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GLOBALIZATION POVERTY AND DEVELOPMENT

ECONOMIC GEOGRAPHY

Professor Ahmad Neaz, PhD

American International University-Bangladesh


(AIUB)

School of Business and Economics


2005
(Earlier version of this Article was published in Bangladesh Journal of Political
Economy, Vol.11, and No.2, 1992)

TRADITIONAL DEVELOPMENT STRATEGY


Professor Ahmad A.N. Neaz, PhD.
1. Background
It is the greatest paradox of our time that even in the later part of the twentieth century, in the midst
of tremendous technological progress, hunger poses a threat to mankind. In the year 1979, lone,
about 50 million people literally died of starvation and another 800 million were in the grip of
poverty. Since the beginning of the 1980's, many African countries have been through a disastrous
famine. Glimpses of the probable future are also cause for even greater gloom. Despite all its
devastating effect on the human race, the problem of poverty has been frequently ignored. It is
really perplexing to note that while man can afford to spend three million US dollars a minute on
the arms race, only a fraction of that could adequately solve the problem of mass poverty. It the
situation is allowed to continue, human civilization will face a complete social, political and
economic night mare. It should be recognized that in today's increasingly interdependent world, the
consequences would not be confined to the poorer countries alone.
When people realize that millions are unfed, malnourished and under the grip of extreme poverty,
they may not owing to their altruistic nature sit as passive spectators. In the year 1984, the
appalling pictures of famine, particularly from Ethiopia, which were shown in Television made a
deep impression on people at large. Although a little late, they came out with a sympathetic
gesture, by extending their help, to overcome the crisis. They expected that their effort would help
to improve the situation and African countries would never again have to go through the disastrous
and humiliating consequences of famine. But the experience shows that such an expectation may
be doomed to be futile. Not long ago, in the midst of a disastrous famine in Bangladesh and the
Sahel region, ' World food Day' was observed by FAO in Rome. in the Year 1974, where an
admirable pronouncement was made; no child should go to bed hungry within a decade and after
a decade in the year 1984 UNICEF ( The United Nations Children Fund) estimated that around 15
million children of the world died of malnutrition and preventable illness in the same year.
In fact it is not an easy task to change the situation. There is no facile solution to this serious
problem. What we are faced with is a full- scale war against hunger and poverty. The war has just
begun, it is the greatest task of our time to learn how to rescue people from the realm of hunger
and poverty and lead them on the arena of liberty and prosperity. Following the world social
conference in Copenhagen, 1996 has been marked as the year for fighting against global poverty.
As we know, the problem of hunger and poverty is a problem of development and the solution must
be sought within the process of development itself. At this point before looking for a new solution
we must learn from the experience of previous efforts in this direction, particularly as to how the
problem has been identified and what policies have been followed. Their depth and dimension
success and failure must be analyzed with care, so that future endeavor can be better directed to
attain their aims and objective.

2. Theoretical Spectrum of Development

The history of development concerning mankind is as old as human civilization itself. Its horizon
has broadened in consequence of people's search for a better life, by improving their material and
social conditions in different historical epochs. Man's collective efforts, expansion of knowledge and
his capacity to innovate have played a decisive role, in creating epoch making history. For many
millennia, the process of development has been slow. The European renaissance came as an
internal transfinite drive, towards improving conditions, in which new sets of rules became
legitimized. Progress in the field of philosophy, natural and social science along with engineering
and technology made it possible for man to enter into a new horizon of development, through the
industrial revolution.
Under a particular time and space dimension, development possibilities are limited by natural laws.
Although man cannot change those laws, with proper understanding he can attain the capacity to
manipulate his environment through scientific innovation and technological improvement. The
Newtonian paradigm came as a major breakthrough in this regard. The concept of deterministic
and time reversible laws where the world was seen as a vast automation; and man appeared as
being outside nature, as a free agent in a mechanical universe; was the obvious outcome of the
Newtonian endeavor. The search for objectivity was the philosophical foundation that really forced
economists to introduce scientific methods in its application. Classical and neo- classical
economists also pretended to follow the Newtonian philosophy by considering a closed
autonomous system, ruled by endogenous factors of a highly selective nature, self-regulating and
moving to a determinate predictable point of equilibrium.
As we know, human vision does not proceed too far from the social dimension within which man
has to live. The early stage of capitalism had been envisioned by Adam- Smith and Ricardo who
conceived the idea of a laissez faire economy, where a rational individual would be trying to
maximize his profit in an open and free competition. However, their world was dominated by the
problem of scarcity and uncertainty and that being so they pursued their theories in the direction of
production and supply to reach equilibrium. Karl Marx saw the rising trend of capitalism and
identified its unstable and disequilibrium condition that led to advocate the idea of socialism and
communism. With the development of capitalism, the changing structure of age-old society
becomes more adaptive to the response of scientific and technological progress that enormously
increased the capacity to use and exploit resources and to induce a powerful explosion in
production. As a result the nature of the economic problem changed from production and supply to
consumption and demand. Under such circumstances, Keynes identified the chronic tendency of
the laissez-fare market economy to generate involuntary unemployment and he prescribed
governmental intervention for boosting effective demand to avert the tendency.
It is apparent that the contradiction between absolute individualism and absolute collectivism in the
capitalist and socialist structures tended in the direction of a kind of synthesis in both systems,
while they have confronting harsh realities. The systems however are poles apart on such issues
as problem identifications and policy suggestions since they pretend to show their differences in
fundamental values as well as in their aims, objectives, means and ends. Unlike the capitalist
system, socialist policies have tried to correct labor contributions in terms of socially necessary
labor through planning mechanisms and through introducing collective ownership of the means of
production. What needs to be examined further is which system would be more efficient for

attaining specific objectives and whether there is any possibility of synthesizing them on the basis
of the experience of the systems, in particular circumstances.
It is to be kept in mind that the theories we have discussed so far, mainly concern the problem of
the advanced world which could complete the industrial revolution. There is no doubt that through
successful industrial revolution the developed world could provide a decent standard of living for
the majority of its population. As the Scottish poet Hugh Mac Diarmid in his Lament for great
Music" says.

The struggle for material existence is over. It has been won.


The needs for repression and disciplines have passed.
The struggle for truth and that indescribable necessity,
Beauty begins now, hampered by none of the lower needs.
No, one now needs live less, or be less than his utmost"
These words are not merely an expression of an imaginary phenomenon. It is also a fact of life, at
least for a small number of the works population. The tragic fact remains that most people of the
world dwelling in the developing nations lack the vary necessities of subsistence. They are being
drawn into a web of deception and despair. Indeed they live far less than their utmost, and remain
stuck in an abject poverty-a condition of life characterized by hunger, malnutrition, ill health and
lack of other basic necessities for survival.
The magnificent success of the industrial revolution only spread over Western Europe, North
America, and Australia and at a later stage Japan. The obvious question why the industrial
revolution had to wait until the 17 th century and why it did not more smoothly spread over the other
parts of the world is a matter of intense study. Anyway, it is not a subject of our present endeavor. It
is evident that the expansion of knowledge through cumulative human experience created
tremendous possibilities for man to deal with the development problem. Scientific and
technological progress promises enormous production possibilities but social success to a large
extent are incapable of acting coherently in the real world and failed to coordinate much of this
progress into practice. As a result, man has attained capacity as well as incapacity; is capable of
providing food and other basic necessities to the entire population of the world but is incapable of
doing so because of limitations of the geo-political and socio- economic structure.

3. Development Economics and Conventional Strategy.


Development did not evolve as an independent field of study until the 2 nd world war, when a group
of economists who quickly identified them as the off-spring of the Keynesian mainstream, created a
new branch of economics know as development economics. It deals with the economics of those
countries which are firmly anchored to the periphery of the capitalist system without adequate
development of capitalism. A group of experts, appointed by the UN secretary General, prepared a
report in the year 1951 entitled "Measures for the Economic Development of Underdeveloped
Countries" which prescribed a strategy termed as the conventional strategy by us. It was
formulated for a wider audience of policy makers and was virtually unchanged down to the end of
1960s.

During the 1950s, quite a number of development models surfaced and identified their intellectual
kinship to the paradigm that emerged from the above- mentioned report. Some of these are (1)
Hans Singer ( 1952) The Mechanisms of Economic Development; (2) Nurske ( 1953) Balanced
Growth ; (3) Lewis (1954) Development with Unlimited Supplies of Labour; ( 4) Nelson (1956) low
level Equilibrium Trap ( 5) Rosenstein Radan (1957) Big push (6) Lebenstein (1957) Critical
Minimum Effort; ( 7) Singer ( 1958) Bottleneck breaking and ( 8) Hirschman ( 1958) Unbalanced
growth. Those models were helpful in formulating and applying the conventional strategy in a more
coherent and consistent manner. In addition to this Harrod-Domor model, Leontief model and
Sollow-Sown model contributed a great deal to implement the traditional strategy.
In this conventional strategy objectives and processes were viewed solely in economic terms and
great reliance was placed no economic factors to achieve results. It emphasizes higher economic
growth, to be accomplished at any cost through the accumulation of capital and its investment in
industrialization, modernization and urbanization through a "top- down" process of central planning
and control. Conventional planners recognized increased pre- capita GNP as the main objective
and yardstick of the performance of development. Agriculture and rural development were
neglected till the latter part of the 60's in the hope of a great industrial "leap forward" which would
lead to the creation of sufficient employment opportunities there, leading to a transformation from
rural agriculture to urban industry. It was expected that the question of distributive justice would be
take care automatically, through the "trickle down" process. In principle, the strategy pursued the
policy of inequality owing to the conviction that it is efficient for growth and inevitable in the early
stage of development.
Success Stories
Conventional strategy, with its effort over a period of more than 35 years claimed spectacular
economic growth on a global scale; in the year 1980, gross product per capita reached US$ 1220
and it was expected to increase at an annual rate of about 3%. On this basis, real goods per capita
would double every 23 years or in other words approximately in a single generation, provided of
course, that this rate were sustained. Judged also by many of the normal measures of social
development, conventional strategy can be labeled a success. Life expectancy at birth in
developing nations rose from an average of 42 years in 1950 to 59 years in 1982. Infant mortality
was halved and the primary school enrollment rate increased from 50 to 94%. World Food
Production also achieved some success. Measured globally there has been enough food to feed its
entire population with more than 3,000 calories and 65 grams of protein daily, which is more than is
consumed by the West European average. In the year 1987, 475 million tons of food grain was
estimated as surplus and a considerable portion of that was misused and damaged owing to lack
of storage facilities. The statistics quoted above portrays a prosperous future for all mankind and
seems to rule out the possibility of any kind of scarcity on a global scale.
What was wrong?
In spite of this tremendous success a serious a serious crisis exists in the current world. This is not
due to shortage or scarcity on an international scale, but to maldistribution. Global figures have
very little meaning because they conceal tremendous inequality. The world population already
exceeds 6 billion and more than 80% of them live in the developing nations. Around 50% of the
world populations dwell in 36 countries with average per capita income below US$ 380, which is
less than one third of the average global income quoted earlier. The difference in standard of living

are also very large between different countries as can be seen from a number of social indicators
like life expectancy, infant mortality rate and soon.
Although, developing nations can achieve an impressive rate of economic growth, it has not
necessarily been helpful in eradicating hunger and mass poverty. It is surprising to note that today
after more than 35 years of concerted effort; there is more hunger and poverty than before.
According to the estimate of Ahluwalia the number of people in absolute and relative poverty was
probably 370 and 580 million in the year 1969. The figure rose to 800 million in the year 1973
according to the then President of the World Bank, Robert Mc Namara. Further confirmatory data
concerning the deteriorating rate of poverty came through the International Labour Organization in
1976, at the World Employment Conference. According to them, there were 706 million "destitute"
people and another 500 million were termed seriously poor" in the developing nations.
Conventional strategy not only failed to reduce the extent of poverty, but even enhanced its
intensity. A study was made by Adelman and Morris, which showed that instead of any
improvement, the income of the poorest 40% had declined in real terms and in the case of extreme
dualism even income had declined among the poorest 60%. They concluded that with the
exception of high-income developing nations, poor people of the 3rd world countries would have
been better off, if there had been no development effort at all. Surely development is not worthy of
its name if the benefits accrue only to tie few, while the great majority of the population remain
stuck in abject poverty living on the bare margin of subsistence. In fact, it is a travesty of
development- "a shameful spectacularity in the face of a monumental inhumanity".
None of the assumptions of conventional strategy turned out to be universally applicable. Although,
in the developing nations. GNP growth is a necessary means it may not be considered as an end
in itself. Even for some important ends it is not a very efficient means either- For instance, if Sri
Lanka tried to pursue higher life expectancy "not through direct public actions but primarily through
growth ,..."then it would have taken Sri Lanka ... some where between 58 years and 152 years to
get where it already now happens to be".
Experience shows that there is no automatic tendency for income to become widely spread
through "the trickle down process" and thus ameliorate poverty. For example, countries like Brazil,
Mexico, Argentina, Indonesia and the Philippines, rapid or moderate growth was not helpful in
alleviating poverty. It has already been established that, there is no simple trade off between rate of
growth and equality of income distribution or inevitability of inequality in the early stage of
development. For Example, countries like Taiwan, Yugoslavia, South Korea, Rumania, Hong Kong,
Cuba and Singapore attained higher growth rates with more equitable distribution. It is evident that
even a poorer country or region in fact capable of waging the battle against poverty and attaining
many of the social objectives by providing greater distributive justice. For example, what Kerala,
one of the poorest states in India achieved in terms of longevity, literacy, infant mortality and as on,
with only around 200 US$ per capita income, countries like Brazil with more than 2000 US$ did not
achieve, China and Sri Lanka, with less than a seventh of GNP per head in Brazil or Mexico have
the similar life expectancy figure as the two richer countries and it was possible because they
pursued directly that objective through public policy and social change.

Conventional strategy offered the same prescription for all and those who accepted it, suffered
from many side effects due to the fact that institutions, organizational capacities, administrative
talents, leverage, drive and willingness are not identical in all the developing nations. Many of the
developing countries accepted foreign aid as an unmixed blessing. As a result, they sank deeper
and deeper into debt. Still we can not draw the conclusion that foreign capital must always be
harmful. In fact countries like Australia and Canada received much higher amounts of foreign
capital during their investment boom and they could utilize them properly. Internal institution, quality
of foreign aid and proper planning and control are the key factors to be considered within the social
and political rigidities that restrict a country's capacity to adjust.
The conventional planners tried to reconcile the Western concept of "development' with
preconceived ideas through a "top- down process of central planning and control. They failed to
grasp the problem of development under specific circumstances and could not combine social,
political economical and other variables in the right proportion. It has become clear that
development cannot be a mere transfer of capital and technology without regard to differences in
material and human factors.

4. The New Streams of Development Thought.


Growing disillusionment about conventional strategy has aroused controversy and suspicion
among group across the spectrum of development thinking. New streams of ideas have been
coming to the fore, to cope with the changing nature of the development problem, particularly
during the decade of the 70's. Some of these are: (1) Experience of post revolutionary China; (2)
The Arusha Declaration (Tanzania "67) & world Employment Programmer (ILO 69) (4) Doomsday
Book (Taylor) (5) A Blueprint for Survival (The Ecologist 72) (6) Redistribution with growth (IBRD &
Sussex Institute of Development Studies; (1974) (7) New International Economic Order (UNO
1974); (8) Mankind at the Turning Point ( Club of Rome, Mesarovic and pestel 1974); (9) Cocoyoc
Declaration (UN0 1974);(10) What Now-Another Development (Dag Hammarskjold Foundation
(75) (11) .Employment Growth and Basic Needs (IL0 76);(12) Catastrophe or New Society
(Bariloche Foundation 76); (13) Reshaping the International Order (Club of Rome 76); (14) Basic
Services (UNICEF & WHO; (15) Eco Development (UN Environment Programme(76)(16)
Indigenous Development (UNESC0 77) and (17) Self-reliance (Institute of Development Studies,
Geneva 1980). Apart from these some to the neo- Marxist theoreticians tried to analyze the
problem of development in their own style. Among them the works of (a) Frank (1969); (b) Rudro
(1970); (c) Patnaik (1971); (d) Emanuel (1972); (e) Bhaduri (1973); (f) Amin (1974) and Mandel
(1975) are note- worthy,
These approaches contributed to the perception of new values based on the idea that economic
growth, pursued regardless of who benefited from it, was making little impact on the problem of the
poor masses. There has been little disagreement about the priority of eradicating hunger and
poverty in the shortest possible period of time. The only difference discernible among the above
declaration is over the precise interpretation and most effective way of achieving these ends.
Among international organizations ILO was the first announced a World Employment Programme
to explore the ways of creating more employment opportunities. To this end employment
programme provided a wide range of policy options such as investment for the poor, more equal
income distribution, adoption of appropriate technology and above all the policy of full employment.

The World Bank also conceded the harmful effects of traditional strategy as more and more
confirmatory data came in, that the benefits of growth didn't trickle down" or perhaps the trickle
down' process was so slow that it would be a century or more before the poor people or their
descendants benefited. To overcome this, the World Bank, in cooperation with the Sussex Institute
of Development Studies published a book entitled Redistribution with Growth". The book tried to
introduce reformist measures over traditional strategy and explained that "Wealth distribution might
be politically difficult, growth was essential poverty was inconveniently embarrassing" and under
those conditions it was prescribed that the redistribution of incremental income would be politically
easier.
However, the theory of "Redistribution with Growth" derived from many misconceptions of reality
and led to a purely technocraticafly oriented approach, which to a great extent failed to be
applicable to developing nations. The approach could be criticized on the ground that it tried to
bring 'equality of outcome' oblivious of the causes of inequality in society and a solution through
equality of opportunity.
Since 1974, most of the development thoughts have been focused on a single issue, the central
emphasis of which is meeting the "basic human needs" of the poor masses within the shortest
[
possible period .The basic human approach identified a list of items considered to be essential for
a decent human life such as (1) Food; (2) Clothing; (3) Shelter; (4) Basic range of household
equipments; (5) Health; (6) Education; (7) Safe drinking water and (8) Contraception. Each item
has its own weight, listed In order of priority to have a hierarchically ordered set of basic- needs.
The 'basic- needs' approach precisely aims at increasing the income and ensures the supply of a
stipulated level of BN Basic- needs level of persona! Income (BNI) and ensures the supply of a
stipulated level of goods and services income distribution, production policies and through the
provision of appropriate administrative and institutional mechanisms. Since many of the above
factors are quantifiable, one could easily make plans and pursue policies to achieve them.
Although the basic needs approach has been accepted, at least as a guiding philosophy by most of
the UN organizations and national governments, owing to the following limitations and shortcoming
it has not attained much success.
(1) Although the approach correctly maintained that everybody must attained BNl, it did not specify
in detail how the disadvantaged group would eventually achieve this.
(2) The approach also did not look deeply and identity the causes of the very low income of the
poor people.
(3) It did not specify the nature of organizations and institutions, which would be necessary to its
success.
(4) It considered production planning without going into the details of who is controlling the
production mechanism and under what terms and conditions they would act in the desired way.

(5) Above alt successful implementation of the ' basic- needs' approach requires cultural
enlightenment and the promotion of new social political and moral values in each specific
context.

5. The World Bank Policy Packages and Developing Nations


It is evident that the World Bank and IMF experts are also concerned about the problem of poverty
and they provided the following policy packages;
1) Increase food production through providing incentives by raising food prices.
2) Reduce all kinds of subsidies to agricultural inputs and food items.
3) Minimize balance of payment deficits and enhance local employment opportunities.
4) Reduce population growth by taking family planning measures.
5) Devalue local currency to bust up export.
It can scarcely be denied that Instead of Keynesian or conventional solutions; the policy
Packages above have followed classical economics and left the problem entirely in the hands of
market forces, with the expectation that they would bring about an automatic solution. It is also
evident that the World Bank and IMF have been trying to improve their policies as a pre-condition
of their aid packages. In the past countries like Egypt, Morocco and Tunisia tried to introduce the
policy packages but in all cases they ended in failure in the face of a violent movement and protest
by people at large. Recently the same history was repeated in the case of Zambia when the World
Bank attached same strings to their condition for financial assistance and the result was a greeted
measure of futility. Even in the advanced countries agricultural, subsidies are provided in the
United States of America, EU countries and other industrialized nations too. The amount of
agricultural subsidies accounted for nearly a billion dollars a day depriving the market access of
agricultural products of developing nations.
It seems that the policy packages above, considered food shortages and population growth as the
main underlying causes of hunger and poverty and wanted to solve the problem from the supply
side by increasing the availability of food supply through price incentive. Such an idea is also
dominant in the' African Priority program for Economic Recovery 1986-90. It would be premature
for us to make a conclusive comment on the above World Bank policies, for the developing
nations, without a comprehensive analysis of the relationship between hunger availability of food
supply and population size.

6. Hunger and Availability of Food Supply


A bird's eye view concerning the problem of hunger at once convinces us that inadequate supply of
food could be the only possible factor fuelling the crisis. It was predicted by Karl Marx that the
construction of Railway in the Indian sub- continent would help to reduce scarcity and famine there,
because better communication would enhance the flow of supply to the areas where there were
shortages. But the predication did not turn out to be true. In fact, after the construction of Railway,
the Indian sub- continent suffered from scarcity and famine more frequently and with a greater
intensity than before. Experience shows that supply does not necessarily flow to the areas where
there is a need. It flows to those who can pay. For example in the Ethiopian famine of 1973, there

was a crop failure in the province of Wallo, but no severe decline in food availability for Ethiopia as
a whole. The famine victims of Wallo lacked the economic ability to command food from elsewhere
in Ethiopia and indeed, some food moved out of famine stricken Wallo to the more prosperous
parts of the country.
It is evident that during the 70's when so many people had to starve, there was sufficient food
grain in terms of aggregated average. The extra food that was needed to provide adequate diets
for the malnourished population of the deficit areas was also not very great in relative terms. The
deficit was calculated as around 37 million tons of grain which could be accounted for only 2 to 3
per cent of the world production at that time and more surprisingly was fess than 10 percent of the
quantity of grain fed to the livestock in the rich countries. In the year 1987, around 475 million tons
of food grain was estimated as surplus and 340 to 730 million people were starving at the same
time.
We can see that most of the Third World countries also could keep their food production higher
than population growth. Still many millions of their population was starved due to uneven
distribution of food within the nations. In the year 1978 India produced a record level of rice and
wheat, more grain than it could store. The country exported more than a million tons of wheat and
yet 20 to 40 per cent of her population was still unable to get an adequate diet.
Our study of famine does not confirm that inadequate food supply was solely responsible for such
a catastrophic condition. What explanation can we put forward so far the famine of Ethiopia in
1973-74? The total food grain was only 7 per cent less than the normal years which were hardly
devastating in an economy with primarily rain fed agriculture. The experience of the 1974 famine in
Bangladesh was also disheartening. The total availability of food grain in per capita and absolute
terms was higher in that year. Still the country was ravaged by disastrous famine. Ethiopia, one of
the countries worst affected, by widespread famine in 1986, we can see that the per capita food
production had been higher in the period 1981-86 In comparison to 1974-76 average.
The following policies may be considered as really paradoxical, having a negative effect on food
problem.
1) Export policy in the face of a widespread hunger; As for example some of this countries,
where starvation is widespread like Zambia, Mali and other Sahelian countries and Thailand
from 1974 to 1980 introduced the policy of export by keeping their own people unfed.
2)

More food grain for livestock and less for human beings; in Brazil, the share of food
crops used as livestock fodder reached as high as 44% of the total production. Countries like
Mexico, Central America and the Caribbean, where some cases poorest people consume
less grain than is fed to the animal producing meat, milk and eggs for better of,

3)

Food import and mal distribution: As for example in Egypt food subsidies are twice as high
for the urban middle class as for the rural population. In Bangladesh nearly 90% of subsidized
food is distributed in the urban areas mainly among the middle class population, In Pakistan
and Bangladesh, those who are employed in defense forces received food items almost at a
negligible price.

4).The dap between current and actual production: The gap between current productions could
be roughly 1.8 billion tons. The production possibilities with the present level of technology
have been calculated as 11.4 billion tons of food grain or their equivalent in food energy.
Indeed the production possibilities are much higher in the developing nations and the
production could feed around 40 billion population with sufficient calories.

7. Hunger and Population Size


It is commonly believed that over population is responsible for hunger and poverty. But we do not
find a strong correction between them.
1. Many Latin American countries are very sparsely populated, but still hunger and malnutrition are
prominent there. It should be noted here that only 13% arable land there has been taken under
cultivation.
2. Most of the African Countries much less densely; populated than many Asian countries, but
poverty and hunger are endemic there.
3. Density of population is highest in Hong Kong and Singapore, but there is little hunger there.
4. In comparison to the land / man ratio of Bangladesh; Taiwan's condition is much less favorable.
However, unlike Bangladesh, hunger and poverty In Taiwan is under control.
5. China's land/ man ratio is as un-favorable as for Bangladesh, but China has successfully
overcome hunger and poverty to a great extent.
6. During the Bengal famine in the year 1942-43, the population of Bangladesh was around one
third of today's population size; still around 3.5 million people were condemned to death.
7. In the year 1769, one third of the total population of India died out of starvation. And yet at that
time the population of India was insignificant in comparison to today's population.
It is already proved that both present policy packages of the World Bank and past development
strategy has been pursued on a priori theoretical basis, which is quite unrealistic when considering
developing nations for the following reasons:
1. Solution of the food problem exclusively from the supply side would not attain the expected
success because the problem is created primarily from the demand side. There has been
enough food, but poverty stricken people are unable to purchase them owing to their low
income.
2. Population size and the food problem do not show a one to one correlation. Many countries with
greater population size have solved the problem of food, whereas some sparsely populated
countries have not, even under favorable physical conditions.

3. Higher population size and the food problem do not show a one to one correlation. Many
countries with greater population size have solved the problem of food, whereas some sparsely
populated countries have not, even under favorable physical conditions.
4. It is unlikely that devaluation wilt boost production because price elasticity of export for traditional
items (which is the export of most of the developing nations) is highly inelastic. As a result,
devaluation may cause inflation, low real income for the poor and unemployment in the
developing countries.
5. Problem of hunger is a complex phenomenon associated with unequal access to food caused by
either lower real income or higher food prices.
6. Lower income of the poor people may not necessarily be due to lower productivity, ill health or
ignorance associated with illiteracy, it is rather related to:
a) Imperfect market conditions associated with unequal exchange relation.
b) Unequal access to low cost credit and exploitation at a usurious rate of interest.

B. MEANING AND EXTENT OF POVERTY:


1. Background
It is the greatest paradox of our time that even in the beginning of twenty first century, in
the midst of a tremendous technological progress, poverty and hunger posses a threat to
human beings. In the year 2003 alone, out of total 5 billion population live in the less
developed world about 25 percent or 1.25 billion people are literally under the grip of
starvation. They are termed as undernourished people unable to fulfill their livelihood
(HDR-2003). Recently held World Bank sponsored poverty alleviation conference in
Shanghai (2004) expressed concern about worsening global level of poverty situation
with 2.2 billion population living below poverty line. Such a figure was approximately
1.5 billion in 1990. Considering the devastating effect on human race, the problem of
poverty and hunger has been considered as number one objective of Millennium
Development Goals (MDGs) and set the target of reducing by halve, between 1990 and
2015, the proportion of people whose income is less than one $ a day.
In spite of the fact, that the UN sponsored MDG has been accepted as a guiding
philosophy by all UN agencies and national governments there are reasons to be skeptical
about the achievement. During 1970s in the midst of a disastrous famine in Bangladesh
and the Sahel region of Africa, World Food Day was observed in Rome by FAO in the
year 1974, where an admirable pronouncement was made; no child will be allowed to
go to had hungry within a decade and after a decade in the year 1984 UNICEF
estimated that around 15 million children of the world died of malnutrition and
preventable illness in the same year.

2. The Meaning of Poverty


Although the meaning of poverty is well understood by many, still it is needed to be
elaborated since over the period of time there has been changes in the concept of the term
poverty. Due to changes of human needs and their hopes and aspirations poverty carries
different meaning in different epoch making eras and different parts of the world. During
the period of pre-industrial revolution, human civilization had been facing the problem of
shortages and scarcities. That time poverty implied to those people who lacked access to
food for survival. In spite of the fact that, even today, in the midst of an abundance many
people lack access to minimum food for survival. As a result, nearly a billion people are
under the grip of hunger and malnutrition in the contemporary world. Moreover, today,
human beings cannot be happy with only food. They have other needs such as clothing,
shelter, minimum household utensils, health, education, contraception, safe water and
sanitation all these items have been termed basic human needs having implications on
livelihood. In todays evolving conditions, poverty may be classified into absolute and
relative terms. Absolute poverty is a condition under which people lack access to
basic needs bundle of goods and services either through exchange entitlement or
otherwise. The implication of absolute poverty is reflected in a society in the form of
famine, destitution, deprivation, landlessness, unemployment, child labor, illiteracy, illhealth and lack of access to basic needs services. Under absolute poverty people lack
exchange entitlement and consequently exchange their physical labor and commodities
under compulsion. The relative poverty is a condition under which people lack access
to opportunities and choices to develop their fullest and consequently fail to
contribute to the family, community and society with their best potentials. People
need enabling environment and conducive socio-economic and political conditions where
they enjoy security, liberty, freedom from basic necessities, leisure, free time and
empowerment to develop their best self. Under the condition of relative poverty people
lack dignity, self esteem, equality, efficiency, entitlement, participation and gainful
employment opportunity.

3. Extent of Poverty
Glimpses of the past about the trend of poverty in the probable future are also cause for
even greater gloom. According to the estimate of Ahluwalia presented in figure 5.1 the
number of people in absolute and relative poverty was probably 370 and 580 million in
the year 1969. The figure rose to 800 million in the year 1973 according to the then

Figure1. Extent of poverty in function of


time.

Population in million

2500
2000
1500
1000
500
0
1969

and

1973

1976

1980

1990

2000

2004

Sources: Ahluwalia, 1969, WB, 1973, ILO, 1976, Hopkins, 1980, HDR, 1990, 2000
.
Shanghai, 2004.

President of the World Bank, Robert McNamara. Further confirmatory data regarding the
deteriorating condition of poverty came through the International Labour Organization
(ILO) in 1976 at the World Employment Conference. According to them, there were 706
million destitute people and another 500 million were termed seriously poor in the
developing nations. The figure rose to approximately 1.5 billion in the year 1990 and
further deteriorated and reached 2 billion in the year 2000 as per human development
report (UNDP).
A recently held UN sponsored global poverty alleviation conference in Shanghai (2004)
estimated that 2.2 billion people are living in poverty. The HDR 2004 published by
UNDP estimates 1.1 billion people living on less than one dollar a day and nearly 2.8
billion people without access to adequate sanitation. In 1990, the dividing line between
absolute and relative poverty was below one and two dollars a day. In 1969, such figure
accounted for 0.14 and 0.21 dollar only and in 1993, the poverty line was equivalent to
$1.08 as per HDR 2003. It is obvious that in 2004, one and two dollars cannot be a
measure for absolute and relative poverty and the poverty level income for 2015 need to
be recalculated for setting target under the MDGs. There is no precise poverty alleviation
strategy. Different UN agencies also do not have uniform priorities. Widespread
conviction about poverty alleviation through economic growth in terms of GDP
sometimes suggest trade off between investment in economic growth with health and
education sector may create inequality and further deterioration of poverty.

National policies must provide adequate attention to the interaction between growth,
equality and poverty in the right proportion.

4. Poverty and Inequality


The worlds population is very unevenly distributed by geographic region, by fertility and
mortality levels by age structures and by other socio-economic indicators. The world
population already has exceeded six billion people more than 80 percent of them live in
the developing world with only 20 percent of the worlds resources. In contrast to that
developed countries with less than 20 percent of the worlds population, consume 80
percent of the worlds resources. Similar proportions of inequality exist within the
developing nations between the rich and the poor. The prescription of W.A Lewis (Nobel
Laureate) of squeezing consumption in favor of savings for accelerating growth was not
universally applicable. Evidence shows that consumption by the poor through
nutrition, health and education may equally contribute to growth, and as such the
dividing line between consumption and saving has to be redrawn by a twist of
consumption that improves the quality of life of the poor. Overemphasis on economic
growth some in cases created inequality and failed to reduce poverty as had been
expected, in a trickle down process. Investment in education and health are not merely
the rewards of growing economies, they are essential preconditions for sustainable
growth.
There has been a growing consensus among economists that the interaction between
economic growth, inequality and poverty, represent, the eternal triangle. Economic
growth reduces poverty, but such gains may be offset by raising inequality. Furthermore
raising inequality may retard economic growth through multiple channels. Inequities in
society can constrain the capacity of the poor to invest in health and education and
undermine socio-political stability. The raising affluence and extravagant
consumption habits in rich countries and rich people in poor countries should be the
major concern of the sustainable development and the issue of environment. The
existing and evolving global economic order is spawning inequality between the rich and
the poor countries; it is reproducing inequality in the global trading system; it is serving
the interest of the rich countries; it is guided by the interests of the developed countries
which guide the way the World Bank, the IMF and the WTO set the rules of the game;
based on market fundamentalism, it is alienating the poor and aggravating the exclusion
of the excluded; it has created unprecedented wealth but poverty remains endemic; and
despite progress, life is still severely nasty, brutish, and short for a large part of the world
population, as observed by Amartya Sen.(Quoted in Ahmad and Barkat 2004). Nobel
Laureate Amartya Sen emphasize that the concern over global inequality lies at the core
of developing a system of global ethics for the emergence of a truly global
community.

5. Regional Distribution of Poverty


Regional distribution of population living on less than one dollar a day is presented in
figure 5.2. Out of global total of 1.1 billion population living on less than one dollar a day
more than 39 percent live in South Asia and more than 29 percent in Sub-Saharan Africa.
Figure 5.3 shows regional distribution of undernourished population of sanitation. In the

year 2000 about 1.2 billion people were without access to improved water source and about
2.8 billion people without access to sanitation. In a global scale.

Fig. 2 Regional distribution of population living inless than


$ 1 a day, (% of total) Global total: 1,100 million in 2000
latin
America
and the
Caribbean,
5.1

Central and
Eastern
SubEurope and
Saharan,
the CIS
29.3

South Asia
, 39.2

Arab
States, 0.7

Fig.3 Regional distribution of population undernourished,


Global Total: 831 million in 2000

Sub-Saharan,
22.2

Latin America
and the
Caribbean,
6.4

Central and
Eastern
Europe and
the CIS, 4.0

South Asia ,
37.6

Arab States,
4.1
East Asia and
the Pacific ,
25.6

East Asia
and the
Pacific ,
23.7

Source: HDR 2004


Fig. 4 Regional distribution of population without access
to improved water source. Global total: 1.2 billion in 2000
Central and
Eastern
Europe and
the CIS, 2.7
Sub-Saharan,
24.9
Arab States,
3.9

Latin America
and the
Caribbean,
6.6
South Asia ,
20.6

East Asia and


the Pacific ,
41.4

Fig. 5 regional distribution of people without access to


sanitation, global total: 2.8 billion in 2000.
Sub-Saharan,
12.4
Arab States,
2.1

Latin America
and the
Caribbean, 5
South Asia ,
39

East Asia and


the Pacific ,
41.5

Source: HDR 2004

6. Poverty Alleviation and the Developing Countries


Development planners exclusive concern for economic factors could be viewed as not
only their inability to blend social, political and economic variables, but also their

failure to fully understand the problem of development from its genesis. Introduction of
such a development strategy created dependency and dominance between developed and
developing countries in many ways. Many developing countries accepted foreign
borrowing as an unmixed blessing and sunk deeper and deeper into debt trap. Between
1970 to 1984 the outstanding debt of developing countries expanded almost tenfold, to
US$ 686 billion. (WDR 1985) It has been observed that industrial countries tried
conditional aid and perhaps their own interest often gets priority. Many case quantity of
aid was not sufficient and as a result technology transfer was not taken place. In the early
stage, agriculture and rural development was ignored and as a result developing countries
had to suffer food shortage and became depended on imported food from developed
countries. During 1990s they cost the developing nations 18 to 22 billion annually.
(International Food Policy Research,1999)
Simon Kuznets (Nobel Laureate)
presumption about the inevitability of inequality in the early stage of development
(Paul Streeten, 1982) was not supported by evidence made by Ahluwalia.(1974)
Experience shows that there is no automatic tendency for income to become widely
speared through the trickle down process and thus ameliorate poverty. It is evident that
development strategy not only failed to reduce the extent of poverty, but even enhanced
its intensity. A study was made by Adelman and Merois,(1973) which showed that
instead of any improvement, the income of the poorest 40 percent had declined in real
terms and under the case of extreme dualism even income had declined among the
poorest 60 percent. They concluded that with the exception of high income developing
nations, poor people of the Third World would have been better off if there had been
no development effort at all.