20 July 2012

New research finds global poverty reduction is driven by political self interest

Third World governments, who have succeeded in almost halving the number of people living below the poverty line, are motivated mainly by self-interest, rather than altruism, according to researchers at the University of Sheffield.

The review of the political factors which underlie the fall in global poverty was led by Professor Paul Mosley from the University’s Department of Economics and Professor Jean Grugel from the University’s Department of Geography. The team found that Third World government’s self-interest and desire to strengthen the state, rather than their altruism and concern for poor people, are the main reasons for poverty reduction.

Professor Mosley explained: “Indonesia and Uganda are two of the countries which have been most successful at reducing poverty in recent times, but their leaders, Presidents Suharto and Museveni, who have reduced poverty by two-thirds in the last 30 years, were, in my opinion, by no standards benevolent and compassionate people. In fact, they were ruthless near-autocrats. But they still pursued policies which were in the interests of the mass of under-privileged people, because they saw that as a way of consolidating their power.

“Although poor people as individuals are excluded from power, governments of developing countries may still see it as in their interests to orientate their policies towards the poor, and global actors such as aid donors and multi-national corporations may see it as in their interests to support these policies.

“Importantly, however, this does not always happen, and many poor countries, from Afghanistan to Nigeria to the Democratic Republic of the Congo to Pakistan, are still caught in a poverty trap. We also set out to find out what political factors determine who stays poor and who escapes from this trap.”

In the last twenty years, global poverty has been halved. The proportion of households living below the World Bank poverty line of $1.25 a day has gone from 40 per cent in 1990 to under 20 per cent today – and remains at around this level in spite of the current global recession.

The results have appeared this month in a book published by Oxford University Press, entitled The Politics of Poverty Reduction. The team reviewed the poverty reduction performance of developing countries as a whole and conducted intensive case-study reviews of nine countries, which between them cover the entire developing world – Argentina and Bolivia in Latin America; Indonesia and Malaysia in Asia; Ghana, Uganda, Kenya and Zimbabwe in Africa; and finally Russia.

Two major reasons why governments included the poor in their development policies, the team found, were fear of revolt – as in Indonesia – and the ability of representatives of the poor to supply the missing cement which consolidates a weak state’s ability to govern – as in Bolivia and Ghana.

Professor Mosley added: “Effective policies are also needed, and policies which expand the demand for low-income labour are vital in this context, because poor people have no assets, and labour is the only thing which they are able to sell. Aid donors have been important in facilitating and supporting these policies; but only where pro-poor coalitions already existed. Attempts by donors to pressure governments to make themselves pro-poor, for example in support of the Millennium Development Goals, have generally been a failure.”