From the Editor’s Keyboard

The Politics of Poverty Reduction

5 April 2018 at 17:32 | 3295 views

By Dr. Yusuf Bangura (Guest Writer), Freetown, Sierra Leone.

Poverty reduction has been a central objective of the world community in the last decade. This can partly be traced to the failure of the stabilization policies of the 1980s and 1990s to generate or sustain growth in many poor countries and the worsening of poverty in some regions.

The elevation of social or human development issues in international development policy is perhaps one of the major contributions of the Millennium Development Goals, in which governments commit to halve poverty and hunger by 2015. Development assistance is now strongly oriented towards poverty reduction and other MDG targets. This has led to a shift in aid allocation in favour of social services. The public expenditures of poor countries have also tended to reflect this shift, with increased spending on basic services used by the poor. There has also been a proliferation of social assistance schemes, such as free health care for children, pregnant women, lactating mothers, and the aged; pensions for the elderly; income transfers for child care; employment guar
antee schemes; and school feeding programmes.

In some poor countries, donors play a crucial role in funding these programmes.
Sustained progress in many of these initiatives and lifting the vision of human development to the level where it addresses broader issues of productive capacities that provide decent jobs, social protection and services to all depends substantially on politics. This refers to processes of cooperation, conflict
and negotiation that influence decisions about how resources are produced, distributed and used.

Outcomes in the political process further depend on the distribution of power, the types of relationships governments establish with different groups in society, and the institutions that mediate conflicts among competing interests.
Unfortunately, the politics of poverty reduction is still top-down in many countries and lessons have not been drawn from the types of politics that have made significant and sustained dents into poverty in democratic countries. This contribution draws on the UNRISD report Combating Poverty and Inequality
to shed light on the conditions under which democracies deliver outcomes that are beneficial to the poor.

Shortcomings of the participatory framework of PRSPs

Most low-income countries have relied on the participatory frameworks of PRSPs to involve citizens in designing and implementing anti-poverty strategies. However, the PRSPs have adopted a consultative process that does not give citizen groups the power to effect real change or to get policy makers to deliver on agreed-upon goals. Many groups that participate in the process typically feel that real decisions on important policies lie elsewhere. Participation is often limited to NGOs without the active involvement of associations of informal
and formal workers, farmers or artisans, whose livelihoods are directly affected by development policies. Research in many countries shows that important issues are often left out of discussions.

One common omission or area that is ring-fenced is the macroeconomic framework of PRSPs, which is largely based on the IMF’s Poverty Reduction and
Growth Facility and negotiated between governments and the IMF. The type of participation associated with the social pacts that produced rapid poverty reduction in the past differs substantially from the bargaining regime of the PRSPs.

When democracies deliver outcomes that benefit the poor

The UNRISD report Combating Poverty and Inequality argues that poverty reduction requires effective and accountable states, the institutionalization of rights, sustained public engagement, expansion of the bargaining power of the poor and those who represent them, and pacts that are structured around issues of employment, welfare and growth. The report shows that democracies have been able to deliver outcomes that are beneficial to the poor when:rights are institutionalized, which allows the poor to exercise political choice, build alliances with others and hold leaders to account; groups with strong ties to the poor develop capacity for independent organization and mobilization and when groups establish structural links with actors involved in policy making.Three examples: OECD democracies; welfare democracies in the South; unequal societies and welfare expansion.

OECD democracies

In high-income OECD democracies, there is a large body of literature that examines how organized interest groups forced policy makers to create an institutional regime that allowed groups that represent interests that include those of the poor to bargain with state authorities and business and influence the direction of public policies. In these countries, democracy and welfare development were driven by similar processes in which trade unions, acting through social democratic and clerical parties, played a substantial role. Data on voting and welfare development suggest that socialist/labour voting in the early period of democratization correlated highly with welfare programme consolidation (meaning that countries adopted at least three of the four main social insurance programmes relating to work accidents, health, pension and unemployment). However, labour needed allies, since it was unable to
effect democratic change and welfare development on its own. In the Nordic countries, workers collaborated with segments of the middle class and small farmers, who defended their interests through agrarian parties. The preferences of agrarian parties for flat-rate, universal, tax-financed benefits came to define the welfare policies of social democratic regimes.

The bargaining regime of countries with superior social outcomes took the form of social pacts. The key features of such pacts included the recognition
granted to representatives of labour and employers in negotiations over wages, employment, working conditions and welfare; the ability of group representatives to ensure members’ compliance when decisions were reached; and the mutual recognition of each actor’s importance in achieving goals, including the relative capacity of parties to obstruct outcomes that were not based on consensus.

Social pacts were not confined to the industrial sector. Agrarian pacts were also
constructed in many countries. These improved farm incomes and narrowed rural-urban inequalities in many countries where farmers’ votes were important.
The data suggest that although social transfers have reduced poverty in all high-income democracies, countries classified as social democratic (with high levels of unionization, centralized bargaining,strong party-union ties, and pacts) have been more effective in reducing poverty, followed by countries classified as Christian democratic. Those characterized as liberal regimes, which have weak labour movements and pluralistic institutions of interest representation in policy making, are the least effective.

Welfare democracies in the South

Similar processes can be found in welfare democracies in the South. In a few established democracies in developing countries, subaltern interest groups are fairly well organized and are part of broad social movements that have influenced the policies of political parties. The most well-known cases are Costa
Rica, the Indian states of Kerala and West Bengal, and Mauritius. Because these were largely agrarian societies when democratic politics were introduced,peasant movements and organizations were much more active in the construction of the alliances that produced welfare-enhancing policies. In Costa Rica and Mauritius, smallholders displayed remarkable organizational abilities because of the absence
of powerful land-owning elites. In Kerala and West Bengal, revolutionary parties implemented land reforms during the early stages of democratization.