aware of, to keep them in such a level of living conditions, to justify an active role of the State in the economy ,but without giving too much attention to the risks of corruption involved, which make the poverty reduction effort more difficult to be successful .-

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