Tackling poverty

Asia and the Pacific are estimated to have around 800 million poor, by the definition of people living on less than one dollar a day. The poor in Asia and the Pacific account for two-third of all the poor in the world.

While the issue of poverty has been the direct or indirect focus of development initiatives in Asia and the Pacific since the end of the colonial era (1940s to 1950s), the issue of urban poverty has gained prominence only in the last two to three decades. Two basic “levels” or “types" of poverty are identified in the development literature: absolute poverty and relative poverty. Simply put, absolute poverty is defined as the cost of the minimum necessities needed to sustain human life. The World Bank currently regards people earning less than US$ 1 a day (in 1993 purchasing power parity) to be absolutely poor. Relative poverty is defined as the minimum economic, social, political and cultural goods needed to maintain an acceptable way of life in a particular society. The European Union defines the relatively poor as “... persons, families and groups of persons whose resources (material, cultural, social) are so limited as to exclude them from the minimum acceptable way of life in the member state in which they live.”

Terms such as poverty eradication and poverty alleviation are often used interchangeably in the development literature. It is important to distinguish what these terms imply. While absolute poverty can be eradicated, relative poverty can only be alleviated, because what is minimally accepted today may vary over time, from villages to urban areas and from country to country. Relative poverty also varies with levels of economic development, and the perceptions and expectations of the majority on what is minimally acceptable. For example, while clean piped water may be a minimum acceptable standard of living in a city, it may not be a minimum requirement in a village. Similarly, while possessing a telephone may be a minimum necessity in a country like the United States, it may not be a minimum requirement in a country like India. Likewise while Internet connections may not be a minimum necessity in India today, they may become a minimum necessity ten years from now.

Poverty essentially has three closely interrelated aspects: “poverty of money”, “poverty of access” and “poverty of power.” These three conditions are closely related. Access to essential infrastructure and services requires adequate income, while undertaking income-generating activities requires good health and education and access to services such as market information and credit. Inclusion in the delivery of essential services requires participation in decision-making, but participation in decision-making requires access to services and availability of time to spend on participation without loss of income.
It is therefore ESCAP’s view that poverty reduction requires a comprehensive approach that simultaneously reduces poverty of income, poverty of access and poverty of power.

Poverty of income and assets

Poverty of access to essential infrastructure and services

Poverty of power and participation in decision-making

Poverty of income and assets

The most prevalent means of measuring poverty have been and continue to be those related to money. Measures such as poverty lines and Gini-coefficients are used to measure absolute and relative poverty in terms of incomes and affordability. They are prevalent because such measurements are relatively easy to make and quantify.
However, the lack of money is more a symptom of poverty rather than its cause. In most cases, the poor are not without an income; what they lack is the ability to accumulate assets, which is a key ingredient to the creation of wealth and breaking the cycle of poverty.
Besides their low earnings, the prime reason for their inability to accumulate assets and thus increase their security of income is that their profits or potential savings are often appropriated by moneylenders who charge usurious interest rates, by formal and informal regulatory and enforcement agents or organizations who demand bribes or extort protection money, and by middlemen or other stronger business partners who exploit the poor because they lack market information or the ability to use that market information to increase their own incomes.
Another key reason that prevents the poor from accumulating capital is that they are often forced to purchase public goods and services that are readily available to other groups in society at market or below market prices, at much higher costs.

Poverty of access to essential infrastructure and services

Most of Asia’s urban poor live in overcrowded and unsanitary slums and squatter settlements and often do not have access to basic infrastructure and services. They are forced to live in illegal and informal settlements because they cannot enter formal land and housing markets. The reasons for the formation of slums and squatter settlements are numerous and have been discussed extensively in the development literature. It suffices to say here that, because of the way formal markets are regulated and structured; the poor are unable to afford the choices offered to them in these markets. In contrast, the informal and illegal housing markets of slums and squatter settlements are specifically geared to meet their shelter needs.
However, like other informal markets, the informal land and housing market is exploitative and has several negative impacts. First and foremost, informal settlements are often located on marginal land (along river-banks, railway lines, steep slopes and on or near garbage dumps) and are prone to natural and man-made disasters. They are also often illegal and those living there do not have security of tenure. Because of their illegal status, they are often not provided with formal basic infrastructure and services such as piped water, electricity, wastewater disposal and solid waste collection by government agencies and organizations. They have to purchase these in informal markets, often paying much more than higher-income groups. Studies in several cities of Asia and the Pacific have shown that the poor end up paying two to five times as much for informal access to public goods and services than higher-income groups.
Because there is often no security of tenure in illegal settlements and the fear of imminent eviction exists, the poor do not invest in improving either their housing or their settlements. The lack of basic environmental infrastructure and locations on marginal land often translate into higher rates of disease and lower life spans. The consequent higher medical bills, lost working days and early demise of income earners further expropriate their marginal income and cements the cycle of poverty.
Similarly, children of the poor are unable to access good education. Often the standards and facilities of the educational institutes they can afford are lower than those available to children of higher-income groups. Moreover, poor children often drop out of school earlier to support their families. Poor education also contributes to entrenchment of the cycle of poverty.

Poverty of power and participation in decision-making

The poor suffer from both traditional and modern environmental health risks in urban areas. They suffer from diseases associated with poor sanitation, lack of clean water, overcrowded and poorly ventilated living and working environments, as well as from modern risks caused by air and industrial pollution. While the poor suffer the most from dysfunctions in cities, they are the least able, as individuals, to influence how cities are governed.
In many Asian cities, both the formal structures of government and the culture of governance tend to exclude the poor from decision-making and tend to concentrate decision-making among a small number of formal and informal elite. The poor have a greater possibility to influence decision-making under conditions of good governance, i.e., a system of government and a culture of governance that is participatory, inclusive, consensus-oriented, based on the rule of law, responsive to the needs of the population, efficient, transparent and accountable.
Another important aspect of power is information. The poor often lack access to information that they can use to advance their case when dealing with other actors in the city. Even when information is available, it is often in media and forms that are neither not accessible to, nor understandable by, the poor.

Related documents:

Understanding poverty