Poverty Reduction Occur on a Local Scale Essay

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  • Subject: Economics
  • Type: Essay
  • Paper: #88283918

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Poverty Reduction occur on a Local Scale or must it be in a Broader Scope to be Meaningful? Discuss with Reference to Specific Examples.

One of the biggest issues that a host of governments and international organizations are wrestling with (i.e. The UN) is how to effectively eliminate poverty. This is because, a number of different programs have been implemented in the past that were suppose to have a dramatic impact on reducing levels. Yet, in reality they are having limited effects at addressing the underlying causes. Instead, most of the money that is intended to tackle these challenges is squandered through: government bureaucracy and corrupt leaders.

A good example of this can be seen by looking no further than Tanzania. After gaining independence in the 1961, the country began to experience 6% economic growth. This caused many international aid organizations and donors to provide increased amounts of funding for a variety of activities. These were designed to encourage economic development and the reduction of poverty. However, many of the governmental institutions were squandering these funds and focusing exclusively on supporting economic growth. Over the course of time, this made any kind of programs ineffective. At which point, the country would experience decades of negative economic growth. The below table illustrates the how this was occurring with the GDP levels from 1961 to 1985. (Mammo 1999 pp. 56 -- 57)

Tanzania GDP Growth 1961 -- 1985

Time Frame

Percentage GDP Growth

1961 -- 1967


1967 -- 1973


1973 -- 1979


1979 -- 1985


(Mammo 1999 pp. 56 -- 57)

These figures are significant, because they are illustrating how efforts to support economic activity are not working. As many of these funds, are not addressing the root causes of the problems. Instead, they are focused on increasing economic growth through: the reduction of trade barriers and social programs that are deal with the lingering amounts of poverty. This is because, most of the funding that they received was often tied to various stipulations (i.e. The removal of trade barriers). Then, when you combine this with increased amounts of corruption, meant that many of the programs are ineffective. Once this begins to happen, the economy will go into a never ending spiral of stagnation. This is when you can see long periods of negative economic growth and no improvements in addressing poverty levels. The reason why, is because many nations have squandered the money they were receiving and they are forced to pay the debt service on the amounts that they received. This will serve as a way of making the problem worse, as this is allowing economic stagnation to occur. (Mammo 1999 pp. 56 -- 57)

Further evidence of this can be seen with a report that was released by the OECD in 1991. They found that one of the main reasons why anti-poverty and economic aid programs were not working is due to the fact that countries have shifted their priorities. As, they have begun to divert funds away from poverty reduction and economic growth initiatives. With many underdeveloped nations focusing, on paying the interest on the outstanding debt service that they received. This is important, because it is illustrating how international efforts to address poverty reduction have failed. (Mammo 1999 pp. 56 -- 57)

As a result, a new kind of focus must be taken in effectively tackling the problem. However, the issue as to the levels of responsibility has been increasingly brought into question. This is because, many people believe that poverty reduction efforts must be locally focused by: taking into account the culture and specific regionalized factors that are affecting these levels. To determine the best approach for dealing with these challenges requires comparing if poverty reduction is effective on: a micro or macroeconomic level. Once this takes place, it will provide the greatest insights as to what kinds of strategies need to be utilized to effectively tackle the consistently high rates of poverty.

Current Efforts to Tackle the Problem

According to World Hunger.org, there are currently 1.34 billion people who are considered to be living in poverty. The basic definition that they are using is someone who is living on less than $1.25 per day. Furthermore, they determined that that the underlying levels of poverty are tied directly to economic well being. As they found that there are number of different factors that can have a direct impact on rates to include: the over control / utilization of resources, war and climate change. At the same time, they also determined that many nations who begin to have large amounts of poverty will fall into a downward cycle of reduced output. This is because these high levels will have an impact on public perceptions (which will feed negative sentiments that are causing slower growth). The below table illustrates the underlying poverty rates around the world. (World Hunger 2011)

Worldwide Poverty Rates


% of the Population Living in Poverty

Total Population (in millions)

East Asia / Pacific



Latin America / the Caribbean


South Asia



Sub-Saharan Africa


Europe and Central Asia


Middle East / North Africa


(World Hunger 2011)

This is important, because it is showing how poverty can impact different regions of the world and large segment of the population. As a result, this has lead to shift in thinking on how to effectively tackle the problem.

International Efforts

The main focus in reducing poverty was established as a part of the Millennium Development Goals (MDGs) in 2000. The emphasis of this program was to reduce the amounts of global poverty worldwide in all developing and developed nations around the globe by 2015. There are total of eight different objectives that the plan is addressing to include: the eradication of poverty / hunger, universal primary education, promoting the empowerment of women, reducing child mortality rates, combating infectious diseases, improving maternal health, environmental stability and establishing global partnerships for development. (What are the Development Goals 2011)

Since the implementation of these goals, the effects that they have been having on different regions have been mixed. In some cases, the overall amounts of poverty are dramatically being reduced. While in other areas of the world, the situation is continuing to become worse. An example of this can be seen with comments from UN Secretary General Ban Ki Moon who said, "Encouraging progress has been made in a significant number of least developed countries. This is no small feat; it shows that the MDGs are achievable. Far more than that, these nations need the tools with which they themselves will use to create jobs, generate income and unleash the continent's own potential." (Aid and Fairer Trade 2010) This is important, because it is showing how tremendous amounts of progress have been made in addressing the levels of poverty around the world.


One of the many countries that proponents will often point to as a success of MDGs is Rwanda. After the civil war ended, the country made considerable strides to reduce poverty and increase economic growth. At the heart of their strategy, was to focus on infrastructure and other public works projects that will support long-term economic growth. This helped the country move closer towards some of the various goals that were established under the program. Evidence of this can be seen with the country electing its first woman member of Parliament in 2008. (Rwanda, 2007)

Yet, beyond the increased amounts of economic growth and improvements in reaching some of the millennium goals there have been continuing disparities. What has been happening is that the tremendous amounts of growth have done little to address the inequalities between various groups within society. As, the economic expansion has been benefiting: the wealthy and political elite, but are ignoring many of rural parts of the country. This is creating, large differences in various segments of the population and select regions. Over the course of time, this means that these disparities will become even worse. At which point, it will become difficult for the country to reduce poverty through economic growth.

Instead, there needs to be consistent investments in programs and sectors that will help to improve the lives of low income families. One possible way to achieve this objective is to have the government invest in industries that will support the livelihoods of these segments of the population. If this kind of an approach could be used it will help to reduce poverty through: economic growth vs. focusing on certain segments of the economy. This is different from the strategy that has been embraced by the government. As, they have been focusing on reducing poverty through: concentrating on those sectors that can provide the most foreign direct investment. (Rwanda, 2007)

Evidence of this can be seen a report that was released by the UN. They found that this is creating uneven levels of growth in country. This is problematic, because the lack of focusing on select areas will…

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