Today is World Poverty Day, and since this blog is dedicated to
ending poverty in South Asia, I want to highlight a
recent speech given in Canberra, Australia by Praful Patel, the World Bank’s Vice-President for South Asia. Truth in advertising: He is my boss. More truth in advertising: I wrote the first draft of the speech. The basic message is that the main obstacles to ending poverty in South Asia—infrastructure deficits, widening inequality, poor delivery of basic services, weak governance—are all associated with government failures, often the result of trying to overcome market failures. Overcoming government failures can be very difficult—not least because they are deeply political. But evidence-based policy debates about these issues can help move things in the right direction. As Praful says in his conclusion, “The remaining obstacles to ending poverty – inequality, infrastructure, lagging human development, weak governance – are all man-made. If we erected them, surely we can also dismantle them.”
Mariam Claeson
Wed, 10/31/2007 - 23:35 It is not that the remaining obstacles to poverty elimination are man made but all obstacle are man made and, yes, poverty can be eliminated in one generation but like Crawford Falconer of the WTO says, it will take a 'better generation' than ours.
Wed, 10/31/2007 - 07:54 I was going through the speech of Mr. Praful Patel. Indeed the obstacles are manmade and the problem is deeply political. As we are aware, political decisions heavily depend upon peoples' perception about issues and their acceptability to reforms. Unfortunately there are few institutional mechanisms to bring people to a common platform. The problem is more acute for areas where population base is large and I believe it may be harder to push in reforms in highly populated regions. However more population may also push people to the limits and they may become mentally ready for long term solutions. This will enable more political support for reforms. In any case I believe one should start addressing human development as the core issue since this will help pushing in reforms.
Fri, 10/19/2007 - 00:05
its true that we are improving but if we see other coin of progess that in our country agriculture contributed 18% to our GDP and 60% our population is dependent on it while in other case 58% of revenue from service sector which served only 20% of our population ..
who will take care of this 60% population
Thu, 10/18/2007 - 00:33
Dear All,
My name is Abid Khan I am pakistani cetizen doing job in afghanistan i am not expert writer but i will like to share some thing with all my friends.
I am living in afghanistan for last Eighteen Month , and i have seen worst poverty situation in this country, i have seen people working working for all day with daily wage of less then fifty US dolloer , people living in ghazni,bamyan,herat, and farah provences are very poor and their are lack of health facitilies specially for women , after taliban still in most parts of afghanistan women cannot go alone some where they are not allowed to study and if they become sick no doctor is availible for them.
I am doing job in bank thats why i have not so much time to go to those area but when evry i go again there i will take pictures and will share will all of you, i have also some more information if some one need details he can ask me by my email abidco@yahoo.com.
thanks & regards
abid khan
Wed, 10/17/2007 - 18:07
"the main obstacles to ending poverty in South Asia—infrastructure deficits, widening inequality, poor delivery of basic services, weak governance—are all associated with government failures, often the result of trying to overcome market failures"
I am wondering why you so explicitly label the obstacles to poverty as government failures. Obviously, these are market failures in the sense that the profit-driven market is simply not interested to ponder upon these issues because the marginal cost would be higher than the marginal revenue. So, if the government steps in to fill the gap created by the market, then its inability cannot be labeled as failure unless the extent and intensity of the final outcome is deeper/graver than what the market system produces!
Also, I see these failures as a result of not the government’s inability but because of several constraints in the economy. The issues you present here so plainly assumes political stability. However, it is a ground reality in Nepal, Sri Lanka, and India (Tamil Nadu, Jharkhand, Bihar) that conflict puts an insurmountable constraint on the government’s or state’s effort to find solutions to the market failures. So, who is to blame? The government (the obvious scapegoat for all failures in the economy, whether it be the result of ill-advised development agencies’ plans or the mess created by the irresponsible private sector or the troubles created by exogenous factors). Well, I don’t think we can so easily deduce such a conclusion. Conflict is an exogenous destabilizing force of which the government has no control over (regarding its sources and natures) because of the unpredictability and spontaneity associated with such forces. Here, the main point is that end of poverty in SA requires an end to conflict.
Even if these obstacles are a result of government inefficiency (which I think is only partially true), it will stubbornly persist unless the public is educated on the rights and wrongs through progressive education system based on scientific knowledge, which our region lack. This way leader who reneges on commitments and promises would be voted out and new, visionary ones would be voted in.
Wed, 10/24/2007 - 00:38
Chandan you had brought up an interesting point on "profit-driven market Vs Govt", where Governments step-in to fill the gap where profit-driven markets hesitate to invest - high risk / low return areas - and in the end blamed for the failure.
In many developing countries basic services are state controlled and if we see their 5 year or 10 year development goals you will find programs targeting improved access to primary education, improved health for women, improved access to basic services of food, energy, water etc.
Governments in many developing countries spend large part of their budget to create programs to improve the livelihood of the poor (where government stepping in to address market gaps). But the creation of these services does not guarantee its delivery to the intended beneficiaries - due to lack of accountability, lack of monitoring, leaks, corruption....(the list goes on) - and I think this is what should be attributed as failure. Data has shown that the amount of money siphoned off and resources wasted due to ineffective processes costs the government a huge sum. A report published in Indian Express shows that "A whopping 8.14 million tons of subsidised foodgrain did not reach the poor. In states with high leakages e.g. Bihar while the intended subsidy was Rs 4.52 per kg, the subsidy ended up being Rs 50.98 per kg due to leakages and diversions. In Punjab, while the intended subsidy was Rs 4.22 per kg, it ended up being Rs 40.15 per kg of foodgrain". This can and should be largely attributed to the governments failure to monitor and make service delivery channel effective.
But the government still would continue to operate these services with a good intention that the partial success rate will benefit some if not all. If it were a "profit-driven market" the provider will first go after the issues that are costing them more and address those that impede progress and effectiveness. There is the profit motive that keeps these markets re-inventing themselves and I don't think any profit-driven market will be able to sustain such loss for a long period.
Does it mean the government should stop providing these services? Absolutely Not. The key here is that these programs are created to help the vulnerable in the society who lack the purchasing power. But governments should monitor, make services effective, and ensure the programs meet their goals. If the government doctors fail to visit rural villages to provide vaccination to children because there is no accountability or monitoring the effects could be distressing. When Tsunami struck the coast of Tamil Nadu and people lives were lost - government created programs and allocated funds to help rebuild people’s lives. But the Press highlighted the issues in disbursements, leaks and corruption that hindered the funds from reaching some of the people affected. The cause was, once again, inability to monitor and hold public sector officials accountable.
Not in the too distant past, when the telecommunication in India was state controlled it used to take 2 years to get a phone connection for your home. Opening a bank account will require referrals and additional signature - to deposit your money. I personally remember having to take half-a-day leave from work to go to the bank (State run) to withdraw money due to the wait time and "cashier not in his seat". While these are optional services for ordinary citizens, when the profit-market entered the same sector they re-invented themselves to adapt to the local market. The key was a shift towards better client-power and there was accountability all along the chain.
Case in Point: Public Distribution System (PDS) India. Couple of pointers on creation of PDS and intent: Source FAOi) Providing foodgrains and other essential items to vulnerable sections of the society at resonable (subsidised) prices;
ii) to have a moderating influence on the open market prices of cereals, the distribution of which constitutes a fairly big share of the total marketable surplus; and
iii) to attempt socialisation in the matter of distribution of essential commodities.
PDS was intended to not only help the vulnerable to get access to food grains at a low price but also help poor farmers sell their products at a standard price set by the government. We have read success stories of farmers selling their products at higher price due to information availability etc. - but that's a topic on its own.
A report published by the Indian Govt. in 2005 identifies various issues in PDS and how the essential services are failing reach the intended beneficiaries. In high poverty states the failure is high and 79% of the time "ration was not available" for distribution. There may not be external market factors that led to Government service failures in this case but lack of accountability and enforcement is a key issue here.I grew up in a small town in India where I personally stood in line at the ration shop and many times I was told they ran out of kerosene or sugar. The report goes on to identify "unavailability and diversion of supplies to open markets, poor quality and faulty weights used to distribute lesser quantities, no ability to hold providers accountable" as some of the reasons for its failure. Now after 4 decades of existence (the PDS ) government is still struggling to address these issues which can be attributed as failure to enforce and monitor. Beneficiaries living Below Poverty Line (BPL) are often times left with few choices - either go hungry or accept low quality rice - and for the poor the choice is obviously to accept whatever is provided to them to feed their family. That is because they have no way of holding the public sector providers accountable - which again is a failure in government's part for not creating an effective mechanism that highlights failures and addresses citizens concerns effectively.
Bottom line is that while governments create programs with a good intent to help the poor and alleviate poverty the positive impact comes from ensuring that the program meets its objectives and reach their intended beneficiaries – until then it will be deemed as failure in government’s part. Better monitoring and increasing client-power where they can hold governments and providers accountable are some of the key factors that will help bring on-the-ground results and is critical to their success.
Thu, 10/18/2007 - 22:02
Chandan, thank you for your comment, which I hope will trigger a broader debate on this important issue. I use the term "government failure" in the same way as we refer in economics to "market failure." Just as market failure does not refer to the inability of the market (but rather to the situation where market participants' acting in their best interest leads to an outcome that is suboptimal for society as a whole), government failure does not imply anything about the inability of government. It refers to the situation where, as a result of some government policy, even when both government and the private sector act in their best interest, the result is suboptimal from a societal point of view. To illustrate, governments intervene in primary education because there is an externality associated with having a literate and umerate population. This is the market failure that government policy (public provision of education) is intended to correct. But when governments cannot monitor or discipline teachers, and furthermore teachers are important political actors who help politicians get elected, we observe teacher absenteeism rates in Indian public schools of 25 percent and learning outcomes that are astonishingly low. This is government failure. And it certainly contributes to keeping poor people poor.
I agree that conflict and external shocks also contribute to keeping poor people poor, but if you dig deep enough, you find that some--although not all--conflicts are caused by some government failure at some point. Many people attribute the Maoist conflict in Nepal to the fact that some groups of the population were excluded from the benefits of economic growth--partly due to dysfunctional public schools and health facilities, weak connectivity to markets, etc.
In short, rather than scapegoating or blaming government, I want to help governments achieve the objectives they originally intended to achieve, but unfortunately are not achieving because of government failure.
Mon, 10/29/2007 - 07:28
The key to change as far as poverty, and the like is concerned is a new, and revolutionary understanding of the nature, and purpose of money. Until that is achieved nothing much will change at record speed. See my research, and development project of TRANSFINANCIAL ECONOMICS. Wake up to a new paradigm....
http://kheper.net/essays/Transfinancial_Economics.html
The above internet essay is to be updated fairly soon, but it deals with the basic aspects of TFE.
Robert Searle
Tue, 11/06/2007 - 12:18 Poverty should be undersood as subjective and comparative term. World's second wealthiest man is poor than wealthiest. Poor are at bottom in economic vessel. Why poverty reduction should not be taken as economic upliftment? Then it can be a continuous process, even a country become wealthiest in world, why still economic improvement should no continue? Poverty reduction should be considered economic upliftment. And is it not state sovereign activity? If state can delegate power of distribution of power and water to private business, why not povery reduction and economic upliftment can be delegated or assgned to business? Economic upliftment should be taken as business opportunity. The business is good for development. Developmen is good for business. If business deliver good results, it should be rewarded, buisness is for wealth creation and in return it expects profit. Poverty reduction program should be privatised. And there is no need to stop poverty reduction program at any point of time, even after generations. The activity should be understood as socio-economic upliftment.