MOVING OUT OF POVERTYSuccess from the Bottom Up

Deepa Narayan Project Director

Lant Pritchett Harvard Kennedy School

Soumya KapoorWorld Bank (New Delhi)

http://www.worldbank.org/movingoutofpoverty1

Introduction Study and methodology:•Conceptual framework• “Culture of poverty”• Poverty measures, churning and vulnerability

•Empowerment• Local markets• Local democracy• Collective action

Concluding remarks

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Outline

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Large scale global study conducted in 15 countries in Africa, Latin America, South and Southeast Asia

•Focus:Long term poverty mobility; cross-disciplinary methodologies

•Objective: To learn retrospectively from those who were once poor but have moved out of poverty and stayed out of poverty in different social, political and economic environments

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MOP Study

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Conceptual FrameworkMoving Out of Poverty

Material well-being Power and rights

Individual agency, aspirations,

and initiatives 4

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Conceptual FrameworkMoving Out of Poverty

Material well-being Power and rights

Individual agency, aspirations,

and initiatives

Economic opportunity

National policies

Local economy

Economic fairness

Democracy

National elections

Local politics

Political fairness

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MOP

Conceptual FrameworkMoving Out of Poverty

Material well-being Power and rights

Individual agency, aspirations,

and initiatives

Economic opportunity

National policies

Local economy

Economic fairness

Democracy

National elections

Local politics

Political fairness

Collective action

Collective and cooperative endeavors

Collective action

Social capital and civic engagement

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MOP

Conceptual FrameworkMoving Out of Poverty

Material well-being Power and rights

Individual agency, aspirations,

and initiatives

Economic opportunity

National policies

Local economy

Economic fairness

Democracy

National elections

Local politics

Political fairness

Collective action

Collective and cooperative endeavors

Collective action

Social capital and civic engagement

Social stratification Social stratification

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MOP

Conceptual FrameworkMoving Out of Poverty

Material well-being Power and rights

Individual agency, aspirations,

and initiatives

Economic opportunity

National policies

Local economy

Economic fairness

Democracy

National elections

Local politics

Political fairness

Collective action

Collective and cooperative endeavors

Collective action

Social capital and civic engagement

Social stratification Social stratification

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“Culture of Poverty”

“Poverty is a dark stain that darkens the whole world.”

—Men’s discussion group,Villa Rosa, Colombia

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Movers cite initiatives as reasons for their move out of poverty

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Life stories in India reveal initiative as most important trigger for accumulating assets

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Gambling, drugs, and alcohol are rarely cited as reasons for falling

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Majority of households have high aspirations for their children

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Even chronic poor and fallers have high aspirations for their children

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Poor people take risks!

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MOP Poverty measures, churning

and vulnerability

“If you fall 10 times, you have to stand up 10 times, no matter what happens.”

—Graciela, a 53-year-old displaced woman,El Mirador, Colombia

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• Poverty is not the bottom rung on the ladder—distinguishing “destitution” from “poverty”

• Enormous mobility across the ladder, the net changes in poverty were small compared to total movements in and out of poverty.

• Vulnerability to falls into poverty is as important as flows out of poverty in net poverty reduction

• Strong apparent “locality” effects within the national/regional picture

• Personal empowerment a strong correlate of moves out of poverty

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Five points

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Description of the Ladder of Life Steps: A Six Step Ladder from Uganda %They can pay for a piece of land worth 400,000 shillings in one day. They have permanent, well-

furnished, beautiful houses, a means of transport, and at least 5 cows. Their friends are also rich and can give them loans if they get into a problem.

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They own painted cement houses, a bicycle, and livestock, including 2 cows, 2 goats, and 3 sheep. They can afford to buy a bar of soap every week. Even when their children are sent away from school, they are able to pay the fee next morning.

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They save money to educate their children above primary 7. All household members sleep on mattresses and the house has furniture. They own livestock—about 3 goats, 1 cow, and a chicken. But they are forced to sell off the animals because they have no land for grazing them.

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They own about 1.5 acre of land, which they cultivate. They have iron-roofed houses, mattresses, and blankets. Each member of the family can afford at least 2 shirts, 2 trousers, and 1 coat. People at this step also do manual labor. Parents are able to educate children up to senior 2, but after that the school sends the child away for want of fees. Children at this step dress in secondhand clothes and shoes.

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They usually sell their land so they can build a house and have a decent place to stay. Most people do not have shoes. They eat meat only on big days like Christmas and Easter. Most children complete primary 7, but with a lot of struggle. They are sent away from school for want of uniforms.

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The “unplanful”: They work as casual laborers for others. They are unemployed and have no money. They do not care about cleanliness and have only one pair of clothes that they rarely wash. When paid money for labor, they use it to buy alcohol.

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A bottom category often described with negativecharacteristics and/or behaviors

Where is the poverty lineon this ladder?

Community Poverty Lineat Step 4 distinguishes “Richer” fromrest, not Poor from the rest

But bottom category usually small18

• Over half the population identified as poor in all but two study regions

• “Poverty” was rarely associated only with the bottom category

• Consistent with an oft-made distinction between “poverty” and “destitution” (or “poor” and “ultra-poor”)

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What “poverty” does the World Bank dream of?

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Upward Mobility

Stability

Downward Mobility

Complete transition matrix for (nearly) every household in every locality

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Churning across the steps on the ladder was enormous—half of all households moved in ten year period

Study region

Average househ

olds ranked in CMM

per village

Mobility index:

movers up plus

movers down

(%)

Movers up (%)

Movers down

(%)

Net upward movement:

movers up less movers

down (%)

Churning index:

ratio total movers to net

upward moveme

nt (%)

Malawi 54 72.9 38.1 34.8 3.3 21.9

Senegal 68 69.5 43.0 26.5 16.5 4.2

Andhra Pradesh 148 44.4 32.2 12.2 20.1 2.2

Uttar Pradesh 153 36.9 25.1 11.8 13.3 2.8

Philippines—Bukidnon 71 30.0 25.2 4.8 20.4 1.5

Average (all) 109 52.6 38.0 13.2 21.0 2.621

Net movements can be as much as differences in falling as in rising: Malawi vs AP, UP vs Philippines (B)

Study region Movers up (%) Movers down (%)

Net upward movement:

movers up less movers down

(%)

Malawi 38.1 34.8 3.3

Andhra Pradesh 32.2 12.2 20.1

Uttar Pradesh 25.1 11.8 13.3

Philippines—Bukidnon

25.2 4.8 20.4

More upward movement(gross) in Malawi than AP

Much less net upward movementin Malawi than AP

Much higherproportion of fallers

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Large apparent (caveats) locality specific differences in mobility

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Thai median highThai bottom quartileof villages lower than most countries

Bangladesh medianlow

Bangladesh upperquartile quite high

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MOP Empowerment

When you have no power, stop dreaming; you will have no freedom, no equality, and democracy will remain a story to you.

—Discussion with men and women,Kijuronga, Kagera, Tanzania

Power is nothing but to go ahead in life with courage.

—Discussion with men, Khatara, Assam

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Movers report control over all or most decisions, while chronic poor and fallers

report less control

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Personal agency has an association with moving out of poverty

Point estimates Std. errors, Plus and minus

ConventionalConfidenceInterval

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Economic opportunity and local markets

The rich have more power. They have power to control the local market price.

—Discussion group in Somrampi, Cambodia

There is no problem in doing business. All can do it. But where there is no light, no bridge, and no roads, what business will you do?

—Discussion with women,Biralipara, Assam

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A majority of chronic poor borrow for regular consumption purposes

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Big increases in corruption were reported in communities where opportunities have expanded

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MOP Local Democracy

Democracy brings development to the community. When there is democracy, things like water, schools, and hospitals will be available to the village, which are otherwise hard to get.

—Men in a discussion group, Kabtito, Uganda

Money, money, money! There is no responsibility or accountability from authorities and government officials.

—Discussion with men and women, Somrampi, Cambodia30

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Communities where governments became more responsive report more services over 10 years

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More roads were present in communities where governments became more responsive

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Responsiveness of local democracy has a significant association with moving out of poverty,

particularly in South Asian study regions

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Responsiveness of local democracy to some has negative spillovers on others

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More than half of households believe most or almost all government officials engage in

corruption

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Corruption has a mostly negative association with moving out of poverty

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MOP Collective Action

If you do not belong to any group in this village, you cannot survive.

—Discussion with men, Bufkaro, Uganda

The community did all this. The school was built with the help of everybody in the community. The families with kids in school had to cooperate, give money.

—Discussion with women, Guadalamoros, Mexico

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Families are rated the most important institution for asset accumulation by all mobility groups in

Indian study regions

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Finance/credit/saving groups are more common than livelihood, health, education, religious, or

ethnic groups

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Community’s propensity for collective action has mostly negative association with movement out of

poverty

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Concluding remarks

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