Why Poverty Persists: Poverty Dynamics in Asia and Africa

296 Pages·2011·1.758 MB·English

by  Bob Baulch, Bob Baulch

Why Poverty Persists
Poverty Dynamics in Asia and Africa
Edited by
Bob Baulch
Chronic Poverty Research Centre
Edward Elgar
Cheltenham, UK • Northampton, MA, USA
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© Bob Baulch 2011
All rights reserved. No part of this publication may be reproduced, stored in a
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Edward Elgar Publishing, Inc.
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A catalogue record for this book
is available from the British Library
Library of Congress Control Number: 2011925731
ISBN 978 0 85793 024 8 (cased)
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Printed and bound by MPG Books Group, UK
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Contents
List of contributors vi
Foreword viii
Acknowledgements xii
List of abbreviations xiii
1. Overview: poverty dynamics and persistence in Asia and
Africa 1
Bob Baulch
2. Poverty transitions, shocks and consumption in rural
Bangladesh, 1996–97 to 2006–07 29
Agnes R. Quisumbing
3. A poor life? Chronic poverty and downward mobility in rural
Ethiopia, 1994 to 2004 65
Stefan Dercon and Catherine Porter
4. The determinants and consequences of chronic and transient
poverty in Nepal, 1995–96 to 2003–04 96
Saurav Dev Bhatta and Suman K. Sharma
5. Poverty dynamics in rural Sindh, Pakistan, 1987–88 to
2004–05 145
Hari Ram Lohano
6. Poverty traps and structural poverty in South Africa:
reassessing the evidence from KwaZulu-Natal, 1993 to 2004 187
Julian May, Ingrid Woolard and Bob Baulch
7. Poverty dynamics in Vietnam, 2002 to 2006 219
Bob Baulch and Vu Hoang Dat
8. Chronic poverty: what is to be done? 255
Bob Baulch
Index 273
v
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Contributors
Bob Baulch is Coordinator of the Chronic Poverty Research Centre’s
theme on Poverty Dynamics and Economic Mobility, Research Fellow
with the Social Development Research Initiative and Lead Economist for
the Prosperity Initiative. He is currently based in Hanoi, Vietnam.
Saurav Dev Bhatta is Senior Education Specialist with the World Bank
in Katmandu, Nepal. From 2007–2009, he was the Education Director
for Saajhaa Shiksha E- Paati (Open Learning Exchange Nepal), a non-
governmental organization implementing the One Laptop per Child
concept in Nepal. Until 2007, he was Assistant Professor in the Urban
Planning and Policy Program at the University of Illinois, Chicago.
Stefan Dercon is Professor of Development Economics at the University
of Oxford, Fellow of Wolfson College, University of Oxford, and Senior
Research Fellow with the Bureau for Research in Economic Analysis
and Development. He is also associated with the Centre for the Study of
African Economies, Oxford and the Centre for Economic Policy Research.
Hari Ram Lohano is an Assistant Professor at the Institute of Business
Administration, Karachi, Pakistan. He was previously a lecturer in eco-
nomics at the University of Sindh, Hyderabad, and an economist for the
Social Policy and Development Centre, Karachi. His research focuses on
agricultural shocks, poverty and rural livelihoods in Pakistan.
Julian May is Professor of Development Studies at the University of
KwaZulu-Natal in South Africa. He was Principal Investigator of the
KwaZulu-Natal Income Dynamics Study (KIDS).
Catherine Porter is a British Academy Postdoctoral Fellow in the
Department of Economics at the University of Oxford. Her research
focuses on chronic poverty measurement and applied investigations into
the consequences of risk and poverty on household and individual well-
being, both in the short and longer term. Her research focuses mainly on
Ethiopia.
Agnes R. Quisumbing is a Senior Research Fellow in the Poverty,
Health and Nutrition Division of the International Food Policy Research
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Contributors vii
Institute in Washington DC, working on poverty, gender, and economic
mobility. She co-l eads a research programme on factors that enable indi-
viduals, households and communities to move out of poverty and has just
begun a new research programme on gender and assets.
Suman K. Sharma is currently a Research Scholar and Lecturer in
the Division of Economics at Nanyang Technological University in
Singapore. Until 2008, she was an Associate Professor at Tribhuvan
University in Kathmandu, Nepal and a consultant to various development
organisations. Her current research areas include poverty, social protec-
tion and the socio-economic dimensions of disasters in the Asian context.
Vu Hoang Dat is a Researcher, Centre of Analysis and Forecasting,
Vietnam Academy of Social Sciences, Hanoi.
Ingrid Woolard is Associate Professor in the School of Economics at the
University of Cape Town, and Co- Principal Investigator of the National
Income Dynamics Survey in South Africa.
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Foreword
Back in 2000, when the Chronic Poverty Research Centre (CPRC) was
being established, an important collection of papers were published in the
Journal of Development Studies – ‘Poverty dynamics and economic mobil-
ity in developing countries’, edited by Bob Baulch and John Hoddinott.
For the fl edgling CPRC this collection had great signifi cance for three
particular reasons. First, it provided important microeconomic fi ndings
about the patterns of chronic and transient poverty in low-i ncome coun-
tries and drew initial inferences about causal factors (and pointed to the
dangers of prematurely drawing conclusions about causality). Second,
it presented the state of the art at that time for the methodologies avail-
able for analysing poverty dynamics from quantitative panel data sets.
And third, and most important for CPRC, it led to us starting a research
partnership with Bob Baulch which has been central to the centre’s overall
output for the last ten years.
The panel data set analyses conducted by Bob Baulch, the networks he
has activated with other microeconometricians (and now anthropologists),
the work he has commissioned for CPRC across Asia and Africa, and the
data sets he has made publicly available, have been at the heart of our
academic and our policy contributions to knowledge.1 These eff orts have
culminated in the publication of this volume which, just over ten years
after the original collection in the Journal of Development Studies, pre-
pares the stage for another decade of advances in the analysis of poverty
dynamics and the conversion of those analyses into policy recommenda-
tions.
Given the relatively high volume of contemporary studies based on
panel data set analysis, the reader may need reminding that back in 2000
such work was rare and almost none of it was focused on developing coun-
tries. With the exception of a small number of innovators, notably Raghav
Gaiha, panel analysis was focused on economically advanced countries
and especially the USA. Our understanding of the microeconomics of
poverty and well- being in developing countries in 2000 was almost exclu-
sively based on static analyses because few panel data sets were available
and because many development economists at that time lacked the skills
to explore panel data.
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Foreword ix
How things have changed over ten years! Now Masters students rou-
tinely expect to learn these skills and undertake panel analyses for their
dissertations. But, some fundamental issues have changed relatively little,
particularly the challenges still facing the assiduous microeconomist, in
ensuring that fi ndings are based on the most rigorous analysis. While this
book examines many aspects of poverty dynamics it has special strengths
in ensuring that fi ndings are robust and that the nightmares of measure-
ment error, attrition and tracking do not undermine the conclusions.
As is discussed in the opening chapter, a key challenge for panel analy-
sis is the degree to which measurement error exaggerates the number of
poverty transitions (getting out of income poverty or falling into poverty)
that a sample experiences. For example, a population that in reality has
experienced no poverty dynamics over a period is likely to record transi-
tions because of measurement error during data collection of its waves.
All of the chapters in this book are sensitive to this conundrum and their
fi ndings are carefully drawn so that problems of measurement error is
acknowledged.
A second challenge is attrition. The great advantage of panel data is
you can see how things change over time, but if the population you are
studying is diff erent at wave two than at wave one, few conclusions can
be drawn. I know from discussions with Bob over the years that this is a
great concern for him and, as a result, all of the chapters in this book take
pains to test whether attrition is biasing their samples over time. As some
of the chapters in this book move beyond the standard two wave analyses,
typical of the early 2000s, to multi- wave analyses this issue becomes even
more important.
A third challenge facing many of the authors of the chapters in this book
is tracking households – determining when a household has split or has
ceased to exist and/or whether to incorporate newly formed households
in a dataset. There can be no simple protocol that can be applied to all
studies for tracking, but as each chapter reveals, the authors have thought
carefully about developing a detailed protocol for their analyses so that
all decisions about which households are excluded from the sample, and
which included, are clearly thought out and explained.
But, this volume goes beyond ensuring that its analyses are cutting edge
in terms of rigour as it deepens the understanding of poverty dynamics by
its exploration of causality. It cautions against the elegant curves under-
pinning much microeconomic analysis of poverty dynamics and economic
mobility, and draws attention to the vulnerability of poor households
and of the ways in which shocks, and often series of shocks in close suc-
cession, aff ect them. These shocks explain why some households fall into
persistent poverty while the progress of households that are doing well is
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x Why poverty persists
often of an ‘upward saw-t ooth’ pattern, as asset accumulation is damp-
ened by adverse shocks. As Bob Baulch’s seminal, collaborative research
with Peter Davis has revealed some of these shocks are unpredictable – ill
health, fl ooding, pest attack, price changes and so on – but others are
predictable (such as the additional health expenditures of having another
child), and some are predictable and socially constructed (such as dowries
for daughters in Bangladesh).2 The discussion of combining and sequenc-
ing quantitative and qualitative research methods in the introductory
chapter provides clear advice on how rigorous ‘Q- squared’ approaches
can take fi ndings beyond association and into complex understandings of
causality.
If a foreword should be balanced, and try to fi nd shortcomings in a
work, then the only signifi cant concern I have of this book is that it follows
the microeconometric norm of acknowledging that poverty is much more
than income or consumption shortfalls, but then bases its analyses almost
exclusively on income and consumption measures. Why this remains the
sub- disciplinary norm is discussed in Chapter 1, and in other work we
must note that Bob Baulch has taken thinking forward by comparing
monetary and non- monetary measures.3 It must be hoped that future
work by leading microeconometricians, and hopefully by Bob and his col-
leagues in this book, will tackle this frontier.
Finally, I encourage any readers with country or regional interests (who
may be tempted to cherry pick chapters) to go beyond the individual
chapters and to ensure that they read the concluding chapter. This sum-
marises the policy fi ndings of all of the chapters in the book in the light of
the broader literature on poverty dynamics and economic mobility. The
conclusion examines ideas about asset accumulation through the conven-
tional debates in microeconomics – agricultural assets, return on assets
and diversifi cation – but also moves beyond these to include structural
factors such as social discrimination and state regulations that discourage
migration and close off a key strategy for household advancement. The
‘economic manifesto for the chronically poor’ that concludes the book
draws together the fi ndings of these studies in a clear and exemplary way.
Baulch argues that people trapped in poverty need the support of both
promotive and protective strategies. For example, improving returns to
labour must be prioritised, as that is the main asset of the chronically poor,
through education, facilitating migration, rural connectivity, employment
guarantees and the implementation of anti- discrimination laws. Eff ective
social protection programmes are also one practical and proven way to
help the chronically poor achieve their economic and social goals.4
At the beginning of the 2000–10 decade Bob Baulch (with John
Hoddinott) was setting the microeconometric agenda on poverty dynam-
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Foreword xi
ics and chronic poverty – producing work that non-e conomists had to
read if they wanted to conduct serious research on these issues. In this
volume – through his analytical excellence, the pursuit of methodological
rigour, extraordinary energy and persistence, and his ability to lead such a
distinguished network of colleagues – Bob has set the research agenda for
the next ten years.
David Hulme
Professor of Development Studies
Executive Director, Brooks World Poverty Institute
Director, Chronic Poverty Research Centre
Head, Institute for Development Policy and Management, University of
Manchester
NOTES
1. Unusually for econometricians, Bob has also made major contributions to capacity
development for colleagues and has taken great pains to extend the skills of partners in
Asia (and elsewhere) and make high quality panel data sets readily available to them.
2. See Davis, P. and B. Baulch (2009), ‘Parallel realities: exploring poverty dynamics
using mixed methods in rural Bangladesh’, CPRC Working Paper 142, Manchester,
UK: Chronic Poverty Research Centre (and the Journal of Development Studies, 47(1),
118–42).
3. See Baulch, B. and E. Masset (2003), ‘Do monetary and non-m onetary indicators tell the
same story about chronic poverty? A study of Vietnam in the 1990s’, World Development,
31 (3), 441–4.
4. Hanlon, J., A. Barrientos and D. Hulme (2010), Just Give Money to the Poor, Sterling,
VA, USA: Kumarian Press.
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Acknowledgements
This document is an output from a project funded by UK Aid from the
UK Department for International Development (DFID) for the benefi t
of developing countries. The views expressed are not necessarily those of
DFID.
I would like to thank the contributors for their valuable insights and
colleagues in the Chronic Poverty Research Centre for their support and
encouragement over the past ten years. I am grateful to Queen Elizabeth
House and New College, Oxford for hosting me while I was editing this
book. My family deserves special thanks for putting up with my many
absences, both abroad and in the offi ce upstairs, while this book was being
completed.
Bob Baulch
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