Chapter three

Poverty, inequality and development

Poverty, inequality, and development are interconnected concepts where poverty, often measured by
income or consumption levels, and inequality, reflecting disparities in income distribution, can
significantly impact a nation's development. A high level of poverty and inequality can hinder economic
growth and overall human development. Poverty:

Poverty is generally defined as a lack of basic needs, such as food, shelter, and healthcare, due to
insufficient income or resources. Poverty, in its broadest sense, refers to a state of deprivation
characterized by a lack of access to basic necessities such as food, shelter, clean water, education, and
healthcare. However, poverty is not solely an economic issue. It also encompasses social, political, and
cultural dimensions, perpetuated by systemic inequalities, discrimination, and exclusion.

Poverty can be measured using various indicators, including absolute poverty lines (minimum subsistence
level) and relative poverty lines (defined in relation to societal norms).

Root Causes of Poverty

Understanding the root causes of poverty is essential in developing effective strategies for eradication.
While the factors contributing to poverty are complex and multifaceted, they can be broadly categorized
into structural, systemic, and individual determinants.

1. Structural Determinants: These include policies, economic structures, and societal norms that
perpetuate inequality. Lack of access to education, healthcare, and job opportunities are all
structural barriers that hinder individuals and communities from breaking free from the cycle of
poverty.
2. Systemic Determinants: Systemic factors encompass issues like discrimination, corruption, and
political instability. Discrimination based on race, gender, or social class can lead to unequal
distribution of resources and opportunities, exacerbating poverty.
3. Individual Determinants: These factors relate to personal circumstances and choices, but they are
often influenced by the larger social and economic environment. Factors such as health, education
level, and family structure can significantly impact an individual’s ability to escape poverty.

Poverty Eradication

1. Education is a powerful tool in the fight against poverty. It empowers individuals with
knowledge, skills, and critical thinking abilities, enabling them to access better job opportunities
and improve their quality of life. Furthermore, education fosters civic participation, leading to
informed and engaged citizens who can advocate for policies that address the root causes of
poverty.
2. Eradicating poverty requires a multifaceted approach that addresses the various dimensions of
this complex issue. This includes implementing policies that promote economic empowerment,
ensuring access to quality education and healthcare, and actively combating discrimination and
exclusion.
 3. Community empowerment plays a crucial role in poverty eradication. Grassroots movements, led
by individuals and communities affected by poverty are instrumental in creating sustainable
change. They mobilize resources, advocate for policy reforms, and provide vital support to those
in need.

Why eradicating poverty is important?

1. A Global Crisis

Poverty remains a pervasive and deeply entrenched problem affecting billions of people worldwide. It
denies individuals access to basic human rights such as education, healthcare, and adequate nutrition.

2. Inequality and Social Disparities

Eradicating poverty is pivotal in reducing inequalities within and between countries. It is a critical step
towards creating a more inclusive and just society.

3. Economic Stability and Growth

Poverty reduction fosters economic stability and sustainable development. By empowering individuals
and communities, nations can unlock their full potential for growth and prosperity.

4. High levels of poverty can lead to social unrest, reduced productivity, and slower economic growth.

Inequality:

Inequality refers to disparities in income, wealth, and opportunities among individuals or groups within a
society. Inequality, in its various forms (social, economic, political), arises from a complex interplay of
factors. These include historical and structural inequalities, socioeconomic and cultural constructs, and
disparities in access to resources and opportunities, and discriminatory practices. Long-term
unemployment, lack of education, and homelessness also contribute to social and economic inequality.
Furthermore, factors like health disparities, social mobility, and even societal acceptance of roles and
stereotypes play a role in shaping inequality.

Causes of Inequality

1. Historical and Structural Factors:

 Colonialism and its Aftermath:

Historical inequalities stemming from colonialism and its lingering effects continue to impact societies,
often creating persistent disparities in wealth, power, and opportunity.

 Slavery and its Legacy:

Slavery and its enduring effects, including systemic racism and discrimination, have contributed to
persistent inequalities in wealth, income, and social status.

 Class Systems:

Social class structures and hierarchies, whether based on wealth, occupation, or other factors, can limit
social mobility and create inequalities in access to resources and opportunities.

2. Socioeconomic and Cultural Factors:

 Economic Disparities:

Significant differences in income, wealth, and access to economic resources create and widen the gap
between the rich and the poor, leading to social and economic inequality.

 Education and Social Mobility:

Limited access to quality education, particularly for marginalized groups, can hinder their social mobility
and perpetuate cycles of inequality.

 Cultural Norms and Stereotypes:

Prevailing cultural norms and stereotypes, including those related to gender, race, or ethnicity, can limit
opportunities and perpetuate discrimination.

3. Political and Legal Factors:

 Legislation and Political Inequality:

Laws and policies that favor certain groups or perpetuate discrimination can contribute to inequalities.

 Lack of Representation and Political Power:

Marginalized groups may have limited representation in political decision-making, hindering their ability
to advocate for their interests and address inequalities.

 Corruption and Lack of Accountability:

Corruption and a lack of accountability within government can divert resources away from social
programs and exacerbate inequality.

4. Other Factors:

 Health Disparities:

Unequal access to healthcare and healthcare services, particularly for marginalized groups, can lead to
poorer health outcomes and further exacerbate inequalities.

 Unemployment and Low Pay:

High rates of unemployment and low-paying jobs can trap individuals in cycles of poverty and contribute
to income inequality.

 Climate Change:

The unequal impact of climate change on different populations and regions can exacerbate existing in
Global factors, such as technological progress, globalization, and commodity price cycles, play an
important role. For instance, technological advancement has contributed to the skill premium, because
individuals with higher education have a comparative advantage in using new technologies (Card and
DiNardo, 2002). In Western Europe and the United States, technological progress has also translated into
a hollowing out of middle-class jobs, a phenomenon known as job polarization (Goos and Manning,
2007).

Country-specific factors, such as those related to economic developments and economic stability as well
as to domestic policies — including financial integration, redistributive fiscal policies, and liberalization
and deregulation of labor and product markets — also play an important role in explaining inequality
trends within countries.

High and increasing inequality can undermine sustainable and inclusive development by exacerbating
material deprivations, eroding social cohesion, and creating social barriers.

3. Development:

Development encompasses improvements in living standards, including economic growth, human capital
(education and health), and overall quality of life.

Relationship with Poverty and Inequality:

Poverty and inequality can hinder development by limiting access to resources, opportunities, and social
mobility. Conversely, sustainable and inclusive development strategies are crucial for reducing poverty
and inequality.

Development Strategies:

Development strategies often focus on promoting economic growth, improving education and healthcare,
and implementing social protection programs to address poverty and inequality.

High levels of poverty and inequality can create a cycle of disadvantage, making it difficult for
individuals and communities to escape poverty and achieve their full potential. Sustainable and inclusive
development can help break this cycle by promoting economic growth, improving social mobility, and
reducing disparities in income and opportunities. Addressing poverty and inequality requires a
multifaceted approach, including targeted social programs, investments in education and healthcare, and
policies that promote inclusive economic growth.
 B. From Modernization to sustainable livelihoods

The sustainable livelihoods idea was first introduced by the Brundtland Commission on Environment and
Development as a way of linking socioeconomic and ecological considerations in a cohesive, policy-
relevant structure. The 1992 United Nations Conference on Environment and Development (UNCED)
expanded the concept, especially in the context of Agenda 21, and advocated for the achievement of
sustainable livelihoods as a broad goal for poverty eradication. It stated that sustainable livelihoods could
serve as ‘an integrating factor that allows policies to address ‘development, sustainable resource
management, and poverty eradication simultaneously’.

Sustainable Livelihoods (SL) is closely associated with Robert Chambers. According to Chambers and
Conway (1992: “A livelihood comprises the capabilities, assets (stores, resources, claims and access) and
activities required for a means of living: a living is sustainable which can cope with and recover from
stress and shocks, maintain or enhance its capabilities and assets, and provide sustainable livelihood
opportunities for the next generation; and which contributes net benefits to other livelihoods at the local
and global levels and in the short and long term.”.

Sustainable livelihoods refer to a way of life that provides individuals with access to basic needs, the
opportunity to thrive, a sense of identity and belonging, and the means to produce and distribute resources
and services. It aims to ensure economic viability and social status while addressing social problems such
as lack of employment, underemployment, discrimination, and exploitation. Sustainable livelihoods
provide access to basic needs, the opportunity to thrive, alongside a sense of identity and belonging.

Sustainable livelihoods can provide nutrition, economic viability, a sense of identity, social status, and the
means to produce and distribute resources and services. While livelihoods provide benefits to some, the
societal system is rife with social problems, including lack of access to employment or sufficient
employment, and exploitation. These issues are often felt intimately at the domestic level, and become
international when workers need to move across nations and regions to survive and thrive.

Livelihood can be best defined as the methods and means of making a living in the world. The concept
revolves around resources such as land/property, crops, food, knowledge, finances, social relationships,
and their interrelated connection with the political, economic, and sociocultural characteristics of an
individual community. A livelihood consists of capabilities, assets, and activities that are required for
living. A sustainable livelihood is defined by the UN Economic and Social Commission for Asia and the
Pacific (UN-ESCAP) as having “the ability to cope and recover from unexpected events, while at the
same time enhancing current and future capabilities” (UN-ESCAP, 2008). This definition interlinks the
definitions of resilience, sustainability, and livelihood, as each affects the others and highlights how DRR
or mitigation strategies directly affect sustainable livelihood. This means that there needs to be a heavy
focus on reducing vulnerabilities of the community, including reducing poverty levels, building capacities
and coping mechanisms, and focusing on community resilience (UN-ESCAP, 2008).

There are five primary assets or capitals in the sustainable livelihoods framework (Figure 4.3) that can
influence sustainability and community resilience, as they can all be affected during disasters. These
assets are human, social, natural, physical, and financial capital. Collectively, this is referred to as the
Pentagon model. Human capital includes the skills, knowledge, labor ability, and good health that
collectively allow people to pursue livelihood. Social capital consists of the specific social resources that
are necessary to pursue one’s own unique livelihood. These can be fostered via establishment of
networks, trusting relationships, and membership of formalized groups. Natural capital consists of the
natural resource stocks from which resource flows and sources are derived; these natural resource stocks
include such elements as nutrient cycling and erosion protection, both which are useful for maintaining
livelihood. Physical capital represents the resources available to support viable livelihood. This may
include clean water, adequate sanitation, and effective shelter; these items are often encompassed by basic
infrastructure. Financial capital consists of the financial resources that are required if people want to
fulfill their livelihood objectives (UN-ESCAP, 2008).

Figure 1. Sustainable livelihoods framework

Modernization
Modernization can lay the groundwork for sustainable livelihoods by enhancing capabilities and access to
resources, ultimately supporting long-term well-being. However, it's crucial to ensure that modernization
initiatives promote inclusivity, equity, and environmental sustainability to truly create sustainable
livelihoods.

Modernization's Role:

Training and Education:

Modernization often introduces new technologies and practices, requiring farmers to receive training and
education to effectively utilize them.

Access to Resources:

Modernization can improve access to resources like irrigation, credit, and markets, allowing farmers to
diversify their income and enhance their livelihood.

Livelihood Diversification:
Modernization can encourage livelihood diversification, such as through livestock rearing, poultry
farming, or non-farm enterprises, making communities more resilient to shocks.

Challenges and Considerations for Sustainable Livelihoods:

 Inclusivity and Equity:

Modernization efforts must ensure that all members of society, including vulnerable groups, benefit
equally from new opportunities.

 Environmental Sustainability:

Modernization should not come at the cost of the environment. Sustainable practices, such as agroforestry
and water conservation, are essential for long-term sustainability.

 Social and Political Factors:

Understanding local social and political contexts is crucial for designing effective sustainable livelihood
interventions.

Examples of Modernization Contributing to Sustainable Livelihoods:

 Improved Irrigation:

Modern irrigation techniques can boost agricultural productivity and allow for more diverse crops,
enhancing farmer livelihoods.

 Access to Credit:

Modern financial institutions can provide credit to farmers, enabling them to invest in their businesses
and improve their income.

 Market Access:

Improved infrastructure and logistics can facilitate access to markets for farmers, allowing them to sell
their produce and earn higher incomes.

Modernization can be a powerful tool for promoting sustainable livelihoods, but it's crucial to address
potential challenges and ensure that modernization efforts are inclusive, equitable, and environmentally
responsible.

C. Equality and social inclusion/exclusion

Equality and social inclusion/exclusion are interconnected concepts that address the fairness and
participation of individuals within a society. Equality refers to the idea of equal opportunity and
treatment, while social inclusion/exclusion focuses on the extent to which individuals and groups are able
to participate fully in all aspects of society.

A. Equality

Equality aims for a society where everyone has the same rights, opportunities, and access to resources,
regardless of their social or economic background, gender, race, ethnicity, or other identity. Equality
emphasizes fairness and equal treatment.

Goal: To create a society where everyone can reach their full potential and have a fair chance in life.

B. Social Inclusion/Exclusion

Social inclusion refers to the process of ensuring that individuals and groups have equal opportunities to
participate in all aspects of society, including economic, social, and political life. Social exclusion, on the
other hand, describes situations where individuals or groups are denied access to these opportunities and
resources. Social exclusion describes a state in which individuals are unable to participate fully in
economic, social, political and cultural life, as well as the process leading to and sustaining such a state
social exclusion entails not only material deprivation but also lack of agency or control over important
decisions as well as feelings of alienation and inferiority. In nearly all countries, to varying degrees, age,
sex, disability, race, ethnicity, religion, migration status, socioeconomic status, place of residence, and
sexual orientation and gender identity have been grounds for social exclusion over time.

The term social exclusion was used for the first time by former French Secretary of State for Social
Action, René Lenoir (1974), to refer to the situation of certain groups of people − “the mentally and the
physically handicapped, suicidal people, aged invalids, abused children, drug addicts, delinquents, single
parents, multi-problem households, marginal, asocial persons, and other ‘social misfits’”− whom he
estimated to comprise one tenth of the population of France and who were considered vulnerable yet
outside the realm of social insurance systems of the welfare state. The concept soon took hold in other
developed countries; more recently, the European Union dedicated 2010 as the European Year for
Combating Poverty and Social Exclusion.
 Box I.1 Illustrative definitions

Social exclusion

“Exclusion consists of dynamic, multi-dimensional processes driven by unequal power

relationships interacting across four main dimensions—economic, political, social and cultural—and
at different levels including individual, household, group, community, country and global levels. It
results in a continuum of inclusion/exclusion characterized by unequal access to resources,
capabilities and rights which leads to health inequalities”, (Popay and others, 2008, p. 2).

“Social exclusion is a complex and multi-dimensional process. It involves the lack or denial of
resources, rights, goods and services, and the inability to participate in the normal relationships and
activities, available to the majority of people in a society, whether in economic, social, cultural or
political arenas. It affects both the quality of life of individuals and the equity and cohesion of
society as a whole” (Levitas and others, 2007, p. 9). “Social exclusion is what can happen when
people or areas suffer from a combination of linked problems such as unemployment, poor skills,
low incomes, poor housing, high crime, poor health and family breakdown”(United Kingdom Office
of the Deputy Prime Minister, 2004, p. 2).

Social inclusion

“ The process of improving the terms for individuals and groups to take part in society” and “The
process of improving the ability, opportunity, and dignity of people, disadvantaged on the basis of
their identity, to take part in society” (World Bank, 2013, pp. 3-4).

“Social inclusion is a process which ensures that those at risk of poverty and social exclusion gain
the opportunities and resources necessary to participate fully in economic, social, political and
cultural life and to enjoy a standard of living that is considered normal in the society in which they
live. It ensures that they have greater participation in decision making which affects their lives and
access to their fundamental rights”(Commission of the European Communities, 2003, p. 9).

Goal:

To create a society where everyone feels valued, respected, and has the opportunity to contribute and
benefit from society.

Interconnectedness

Inequality leads to exclusion:

Inequalities in access to resources, opportunities, and rights can lead to social exclusion.

Box 2: climate change, demographic change and globalization

Social: exclusion, climate change and natural disasters Social exclusion increases
exposure and vulnerability to natural hazards and disasters in several ways. Certain
groups, such as indigenous peoples, are more likely to live in rural areas and to be
reliant on natural assets, such as forests, bodies of water, or fish or livestock, to sustain
their livelihoods and meet their basic needs; all such assets are heavily affected by
climate and weather events (Olsson and others, 2014; World Bank, 2010). Other groups
often inhabit areas and housing structures that are highly exposed and susceptible to
natural disasters, such as urban slums and other informal settlements, marginal areas
prone to floods, landslides and mudslides, and areas where the infrastructure is lacking
or weak (Arnold and de Cosmo, 2015; Ghesquiere and others, 2012). At the same time,
excluded groups often lack the means to access insurance, credit and other productive
resources that could help them to buffer against (as well as recover from) shocks and
invest in adaptation (Ribot, 2010; World Bank, 2010). Exclusion also frequently entails
limited political participation and clout, such that excluded groups may lack influence
over resource allocation and representation in policies and strategies related to
environmental protection and disaster prevention and management (Ribot, 2010). For
persons with disabilities and older persons, gaps in accessibility can be a significant
challenge, for example in obtaining information about risk and in evacuating in the
event of a disaster. The effects of natural hazards and disasters similarly tend to cause
disproportionate harm to vulnerable and disadvantaged individuals and groups
(Ghesquiere and others, 2012). They are more likely to be affected by injury, illness or
death, damage to homes, workplaces and essential infrastructure, and by limited or
absent public services and the availability or affordability of water, food and other
consumption items. Socioeconomic factors and geographic location may increase risk
for climate-sensitive health outcomes (Balbus and Malina, 2009). In four cities in the
United States of America, for example, between 1986 and 1993 blacks were found to
have a higher prevalence of heat-related mortality than whites (O’Neill, Zanobetti and
Schwartz, 2005). Worldwide, women are more likely than men to be killed by natural
disasters (World Health Organization, 2014). Insecurity and destruction following
disasters affect livelihoods and prevent children from attending school, thereby reducing
productivity and income and creating irreparable learning gaps among young people. In
parts of Bolivia with a high incidence of disasters, gender disparities in primary
education achievement widened following a natural disaster, while other education
indicators also deteriorated, as they did, too, in similar areas of Nepal and Viet Nam
(United Nations Office for Disaster Risk Reduction, 2011). Following a disaster, some
children and youth are typically kept home from school to help their families cope.
Human capital is further weakened by injury and illness and the separation or
displacement of families and communities. By deepening inequalities, disasters also risk
contributing to civil unrest and conflict (Ghesquiere and others, 2012). Although all
countries are susceptible to natural disasters and climate change, developing countries
have less financial and institutional capacity to manage natural catastrophes and adapt
to climate change (Intergovernmental Panel on Climate Change, 2012; World Bank,
2010). Between 1970 and 2008, more than 95 per cent of lives lost due to natural
disasters were in developing countries, which also suffered greater economic losses as a
 proportion of GDP than did developed countries (Intergovernmental Panel on Climate
Change, 2012). Indeed, climate change is expected to intensify social exclusion and
threaten development gains in both developing and developed countries (Olsson and
others, 2014).

C. Social exclusion and major global trends

Colonization has also created various forms of exclusion. In Africa, the arbitrary delineation of national
borders by Western powers served to both separate individual ethnic groups and join different groups
together (Michalopoulos and Papaioannou, 2011). Colonial powers further tied legal status to a hierarchy
of ethnic and racial groups, privileging some over others (Mamdani, 2001). The legal system of apartheid
in South Africa was also, in part, an outgrowth of colonization. Colonization additionally had devastating
effects on the world’s indigenous peoples, against whom mass atrocities had been committed. Many
indigenous peoples continue to live amid longstanding conflicts or hostility with governments, dominant
population groups and industries. They have been subject to displacement and dispossession of their lands
and resources, marginalization, denial of their cultural rights and of their voice in political processes

Major trends in climate change, demographic change and globalization have affected exclusion and
continue to affect it. Globally, the number of climate hazards caused by droughts, extreme temperatures,
floods and storms has increased (World Meteorological Organization, 2014).

One aspect of the evolving global society that is changing the nature of social exclusion is urbanization.
Cities are focal points of economic growth, paid employment and social mobility. On average, urban
residents have better access to education, health care and other basic services than rural residents. Cities
also offer a more diverse and open social milieu than do villages. Nevertheless, they also create new axes
of exclusion (World Bank, 2013). For one thing, income and wealth in urban areas are more unequal than
in rural areas. High levels of wealth and modern infrastructure coexist with areas characterized by severe
deprivation and lack of services, creating a strong divide between the “haves” and the “have-nots” and
intensifying the social exclusion of the latter.

In parallel with urbanization, declining fertility rates combined with increasing life expectancy have led to
population ageing across countries. The process of population ageing is projected to accelerate rapidly in
the coming decades, especially in developing countries. Where employment creation and gains in
productivity, growth and public investment and savings have not preceded population ageing, and where
social protection systems are not in place and robust, greater numbers of older persons are being put at
risk of social and economic exclusion. Not only do they face the prospect of lower incomes and poorer
health, but they are also at risk of losing their independence and becoming limited in their ability to make
decisions that affect their well-being.

Although international migration is not a new phenomenon, a growing number of people choose or are
forced to migrate. Likewise, an increasing number of countries receive international migrants. In recent
years, the dangerous journeys of large numbers of refugees and migrants and the harsh conditions they
endure once they reach their destination have made headlines around the world. While the settlement and
social inclusion of migrants has long polarized politics across countries and in international forums, the
issue is now at the forefront of public debate. Migration itself separates families and fractures social
networks, even though improvements in ICTs and in transportation are increasingly enabling migrants to
keep in contact with their communities of origin. International migrants are vulnerable to coercion,
exploitation and substandard labour conditions and benefits. They often suffer from discrimination and
are confined to the margins of the societies in which they live.

Technological change and ICTs in particular can serve as critical channels for social inclusion. They
connect people with information sources and opportunities that may otherwise be inaccessible or poorly
accessible, such as public services, legal rights, skills training, jobs and markets. The internet and mobile
phone texting, for instance, enable individuals, including members of marginalized groups, to consult
with medical professionals and receive reminders to take essential medication (World Bank, 2016).
Further, digital ICTs foster connection among family and friends as well as social networks that enable
people to organize. They also foster public transparency and accountability. Yet vast inequality in access
to such technologies, referred to as the “digital divide”, also perpetuates exclusion and widens disparities
in many respects. In addition to creating new divides, ICTs can worsen exclusion through, for example,
the spread of misinformation, as well as digital crime and censorship.

2. Social inclusion

In the policy discourse, efforts to promote social inclusion have arisen from concerns over social
exclusion. Social inclusion is defined as the process of improving the terms of participation in society for
people who are disadvantaged on the basis of age, sex, disability, race, ethnicity, origin, religion, or
economic or other status, through enhanced opportunities, access to resources, voice and respect for
rights. Thus, social inclusion is both a process and a goal.

Inclusion promotes equality:

Addressing social exclusion and promoting social inclusion are essential steps toward achieving greater
equality and social justice.

Examples of social inclusion:

Inclusive education, accessible healthcare, community programs, and policies promote equal
opportunities in the society. Equality provides the foundation for a fair society, while social inclusion
ensures that everyone has the opportunity to participate and benefit from that fair society.