Moving Out of Poverty

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Moving Out of Poverty Success from the Bottom Up
Deepa Narayan Project Director Lant Pritchett
Harvard Kennedy School Soumya Kapoor World Bank
(New Delhi)
http//www.worldbank.org/movingoutofpoverty
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Outline

• 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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MOP Study

• 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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Conceptual Framework
Moving Out of Poverty
Material well-being
Power and rights
Individual agency, aspirations, and initiatives
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Conceptual Framework
Moving Out of Poverty
Material well-being
Power and rights
Economic opportunity
Democracy
National policies
Local economy
Economic fairness
National elections
Local politics
Political fairness
Individual agency, aspirations, and initiatives
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MOP
Conceptual Framework
Moving Out of Poverty
Material well-being
Power and rights
Economic opportunity
Democracy
National policies
Local economy
Economic fairness
National elections
Local politics
Political fairness
Collective action
Collective action
Collective and cooperative endeavors
Social capital and civic engagement
Individual agency, aspirations, and initiatives
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MOP
Conceptual Framework
Moving Out of Poverty
Material well-being
Power and rights
Economic opportunity
Democracy
National policies
Local economy
Economic fairness
National elections
Local politics
Political fairness
Collective action
Collective action
Collective and cooperative endeavors
Social capital and civic engagement
Social stratification
Social stratification
Individual agency, aspirations, and initiatives
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MOP
Conceptual Framework
Moving Out of Poverty
Material well-being
Power and rights
Economic opportunity
Democracy
National policies
Local economy
Economic fairness
National elections
Local politics
Political fairness
Collective action
Collective action
Collective and cooperative endeavors
Social capital and civic engagement
Social stratification
Social stratification
Individual agency, aspirations, and initiatives
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Culture of Poverty
Poverty is a dark stain that darkens the whole
world. Mens 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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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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Five points

• Poverty is not the bottom rung on the
  ladderdistinguishing 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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Where is the poverty line on this ladder?
Community Poverty Line at Step 4 distinguishes
Richer from rest, not Poor from the rest
A bottom category often described with
negative characteristics and/or behaviors
But bottom category usually small
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What poverty does the World Bank dream of?

• 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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Complete transition matrix for (nearly) every
household in every locality
Upward Mobility
Stability
Downward Mobility
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Churning across the steps on the ladder was
enormoushalf of all households moved in ten year
period
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Net movements can be as much as differences in
falling as in rising Malawi vs AP, UP vs
Philippines (B)
Much higher proportion of fallers
More upward movement (gross) in Malawi than AP
Much less net upward movement in Malawi than AP
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Large apparent (caveats) locality specific
differences in mobility
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Thai bottom quartile of villages lower than most
countries
Thai median high
Bangladesh median low
Bangladesh upper quartile quite high
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Empowerment
Power is nothing but to go ahead in life with
courage. Discussion with men, Khatara, Assam
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
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Movers report control over all or most decisions,
while chronic poor and fallersreport less control
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Personal agency has an association with moving
out of poverty
Std. errors, Plus and minus
Point estimates
Conventional Confidence Interval
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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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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, Cambodia
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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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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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Communitys propensity for collective action has
mostly negative association with movement out of
poverty
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Concluding remarks