Posted: February 1st, 2023

Effects of Measuring and reducing poverty

The way in which the international economic order is structured can either reinforce or ease poverty. Institutions like the World Bank and the World Trade Organization are dominated by wealthy nations. This has placed them under scrutiny due to embedded practices that often place developing countries at a disadvantage. For example, before the World Bank issues a loan to a low-income nation, certain conditions must be met. These are known as conditionalities. They can include policy changes such as the privatising of public services – for instance, the provision of water, sanitation and electricity. Imposing such conditions, or structural adjustments as the World Bank calls them, have frequently been shown to cause more harm than good.

4. Inequality

Inequality is an important contributor to poverty as it can reinforce divisions between the so-called ‘haves’ and ‘have-nots’. In a relative sense, it can result in certain elements of a population lacking the tools and resources needed to counter the challenges they face. In an absolute sense it can render a whole state unable to rescue its citizens from dire circumstances because it lacks the financial resources. For example, in the United States approximately 16 million children live in poverty. This is despite the fact that it is one of the richest countries in the world. Inequality can be measured by looking at how much income a family has relative to the cost of living in that society. It is not the same as the absolute poverty a child living on less than $2 a day would experience in the Democratic Republic of the Congo, one of the world’s poorest nations. Yet, it is still poverty when viewed in a relative sense through the lens of inequality. The nature of the problem is thus extensive since it is something that exists at both the domestic level (inequalities within states) and the international level (inequalities between states). Although there is a vibrant international charity system and a range of international assistance programmes, inequality remains a key structural condition associated with poverty.

Measuring and reducing poverty

Since the end of the Second World War states have come together to find ways to reduce poverty through prompting economic growth. As discussed earlier in the chapter, concepts of global justice underpin international poverty-reduction strategies, giving focus to approaches that seek to enhance the rights of the marginalised. The extent to which these efforts have been successful is highly debatable – but the intent has certainly been there. States have attempted to address the challenges of poverty at a global level in various ways. We discuss four approaches below.

1. Official development assistance (aid)

Typically, aid comes from developed states and is either channelled bilaterally (or directly) from one state to another or diverted multilaterally through international organisations like the United Nations. It is one way in which wealthy nations have attempted to meet their moral obligation to assist poorer nations. Indeed, developed countries have spent a great deal on official development assistance over the years. In 2014 alone, states spent over $135bn on aid according to a report from the Organisation for Economic Co-operation and Development (OECD). However, the success of such efforts has been inconsistent, and in some cases poverty has actually got worse. The reasons for this are complex but some examples may be helpful.

First, inappropriate types of aid can be sent. Instead of sending money that a developing country can use to address poverty, developed states sometimes provide goods that may or may not be helpful. For example, in Gambia a number of oxygen devices were donated to a hospital, but unfortunately they were not compatible with the local electricity voltage. This rendered the devices unusable, highlighting how aid needs to be properly thought through. Second, corruption in some countries has seen aid syphoned off into the offshore bank accounts of the political elite. For example, the New York Times claimed that over $1 billion in foreign aid intended to help Bosnia rebuild itself after years of destructive war was stolen by Bosnian officials for personal gain (Hedges 1999).