Op-Ed: What is Poverty?

02 Jun 2010

If you ask ten people what poverty is you are likely to get ten different answers. To measure poverty is difficult, and experts are divided on the question of how this is best done. In Fiji the most common measurement today is the Basic Needs Poverty line, which is calculated to range between 31 to 37 Fijian Dollars per adult equivalent per week (2002/03). An estimated 40 percent of Fiji’s population lives below this line, which is an increase from 25 percent in 1990. In recent announcements, the Government has shared its aim to reduce poverty from the current level to five percent by 2020. To achieve such a major reduction in poverty, adequate economic growth is necessary, and this will benefit the poor, but many other factors also affect poverty.  Importantly, there is a need to identify who the poor are and what their needs are. UNDP defines poverty as the denial of opportunities and choices to lead a long healthy, creative life and enjoy a decent standard of living, freedom, dignity, self-esteem and respect of others.

Poverty - more than just income

o identify the poor, a good starting point would be to look at global poverty levels and which areas of the world do the poorest reside. Today, the total number of people living below extreme poverty in the world as a whole is hovering around one billion. In analyzing the trends of poverty, the percentage of the developing world’s population living below US$1.25 per day was halved from 52 percent to 25 percent, over the 25 year period of 1981 to 2005.

A significant number of people have reached the US$1.25 day mark, but they are still quite poor and vulnerable to adverse shocks. The high increases in food and fuel prices since 2005 are such shocks, as well as the impact of the global economic crisis of 2008.

Alternative indices to address the limitation of taking a single measure such as per capita as an index of development has been developed by UNDP. The Human Poverty Index (HPI) is based on three main indices: Population not expected to survive to the age of 40; adult literacy rate; and a deprivation index based on an average of two variables – the percentage of the population without access to safe water and the percentage of underweight children under five years old. It reflects UNDP’s definition of human development – more than just income. It is also about other social indicators such as life expectancy, education, literacy and health provision and the process of increasing people’s choices and opportunities in life.

Extreme poverty is increasing

In the Pacific, where more economies include high levels of subsistence production and traditional mechanisms provide a social safety net, most Pacific islanders do not live in extreme poverty. However, it is worth noting that extreme poverty is increasing in PNG and Fiji.

The definition of poverty purely by the level of income does not appear to be suitable for the Pacific. In most Pacific countries, the majority of the population resides in rural areas which can be quite remote from the main urban centers. In addition, remittances which are of critical importance to household liquidity are not captured in measures such as GDP per capita. With the participatory approach of poverty assessment undertaken by the Asian Development Bank (ADB), Pacific Island Countries generally refer to poverty as hardship. It is the lack of access to basic services, infrastructure, lack of access to participate fully in the socio-economic life of the community, and a lack of access to productive resources and income generation support in order to meet their basic needs. However, current statistics on poverty in the Pacific do not include specific indicators or measures capturing these factors.

Keeping the Promise

he international community, at the Second United Nations Millennium Summit in September 2005, reaffirmed its commitments to the Millennium Development Goals (MDGs) and to end poverty. Since the introduction of the MDGs in 2000, more children are attending school, fewer children and women are dying from preventable diseases and millions of people have been lifted out of poverty. The latter, in China and other parts of East Asia are a result of rapid economic growth. Closer to home, economic forum, rural economic development initiatives, good governance, and financial discipline have led to a reduction in poverty, for example in Vanuatu. In essence, macro-policies that generate economic growth and good governance have been critical.

In 2000, when leaders signed the Millennium Declaration, climate change, rising food and fuel prices had not been considered, but will now need to be addressed. The need for safety nets, sound enabling environments, expansion in accessibility and quality of social services, improved public accountability, greater trade liberalization reforms and removal of barriers to human mobility are needed and at a scaled up and accelerated pace if we are to achieve the MDGs including further reduction in global poverty.

In September this year the world will have another chance to agree on strategies for the last five years of working towards the MDGs. World leaders will assemble in a summit organized by the UN. I hope the Pacific will make its mark on this summit, and that we will be able to present new approaches for achieving the MDGs and combat poverty in the Pacific.

Mr Knut Ostby is the United Nations Resident Coordinator and UNDP Resident Representative, representing 10 Pacific island countries:  Fiji, Tuvalu, Palau, Federated States of Micronesia, Republic of Marshall Islands, Nauru, Kiribati, Solomon Islands, Tonga and Vanuatu.