How to achieve growth for the poor

Economic growth alone does not guarantee poverty reduction in developing countries. Evidence from Asia illustrates that rapid growth may not benefit poor and excluded groups of people, and could even threaten social stability and national cohesion. Governments and donors need to smooth these transitions and help poor people share in the benefits of growth.

Asia has achieved impressive economic growth along with poverty reduction in recent years. Between 1990 and 2001, the number of people living on less than a dollar a day dropped from 931 million to 679 million. But this growth � and its impact on different aspects of development � has been uneven across and within countries. An article in Development Policy Review draws attention to the structural and demographic transformations that accompany rapid growth, and the unique challenges they pose in Asia.

Accompanying rapid growth, the economic structure of countries tends to shift from one that is predominantly rural and agriculture based to an urban, industrial and eventually service and knowledge-based structure. This is happening in China, Vietnam and India. Only in the poorest and slowest growing economies such as Nepal, Sri Lanka and Cambodia does agriculture still generate more than 30 percent of Gross Domestic Product (GDP).

The demographic and age structure is also changing, with the fastest growing countries experiencing a rapid fertility decline, a growing proportion of elderly people, fewer children and an aging labour force. Poorer, high-fertility countries have large young populations, but also face new challenges.

Key areas of concern include:

* In high-fertility countries, growth may not be sufficiently labour-intensive to create the number of jobs required to employ a growing labour force.
* High-fertility countries are still predominantly rural with poor infrastructure, so maternal mortality, child mortality and access to basic services remain problematic.
* Changing economic structures in the faster growing countries require the labour force to become increasingly mobile and skilled.
* Rising incomes lead to changing consumption patterns and impacts on health (�diseases of the rich� such as obesity and heart disease) and environment (pollution, energy use), that in turn require changes to health care and environmental policy.
* The worst poverty and exclusion occurs in remote or resource-poor regions and in overcrowded urban environments.

The paper surveys regional approaches to combating poverty and exclusion within Asia, innovative programmes for financing urban development, and the use of social protection schemes (for instance, Thailand�s �30 baht health scheme�). Governments will need the political will to address concentrations of poverty while strengthening linkages between rural and urban areas. In addition to highlighting specific experiences and lessons, the paper concludes with three general messages for policymakers seeking to achieve economic growth with poverty reduction:

* Donor coordination, with participation from national governments, is crucial to reduce the costs of administering aid and adjusting to growth, particularly in aid-dependent developing countries.
* There is a need to support local processes, for example by building up local skills and capacities.
* It is important to incorporate a focus on poverty and exclusion into all aspects of bilateral relations, and not just into development assistance programmes.

Source: ID21

User comments

"Introduction of social security to unorganized sector workers"

Author: SADASHIVAN NAIR

Time: 18.09.2007 13:36

Comment: Over 70% population in developing countries in informal sectors lack social security and pension schemes. Insecure life is poverty:
http://www.sadashivan.com/unorganisedsectorandlackofsocialsecurity/

"Attention should be more towards rural employment opportunity"

Author: SADASHIVAN NAIR

Time: 18.09.2007 13:27

Comment: growth of poverty level is largely due to misunderstanding poverty. Measures controlling poverty should be linked to the suitability of the country, as reasons of poverty changes due to social conditions of the country. For example, countries like India and other who has thick population and dominated by illiterates and semi- literates (semi-literate means with less literacy level which deprives them from employment in high tech or medium industries). This category does not fit into high tech industries. For them agricultural, small and cottage industries are most suitable. the link below brings more details on the poverty solutions:
http://www.sadashivan.com/quotpovertyquotasubject/index.html