POVERTY ELEMENTS AND ORIENTATION
The diversity of definitions emerges from entanglements among technical analysts, institutions, and "poverty issues."Definitions of poverty do not emerge independently of theories, ideologies, statistical methods, and analytical procedure that inform policy, but rather inside them.
CO-OPERATIVES AND POVERTY REDUCTION
These explain why, despite the best efforts of the world community, they remain obstinately poor. First, there is a conflict trap caused by political instability leading to civil wars and coups. "Seventy three percent of the people in the societies of the bottom billion have recently been through a civil war or are still in one" (Collier, 2008, p17). Not surprisingly, war keeps people poor and prevents growth. It is made more likely by low incomes and slow growth, coupled with the chance of getting hold of natural resources. Unless a country can grow quickly it is stuck in the conflict trap, suffering recurring conflicts that only make things worse. Second, there is a natural resource trap, which affects about 29% of people in the bottom billion. They live in countries that have high incomes from resources such as oil or minerals. This is paradoxical, because we might expect countries that have such high incomes to become richer, but the influx of 'easy money' actually prevents growth. The currency becomes overvalued and exports suffer, price fluctuations and changes in output create a boom and bust economy, people's attention is diverted away from more productive ways of making a living, and corruption becomes endemic. The political process is subverted by 'patronage politics' in which it is easier to gain loyalty by bribing voters rather than providing them with good public services. This trap can be escaped from if there are checks and balances that prevent such patronage politics, but countries rarely follow the example of Botswana, which is both rich in minerals and has transformed itself into a middle income country. Nigeria, for all its oil wealth, has experienced no real economic growth in a long time. It gets worse. Dambisa Moyo, an outspoken critic of aid to Africa, says that aid acts in the same way as natural resources to prevent growth, foster corruption, weaken the commitment to public services, and undermine civil society. She talks not of a trap but a vicious cycle – of underdevelopment caused by reliance on aid (Moyo, 2009). Third, countries are trapped by their own geography; 38% of the bottom billion are in landlocked countries, mainly in Africa. There are rich landlocked countries such as Switzerland, but they are dependent on the infrastructure provided by other countries to enable them to export. Botswana is landlocked but manages its resource wealth effectively. Other African countries (such as Uganda) are stuck in a trap that depends on improved transport links through other countries (such as Kenya) yet these countries have no incentive to improve the transport links; why should they? So the landlocked countries remain poor. Fourth, there is a governance trap. Bad governance can quickly destroy a growing economy; you just have to look at Zimbabwe. If all the opportunities for growth are there, bad governance cannot stop a country growing, but if a country suffers from any of the other traps bad governance deepens them. Paul Collier cites Chad, which is a landlocked, oil-rich country that desperately needs to improve its public services. A study done in 2004 found that less than 1% of money earmarked for rural health clinics reached its destination (Collier, 2008, p66). It is not easy to find ways to escape these traps. Collier advocates military intervention and a post-conflict charter to escape the conflict trap, new trade policies to escape the natural resource trap, international laws and charters, and changes in aid policy so the right kind of aid goes to the right place at the right time. In his 'Agenda for Action' he asks "What can ordinary people do?" His answers suggest what we can do as an electorate to make our governments and international agencies smarter, more focused on the 'bottom billion' yet using a wider range of instruments than just aid. Yet there is a problem here. Many people in the rich countries want to do more than just influence governments; we want to get involved. And so do many people in developing countries; the poor are willing to help themselves if they are only given a chance. We know that these big traps have to be escaped, but also that there is a lot that people can do for themselves now, and in small ways that involve action on a human scale. Fair trade, for instance, is one way in which ordinary people from the North and South can meet up and take action to reduce poverty (see Shaw, 2006). Trade agreements do not have to be just between governments; consumer co-operatives in the North and producer co-operatives in the South are working together to raise the incomes of poor farmers. In the informal economy in the cities of the South, mutual aid between small business people can make all the difference to their lives (Smith and Ross, 2006). More generally, co-operatives are seen as a vital way in which people in the South can help themselves. To find out what is the potential for this kind of action, we need to extend the idea of traps right down to the local level, to the places where people live and are trying to make a living.
Poverty traps
A poverty trap is "any self-reinforcing mechanism which causes poverty to persist. If it persists from generation to generation, the trap begins to reinforce itself if steps are not taken to break the cycle. See also Welfare trap.
Poverty trap is a self-perpetuating condition where an economy, caught in a vicious cycle, suffers from persistent underdevelopment. Although it is often modeled as a low-level equilibrium in a static model of coordination failures, we discuss the concept in a dynamic setting. This is because, in a static setting, we will not be able to distinguish poverty traps from (possibly temporary) bad market outcomes, such as recessions and financial crises, that are also often modeled as a low-level equilibrium in a static model of coordination failures
Measuring poverty
Although the most severe poverty is in the developing world, there is evidence of poverty in every region. In developed countries, this condition results in wandering homeless people and poor suburbs and ghettos. Poverty may be seen as the collective condition of poor people, or of poor groups, and in this sense entire nation-states are sometimes regarded as poor. To avoid possible stigma, they are commonly referred to as developing nations.
Absolute vs relative poverty
When measured, poverty may be absolute or relative. Absolute poverty refers to a set standard which is consistent over time and between countries. An example of an absolute measurement would be the percentage of the population eating less food than is required to sustain the human body (approximately 2000–2500 calories per day).
Relative poverty, in contrast, views poverty as socially defined and dependent on social context. One relative measurement would be to compare the total wealth of the poorest one-third of the population with the total wealth of the richest 1% of the population. In this case, the number of people counted as poor could increase while their income rises. There are several different income inequality metrics; one example is the Gini coefficient.
Measurements
The main poverty line used in the OECD and the European Union is a relative poverty measure based on "economic distance", a level of income usually set at 60% of the median household income.
The United States, in contrast, uses an absolute poverty measure. The US poverty line was created in 1963–64 and was based on the dollar costs of the U.S. Department of Agriculture's "economy food plan" multiplied by a factor of three. The multiplier was based on research showing that food costs then accounted for about one-third of money income. This one-time calculation has since been annually updated for inflation.
The US line has been critiqued as being either too high or too low. For example, the Heritage Foundation, a conservative U.S. think tank, objects to the fact that, according to the U.S. Census Bureau, 46% of those defined as being in poverty in the U.S. own their own home (with the average poor person's home having three bedrooms, with one and a half baths, and a garage).Others, such as economist Ellen Frank, argue that the poverty measure is too low as families spend much less of their total budget on food than they did when the measure was established in the 1950s. Further, federal poverty statistics do not account for the widely varying regional differences in non-food costs such as housing, transport, and utilities.
Both absolute and relative poverty measures are usually based on a person's yearly income and frequently take no account of total wealth. Some people argue that this ignores a key component of economic well-being. Major developments & research in this area suggest that standard one dimensional measures of poverty, based mainly on wealth or calorie consumption, are seriously deficient. This is because poverty often involves being deprived on several fronts, which do not necessarily correlate well with wealth. Access to basic needs is an example of a measurement that does not include wealth. Access to basic needs that may be used in the measurement of poverty are clean water, food, shelter and clothing. It has been established that people may have enough income to satisfy basic needs,but not use it usely. Similarly, extremely poor people may not be deprived if sufficiently strong social networks, or social service systems exist.
Non-monetary indicators
Some economists, such as Guy Pfeffermann, say that other non-monetary indicators of "absolute poverty" are also improving. Life expectancy has greatly increased in the developing world since World War II and is starting to close the gap to the developed world where the improvement has been smaller. Even in Sub-Saharan Africa, the least developed region, life expectancy increased from 30 years before World War II to a peak of about 50 years — before the HIV pandemic and other diseases started to force it down to the current level of 47 years. Child mortality has decreased in every developing region of the world. The proportion of the world's population living in countries where per-capita food supplies are less than 2,200 calories (9,200 kilojoules) per day decreased from 56% in the mid-1960s to below 10% by the 1990s. Between 1950 and 1999, global literacy increased from 52% to 81% of the world. Women made up much of the gap: Female literacy as a percentage of male literacy has increased from 59% in 1970 to 80% in 2000. The percentage of children not in the labor force has also risen to over 90% in 2000 from 76% in 1960. There are similar trends for electric power, cars, radios, and telephones per capita, as well as the proportion of the population with access to clean water.
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