‘Moving Out of Poverty’: Outstanding new mega-study from the World Bank

March 18, 2009

     By Duncan Green     

One of the best books I have ever read on development was ‘Crying out for Change’, a summary of a massive late 1990s study by the World Bank called ‘Voices of the Poor’. So it was a delight to pick up the summary of its new and epic successor ‘The Moving Out of Poverty Study’ (I’ve got the book on order, but this is so good, I wanted to tell people about it right away).

If the first book was about the statics of poverty – what it is, what it feels like etc, this is about the dynamics – how people rise and fall out of poverty and why. To find out, the Bank researchers talked to 60,000 people in over 500 communities in 15 developing countries, using everything from focus groups to collecting life stories and asking people to design their own local definitions of poverty and wealth.

The results are fascinating. Voices of the Poor generated a big discussion over the extent to which the Bank was imposing some of its own preconceptions on its findings (something an NGO would of course never do!) and I’m sure the same debate will take place over this book, but taking it at face value, here is a taste of its findings:

1. Poor people put the poverty line at around $2 a day, not $1: ‘In a typical country or study region, more than 60 percent of households were classified as currently in poverty, and in every single study region, the fraction of households classified as poor was more than 40 percent’. When compared to conventional poverty indicators, that came out fairly consistently near the $2 a day mark

2. Oscar Lewis was wrong: there is no ‘culture of poverty’: ‘Poor people are not listless, passive and alienated. ‘Instead, they take initiatives, often pursuing many small ventures simultaneously to survive and get ahead. Some do manage to move out of poverty. In country after country, when we asked movers to name the top three reasons for their move out of poverty, the answers most frequently emphasized people’s own initiative in finding jobs and starting new businesses.’ In contrast, the reasons for falling into poverty are more varied (see chart).

3. Poverty is a condition/experience, not a permanent characteristic. The numbers moving out of and into poverty are much higher than the net result (poverty falling or rising) suggests.

4. ‘Power within’ can be a vital first step: ‘inner strength and confidence emerge time and again as a key factor in moving out of poverty. Moreover, self-confidence increases quickly as poor people experience some success. …. [this is] important for how development is done. Development interventions should be carried out in ways that respect and increase—rather than detract from—people’s confidence in themselves and their families. Participatory and community-driven approaches reinforce people’s own sense of agency.’

5. ‘Equal opportunity remains a dream… Poor people face agonizingly limited economic choices, very different from the gilded choices of the rich…. Local prosperity offers no protection against exploitation. Even poor people in booming economies may find themselves cycling through a series of low-value, dead-end activities.’

6. ‘Tiny loans usually provided under microcredit schemes do not seem to lift large numbers of people out of poverty. Poor people need credit that enables them to go beyond meeting immediate consumption needs and build permanent assets. Second, credit is more likely to be used productively when it is combined with improved local infrastructure, particularly rural roads, and with help in connecting to and producing for markets. When new economic possibilities open up, whether through construction of roads, liberalization of markets, or introduction of new commercial crops, for approximately two years there seems to be a period of openness to social change. During this time it is possible to increase equality of opportunity and effect change in social relations across lines of caste, ethnicity, or religion. Eventually, however, new elites emerge—and new cycles of suffocation begin.’

7. ‘Communities with more responsive local governments have better access to clean water, schools, doctors and nurses, and public health clinics. Furthermore, the quality of education and health services also registers more improvement.’

8. ‘The paradox of collective action is that while it may enable poor people to cope and survive, it typically does not help them move out of poverty…. Poor people as a group lack cash, assets, education, market know-how, and connections with the rich and powerful. When poor people associate only with each other, they bring only their own meager resources to the table. Poor people understand these constraints and affirm that “there is a limit to how much one hungry man can feed another.” The challenge is to extend these positive local traditions of mutual help so that they reach across social lines.’

That’s just a taste – it doesn’t include all the evocative quotes and case studies, or the more subtle debates, but there are rich pickings in here for anyone interested in the reality of poverty and development, big challenges to our assumptions, and blessed relief from all the frustrating generalities about ‘the poor’, ‘developing countries’ and so on.