the paper looks at the role of the state, the market, and societal forces in improving the lives of the poor. It looks at how different writers on the field of economy and society argue out their views on what the state should be doing to improve the lives of the poor, giving three different perspectives.
Rethinking Development
The State, the market, and the societal forces all have a role to play towards improving the lives of the citizens. In as much as entrepreneurs and government institutions would always endeavor to improve their economic performance, they should also make an undertaking to ensure that social services are provided to the citizens. The state in particular has to ensure that it puts in place governance structures that work for the citizenry. It should ensure that health services, education, and security become its top priority (Allchin, 2013). The state should pass legislations that makes doing business less expensive. In that way private sector entities would have the capacity to engage in large-scale export oriented industrialization. This may be a ticket out of poverty for its citizens who may get gainful employment from these industries. Countries where people are economically empowered are less likely to experience high child mortality rates. Household poverty is also reduced especially when women have access to employment and education. These women can make long-term investment decision decisions like sending their children to school or saving.
Democratic governance is essential poverty alleviation. However, poverty in countries where democratic governance is practiced can only be eliminated when the performance element is integrated (Boato, 2007). Credible economic and political institutions that facilitate vibrant and productive economic activities leading to growth and development have to be instituted. State institutions have to be accountable and responsive (Boato, 2007). Democracy should be deepened and be made to deliver the desired benefits of social and economic well-being. Countries caught in widespread poverty should embrace good governance. In this way, they would establish credible institutions with transparent rules that are known, internalized, and enforced. Quality of economic and political institutions determines and affects the capacity of less developed countries to ensure economic diversification, transformation, growth, and development. With good governance the people have rights to own property and do business. It ensures that there are no expropriations (Boato, 2007). People are assured of the government's enforcement of the rules of the game. Honoring of contractual obligations is also predictable. Institutional credibility, in essence resonates well with existence of formal and informal rules, regulations, procedures, and processes that are known, accepted, and internalized (Boato, 2007). A government that creates an environment where rules and contractual obligations are adhered to attracts the participation of private sector entities whose participation is integral in poverty eradication. Good governance also ensures that there are no administrative bottlenecks that breed an atmosphere of corruption and indiscipline which are sworn enemies of socio-economic development. Institutional credibility ensures that there is no suspicion by the society especially the entrepreneurs about the implicit and explicit actions of the authorities. State systems lacking institutional credibility have perennial problems that relate to allocation and definition of property rights (Boato, 2007). There are also rampant discretionary actions by state actors. State institutions must work to sustain the wishes and aspirations of the citizens. In order to alleviate poverty, the state input has to be in synergy with the actions initiated by the civil society organizations. Sidelining civil society organizations only serves to aggravate the dire situation. This underscores the importance of building institutional mechanisms (Boato, 2007).
Financial system help in alleviating poverty among the poor as was witnessed in Bangladesh whose financial sector is not very much exposed to the world. This has made it survive the tide of global financial crisis (Allchin, 2013). Major world financial institutions like the World Bank have a responsibility to the world citizens. The World Bank has come up with a raft of measures meant to cushion Latin American countries against sinking into poverty. Such measures include fiscal discipline, redirecting public expenditure policies, and tax reforms. Interest rate liberalization or in broader sense financial rate liberalization can also help in alleviating poverty among the poor. Interest rate liberation should come after financial liberation has been instituted so that it provides a constraint on gambling for redemption. Governments should desist from directing credit to particular industries. It should allow market to determine the allocation of credit (Williamson, 1999). The World Bank is of the opinion that Latin American countries have firmly fixed or freely floating exchange rates as opposed to competitive exchange rate. Latin American countries should also embrace trade liberalization. Trade liberalization enables the countries involved to get the badly needed foreign exchange that can be used in importing goods that can be used in bettering the lives of the common citizens. Trade liberalization also encourages prospects of Foreign Direct Investment (Williamson, 1999). With Foreign Direct Investment new industries can be set up that can make use of skilled or unskilled labor. Household Income per Capita is more likely to increase. A people who are economically empowered are in a position to access healthcare services and can better their education. Another reform that the World Bank has put as a condition that has to be met by countries that apply for loans is privatization. All state corporations had to be privatized apart from those that provided essential services like the health and security. Privatization was supposed to eliminate elements of corruption and ensure efficient service delivery to the citizens. This has proved a little bit challenging bearing in mind that the government has for a long time been seen as the provider of basic social services (Williamson, 1999). Privatizing something like the public transport sector has been quite challenging in some countries where the fares for road and rail transport have ballooned to disproportionate levels that the poor can hardly afford.
Societal forces play integral roles in poverty eradication. Donors have done some good work in post-conflict societies. They have desisted from dumping aid in a rush and taken to providing essential services in phases. They deliver basic services using independent service authority model where competing organizations provide services on ground while authorities finance and scrutinize their performance (Collier, 2007). In this way the donors coordinate and pool funds into the authority. This works in post-conflict countries with weak governments. The donors fund traditional projects to restore infrastructure. Security is vital for investors. Aid agencies should be concentrated on most difficult environments where they can actively supervise their projects. They should seize reform opportunities at early stages, intervene strategically, and finance big push strategies for export diversification (Collier, 2007). The element of aid conditionality should be embraced by them to ensure that corruption is eliminated and only deserving people access their services. To initiate reform and growth, aid agencies have to prioritize long-term social objectives as opposed to short-term opportunities. Societies that have gone through civil unrests have to rely on external military personnel for a long time before normalcy returns (Collier, 2007). There has to be commitment between the government sending its military to foreign destination to restore law and order and the recipient government. Deteriorating security is a liability to host government as no investor would be keen on investing in a war torn country. External military personnel should fight to preserve peace. The host government should be willing to accept casualties. The post conflict government should rule by consent rather than oppression. As the military reduce in size the police force should be expanded to deal with the wave of violent crimes. International community has a responsibility to restore peace in war torn countries regardless of the accusations of infringing on sovereignty of these particular countries (Collier, 2007). War is a kin to poverty. Unless peace is restored the residents of these countries are likely to remain in poverty for a very long time. International community should therefore appoint international actors to negotiate peace processes. Governance issues are key in poverty eradication. To mobilize changes in laws, poor countries have to be coerced to sign international charters. This can help improve governance in poor countries. Charters can be promulgated through the U.N. general assembly (Collier, 2007).
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