Broader view of poverty exposes challenges

Source: Pano feed

Poverty will remain a critical challenge for Asia in coming decades and will require a greater efforts to address food insecurity and economic vulnerability, according to a new report by the Asian Development Bank (ADB).


Rapid economic growth in the region has led to a dramatic improvement in living standards. In 2005, the bank measured extreme poverty in terms of per capita income or expenditures of less than USD1.25 per day. According to the new report, the number of people living in extreme poverty in the region could drop to 1.4% by 2030, if current trends continue. This is cause for optimism, as the organisation defines poverty eradication as populations with less than 3% living in extreme poverty.



However the new report, Key Indicators for Asia and the Pacific 2014, suggests that the USD1.25 per day expenditure measure does not fully capture the extent of extreme poverty.


“USD1.25 a day is not enough to maintain minimum welfare in many parts of our region,” said ADB Chief Economist Shang-Jin Wei. “A fuller understanding of poverty is needed to help policymakers develop effective approaches to address this daunting challenge.”


According to the ADB, three additional elements should be factored into the definition of poverty: cost of consumption specific to Asia’s poor; food costs that rise faster than the general price level; and vulnerability to natural disasters, climate change, economic crises, and other shocks.


The new report explores how including these elements in poverty assessments changes poverty assessments of the region. Although the report does not recommend abandoning the conventional USD1.25 figure to determine the poverty line, it does point out that data taken from Asia would suggest raising that number to USD1.51. Using the adjusted figure would raise the poverty level of 2010 from 20.7% to 30.5%.


The report also recommends that the rapidly-rising price of food and food insecurity be taken into account, especially because the poor spend a larger portion of their incomes on food. Taking into account the actual rises in food prices compared to CPI would increase the 2010 figure for those living in poverty by 4%, or 141 million people.


The third added measure suggested for policy-makers to recognise is that many households living just above the poverty line can easily fall into the category of extreme poverty. They are especially vulnerable to natural disasters, financial crises, illness or other unexpected events. A vulnerability-adjusted poverty line would also increase the 2010 poverty estimates by 11.9%, or 418 million.


With all three factors taken into account, the report estimates that these adjustments would increase Asia’s estimated extreme poverty rate for 2010 to 49.5%, although the report did point out that these three factors are not mutually exclusive.


With this wider criterea for estimating poverty, projections, while they still predict reduction in poverty, also appear less optimistic, with a fall in the poverty rate to 17.1% by 2030. Most of these would be living in middle income countries.


“To confront this challenge, the report urges a stronger focus on efforts to enhance food security and reduce vulnerability in addition to promoting growth,” said Wei.


Food security, the report says, can be improved by enhancing policy, including stimulating faster productivity and technological development, expanding affordability and access to targeted food aid, improving productivity chains and their infrastructure and stabilising food supply.


To manage increasing vulnerability, governments can invest in risk-mapping and disaster risk reduction efforts, such as early warning systems and workforce diversification. Fostering the development of insurance products accessible to the poor, making infrastructure more resilient, and strengthening social safety nets are also important components of a poverty reduction strategy.




Đăng ký: VietNam News

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