The person, who inherits the burden of poverty, not only lacks money, property or any tangible assets, he also lacks information, articulation, connection and ability to create his own support for defence against the environment around him. He will be generally described as a poor person. There had been a general apathy and perhaps will continue to generate interest in determining and cataloguing his social identity and economic status as the divisive world moves on to new phases and to a new era. But in reality, poverty is an impediment for those who are without it or would not like to return to it.
The persistent problem of poverty in the developing world has led many to question the efficacy of economic growth and development as a means of poverty alleviation. Indeed, the lack of convergence in standards of living across countries is one of the great unresolved issues in development and growth economics. The prevalence of poverty may also lead to pessimism about the effects of market-oriented policies and outward-looking development strategies.
In the context of Bangladesh, the country is among the poorest countries in the world with an estimated 40 per cent of the population living below the national poverty line of US$1.25 per day. Forty-eight per cent of children under five in Bangladesh are chronically malnourished and 30 per cent of the total population is below the minimum level of dietary energy consumption. These poverty-related challenges for families are particularly acute in rural areas, which offer few opportunities for employment or increased income generation to meet nutritional needs. Weak state governance and market failure are significant issues in the country with the state having little positive influence, for example on dairy sector development as a result of over-bureaucratisation and a high incidence of public service inefficiency, waste, and under-funding. Small holder dairy farming accounts for 90 per cent of the country's milk production, but despite strong domestic demand, only nine per cent reaches the formal market, composed primarily of three large dairy processing companies. Bangladesh is thus forced to import 40 per cent of the country's milk requirements in the form of powdered milk.
"The fragmented nature of the dairy sector means that milk production remains a mostly subsistence practice with transactions highly localised, uncoordinated, and lacking in predictability and transparency" (Kevin McKague, Christine Olive: Enhanced Market Practices: Poverty Alleviation for Poor Producers in Developing Countries).
HISTORICAL EXPERIENCE: Historical experience shows that the cause of poverty fundamentally is unplanned growth of population which largely affects the resource-poor nations more than the resource-rich countries. In defining and measuring poverty, there are many indicators available of which nutritional consumption is widely adopted by the national and multilateral bureaucracy while economic theorists prefer income distribution among the population.
"Poverty, especially in developing countries, is one of the world's most intractable problems. While this remains a daunting challenge, it is not an excuse for inaction or unwillingness to explore new approaches. Donation-based aid programs can make an important impact on alleviating poverty, but they are inherently not economically sustainable. Once implemented in a specific community or region, there is no capital remaining to transfer the program to another location. Market-based approaches offer an attractive alternative, as they can be economically sustainable. While a number of interesting approaches have been developed over the years, they too have limitations in their effectiveness and their scalability to new locations. This suggests an opportunity to identify new poverty alleviation approaches based on market mechanisms" (Professor Ted London, William Davidson Institute & Ross School of Business, University of Michigan).
The market approach to poverty has received considerable attention in the past 20 years, particularly in the private sector. The approach, rooted in the 'bottom of the pyramid' concept by CK Prasad, departs from traditional ideology by conceptualising the poor as not helpless, but rather, as individuals that, given the necessary tools, are empowered to improve their own lives. The market approach argues that charities only focus on the very poor, based on the assumption that they are unable to help themselves and thus need public assistance (Agrawal, 1995). A market-based approach starts from the recognition that being poor does not eliminate commerce and market processes: virtually all poor households trade cash or labour to meet their basic needs.
MARKET-BASED APPROACH: A market-based approach focuses on people as consumers and producers and on solutions that can make markets more efficient, competitive, and inclusive (IFC 2007).
While a hypothesis is established that one has either to be a producer or be employed to generate income which will define his economic status and measure the poverty suffers from, the theoretical argument forwarded to promote microfinance may have been based on this hypothesis but in practice, microfinance has attracted glitters of charitable aspect of microfinance and produced no sustainable improvement to economic activity. The confusion over the economic and social status of the poverty- stricken person generated more attention than resolving the quagmire of one's living environment, obstacles in accessibility to resources for producing and to markets for generating income. The issue is more political than economic. Historically, the class divides always had land and resources (capital) monopolised by the few in the society and by depriving rest of the population from it.
The poor can only offer labour and thus developed the theory of Minimum Wage and Wage Adjustments an Effective Mechanism for Poverty Alleviation. A key component of labour market policy debate has been around the role of wages in either hindering employment creation, or conversely as a tool for reducing poverty and acting as a catalyst for aggregate demand growth.
"The results reflect on the nature of the income distribution, with respect to the poverty line, of domestics and farm laborers. The fact that most of these workers are earning and working well below rather than simply close to the poverty line, means that even huge, and highly unrealistic, wage adjustments will do very little to eradicate poverty amongst these workers. The extreme degree of vulnerability and indigence of these workers ensures this outcome under most conceivable wage scenarios. This result of course means that the wage mechanism has limited use as an instrument of poverty reduction: that even if all other factors were held constant, increasing the wage rate of targeted workers will do very little to significantly erode the incidence of poverty amongst the most vulnerable employees" (Haroon Bhorat, Development Policy Research Unit, University of Cape Town).
The emergence of the sub-discipline of development economics took place when economists had to recognise that the theories they had been elaborating for mature industrialised countries do not fit with the main features of the rest of the world. Thus, the analyses of development have explored the impact upon growth of alternative hypotheses by contrast with those adopted by conventional growth theory. Basically, economic instability, poor growth performance and the persistence of poverty were interpreted as evidence for the absence of a key single factor that has evolved continuously through time. Firstly, the scarcity of capital was blamed and then the lack of entrepreneurship, the absence of competition, and finally a poor human capital formation have been attributed a key role in the absence of development.
WASHINGTON CONSENSUS: More recently, the lack of transparency, economic freedom, and ultimately macroeconomic governance have been perceived as key factors inhibiting growth and poverty reduction. Since the 90s, the so-called 'Washington Consensus' has diffused all over the world a basic vision: full liberalisation, both internal and external, was the key strategy for promoting growth and eradicating poverty. In retrospect, the relevance of this strategy has to be reassessed (Robert Boyer Pse - Paris-Jourdan Sciences Economiques).
Politics played a unique role in managing poverty, especially in the newly-decolonised and developing nations. While vast population (nearly most of the population) was poor in a conceivable human standard, 'institutional approach' to eradication of poverty remained interlinked with local and external politics, geopolitical hegemony and manipulation by the market leaders of international trade.
Poverty is not only the inability to generate income, it does not create wealth as well to add to the GDP and as such, a poor will remain outside the relevance of governance and of the market. Consumption of the poor has remained in such a subsistence level that market can not react or respond to either to the supply or to make any additional investment for it.
GOVERNANCE ISSUE: Lack of transparency in governance and nonchalant reaction from the market caused the development of micro-fused concept of microcredit out of moral dilemma and sense of social responsibility for covering up glare display of barefaced poverty. Belated response from the market introducing some stimulants to alleviate poverty by various financial products based on establishing 'supply chain' to meet the inadequacies of the poor only served the purpose of the market but did nothing to the intended recipient, as the poor was never consulted and never counted in the efforts of alleviating his predicaments.
Rural development and incentives in agro-development were highlighted by multilateral and non-profit institutions but investment management collapsed due to lack of transparency in governance and as well as lack of connectivity and access to the market failed the producer at rural level while employment, a key fundamental for income generation is in jeopardy.
There is a vicious conspiracy in governance compounded by the 'profit' in the market keeping poverty suspended and pulling it enough to suit their agenda that needs a level of poverty to monopolise power and wealth. Poverty existed since the dawn of civilisation and there is no sign of it going anywhere now or in the future.
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