How, if at all, does inequality matter for poverty reduction policies?
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Table of Contents
Introduction to poverty and poverty reduction. 1
TWO MAIN APPROACHES. 1
RESIDUAL APPROACH.. 2
RATIONALE APPROACH.. 2
ANALYSIS OF BOTH APPROACHES IN UNDERSTANDING POVERTY.. 2
ROLE OF GROWTH IN REDUCING POVERTY.. 4
CASE STUDY.. 4
RESULTS OF INCLUSION OF POOR IN ECONOMY FOR REDUCING POVERTY.. 5
CONCLUSION.. 5
REFERENCES. 6
Introduction to poverty and poverty reduction
Poverty is a multinational concept, and it covers all the area, i.e. socio, economic and political elements. Poverty, at its extreme, is defined as a lack of basic needs of life or lack of complete means to meet the basic needs which are food, protection, and shelter. On the other hand, relative poverty describes the condition in which people are unable to enjoy the minimum level of living standard as compare to the other people living in the same society. (ravallion, 2013). Poverty has been associated with poor health, low level of education and skills, an inability or willingness to work, high rates of disorderly behavior and improvidence.
Most of the countries in the world define poverty in a uni-dimensional way, using income or consumption level. As poverty is becoming a very important problem for the societies to develop, therefore it has become an international issue. Therefore they are trying for the reduction of poverty. The main problem arising in the way of reduction of poverty is the way of understanding the type and reason for poverty. Poverty reduction or poverty alleviation is a set of measures that are intended to lift the people out of poverty at both social and economic level. Many policies and programs help in the reduction of poverty. Poverty reduction occurs largely due to economic growth in a country. Many aspects of poverty reduction are based on their efficiency of making the basic needs available or increase in the income to buy those basic needs or enhancing the standard of living. Some strategies are helping people to access different needs by providing opportunities to access urban areas. As poverty is an international issue; therefore developing countries are paying larger attention to reducing poverty. According to the research of the World Bank, poverty has been reduced by 1 billion in the last 25 years. (Goodpal, 2018)
TWO MAIN APPROACHES
As described above the main issue is the understanding of the main issue creating poverty. There are two main approaches:
- Residual approach
- Rationale approach
RESIDUAL APPROACH
Residual poverty means an individual is born poor and stays poor due to limited opportunities for gaining an education, health, and care. (hope, 2016)To deal with residual poverty, there is a residual approach that is given by neo laborism and development. This approach explains that inequalities have no role to play in poverty, but this is a developmental process.
RATIONALE APPROACH
As compared to the residual approach, the rational approach considers that this is the inequalities that are the roots of poverty and is extracted from the reason of lack and misuse or mistreatment of social relations. This approach considers the structure and dynamics of social relations. This approach explains about the inequalities in the opportunities given and in every field of social, economic and politics which is the main cause of the creation of poverty.
In this essay, it is discussed in details about why and how the inequalities are very important in the creation of poverty and how they will help reduce poverty.
ANALYSIS OF BOTH APPROACHES IN UNDERSTANDING POVERTY
Both the residual and rational approach of dealing with poverty has its concerns, ideas and conclusion and both are morally important in understanding the type of poverty. But the ideas of residual approach that inequalities among the living standards, among the people in dealing with other people has no concern with poverty and poverty is independent of inequalities is not fair and in this essay, we provide critical analysis over both these approaches. Residual approach considers that due to lack of education, health and care facilities and mental development poverty rises, but the concept of rational approach that these deficiencies arise due to inequalities is right. As it is a common sense that if equal opportunities are provided to both rich and poor, and if poor people are dealing with great attention and provides them equal options of making their way of living better, poverty can be reduced. Residual approach id derived from neoliberalism and its understanding in the development, therefore it largely focus on free-market capitalism and laissez-free economic liberalism. (jordan, 2006) Laissez freestyle defines that the leader gives the workers their work and then pays no attention to them; the work efficiency is zero in that style. The neoliberalism brings the ideas of privatization, free trade deregulation. This term has become more prevalent in the 1970s and 1980s and is used by a variety of scholars and critics. But the definition, meaning, and usage have changed over time, and with time, the use of this term becomes less accordingly. In decades the use of this term is seen emerged from the Laissez free doctrine of liberalism and has changed the concept form market economy to social market economy. (Brick, 2015) But this term has its critics. Many academics and activists have criticized neo-liberalism. According to David Harvey neo-liberalism imposes class on society as its primary objective is to increase the power, wealth and income of the upper class. Though it has not directly told in its theory the assumption and way of working on neo-liberalism evaluate such results. (Harvey, 2018) Many scholars have links the neo-liberalism with mass incarceration of poor in the world mostly in developing countries. The neoliberalism has dominated economic development as well as political development. As we know poor people live on the margin of society therefore while working with this residual approach, development excludes the development of poor and they lack the necessities of life even the basic needs of food, clothes and shelter and ultimately the whole economic gain due to growth in the economy is not shared with poor. This is the main drawback of this residual approach. It holds the development back as it limits the development to the free market only. At the level of international aid, neo-liberalism involves many key players like NGO’s, IMF or World Bank as they focus on privatization and free markets which helps these key players to provide better social welfare. (Ostry, 2016) This results in a reduction in government spending on health. The gain of public health by these NGO’s leads to the undermining of local health and contributes to the local social inequalities between NGO workers and local individual. This ultimately leads to financial crises in the country. The increased benefits due to neo-liberalism results from the cost of increased inequalities. (Metcaff, 2017) Increase in inequalities has an adverse impact on the value of growth and sustainability in the economy. Therefore this agenda needs to pay attention to distributional effects. (salon, 2017).
Now, what’re the inequalities created by neo-liberalism. The lack of access to opportunities of gaining income, assets of the country and other such factors that lead to the development. Inequalities define the existence of equal opportunities and rewards among different groups in a society. In the formal term, social inequalities are the rational processes in society that have the effect of limiting or hurting the group’s social status, social class, and social circle. (Wade, 2017)
The rational approach of…
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