Moving Out of Poverty Success from the Bottom Up

1. Moving Out of Poverty Success from the Bottom Up DeepaNarayan Project Director Lant Pritchett Harvard Kennedy School SoumyaKapoor World Bank (New Delhi) http://www.worldbank.org/movingoutofpoverty

2. Introduction Study and methodology: Conceptual framework “Culture of poverty” Poverty measures, churning and vulnerability Empowerment Local markets Local democracy Collective action Concluding remarks MOP Outline

3. Large scale global study conducted in 15 countries in Africa, Latin America, South and Southeast Asia Focus: Long term poverty mobility; cross-disciplinary methodologies Objective: To learn retrospectively from those who were once poor but have moved out of poverty and stayed out of poverty in different social, political and economic environments MOP MOP Study

4. MOP Conceptual Framework Moving Out of Poverty Material well-being Power and rights Individual agency, aspirations, and initiatives

5. MOP Conceptual Framework Moving Out of Poverty Material well-being Power and rights Economic opportunity Democracy National policies Local economy Economic fairness National elections Local politics Political fairness Individual agency, aspirations, and initiatives

6. MOP Conceptual Framework Moving Out of Poverty Material well-being Power and rights Economic opportunity Democracy National policies Local economy Economic fairness National elections Local politics Political fairness Collective action Collective action Collective and cooperative endeavors Social capital and civic engagement Individual agency, aspirations, and initiatives

7. MOP Conceptual Framework Moving Out of Poverty Material well-being Power and rights Economic opportunity Democracy National policies Local economy Economic fairness National elections Local politics Political fairness Collective action Collective action Collective and cooperative endeavors Social capital and civic engagement Social stratification Social stratification Individual agency, aspirations, and initiatives

8. MOP Conceptual Framework Moving Out of Poverty Material well-being Power and rights Economic opportunity Democracy National policies Local economy Economic fairness National elections Local politics Political fairness Collective action Collective action Collective and cooperative endeavors Social capital and civic engagement Social stratification Social stratification Individual agency, aspirations, and initiatives

9. MOP “Culture of Poverty” “Poverty is a dark stain that darkens the whole world.” —Men’s discussion group, Villa Rosa, Colombia

10. MOP Movers cite initiatives as reasons for their move out of poverty

11. MOP Life stories in India reveal initiative as most important trigger for accumulating assets

12. MOP Gambling, drugs, and alcohol are rarely cited as reasons for falling

13. MOP Majority of households have high aspirations for their children

14. MOP Even chronic poor and fallers have high aspirations for their children

15. Poor people take risks!

16. MOP Poverty measures, churning and vulnerability “If you fall 10 times, you have to stand up 10 times, no matter what happens.” —Graciela, a 53-year-old displaced woman, El Mirador, Colombia

17. Poverty is not the bottom rung on the ladder—distinguishing “destitution” from “poverty” Enormous mobility across the ladder, the netchanges in poverty were small compared to total movements in and out of poverty. Vulnerability to falls into poverty is as important as flows out of poverty in net poverty reduction Strong apparent “locality” effects within the national/regional picture Personal empowerment a strong correlate of moves out of poverty MOP Five points

18. Where is the poverty line on this ladder? Community Poverty Line at Step 4 distinguishes “Richer” from rest, not Poor from the rest A bottom category often described with negative characteristics and/or behaviors But bottom category usually small

19. Over half the population identified as poor in all but two study regions “Poverty” was rarely associated only with the bottom category Consistent with an oft-made distinction between “poverty” and “destitution” (or “poor” and “ultra-poor”) MOP What “poverty” does the World Bank dream of?

20. Complete transition matrix for (nearly) every household in every locality Upward Mobility Stability Downward Mobility

21. Churning across the steps on the ladder was enormous—half of all households moved in ten year period

22. Net movements can be as much as differences in falling as in rising: Malawi vs AP, UP vs Philippines (B) Much higher proportion of fallers More upward movement (gross) in Malawi than AP Much less net upward movement in Malawi than AP

23. MOP Large apparent (caveats) locality specific differences in mobility Thai bottom quartile of villages lower than most countries Thai median high Bangladesh median low Bangladesh upper quartile quite high

24. MOP Empowerment Power is nothing but to go ahead in life with courage. —Discussion with men, Khatara, Assam When you have no power, stop dreaming; you will have no freedom, no equality, and democracy will remain a story to you. —Discussion with men and women, Kijuronga, Kagera, Tanzania

25. MOP Movers report control over all or most decisions, while chronic poor and fallersreport less control

26. Personal agency has an association with moving out of poverty Std. errors, Plus and minus Point estimates Conventional Confidence Interval

27. MOP Economic opportunity and local markets The rich have more power. They have power to control the local market price. —Discussion group in Somrampi, Cambodia There is no problem in doing business. All can do it. But where there is no light, no bridge, and no roads, what business will you do? —Discussion with women, Biralipara, Assam

28. MOP A majority of chronic poor borrow for regular consumption purposes

29. MOP Big increases in corruption were reported in communities where opportunities have expanded

30. MOP Local Democracy Democracy brings development to the community. When there is democracy, things like water, schools, and hospitals will be available to the village, which are otherwise hard to get. —Men in a discussion group, Kabtito, Uganda Money, money, money! There is no responsibility or accountability from authorities and government officials. —Discussion with men and women, Somrampi, Cambodia

31. MOP Communities where governments became more responsive report more services over 10 years

32. MOP More roads were present in communities where governments became more responsive

33. MOP Responsiveness of local democracy has a significant association with moving out of poverty, particularly in South Asian study regions

34. MOP Responsiveness of local democracy to some has negative spillovers on others

35. MOP More than half of households believe most or almost all government officials engage in corruption

36. MOP Corruption has a mostly negative association with moving out of poverty

37. MOP Collective Action If you do not belong to any group in this village, you cannot survive. —Discussion with men, Bufkaro, Uganda The community did all this. The school was built with the help of everybody in the community. The families with kids in school had to cooperate, give money. —Discussion with women, Guadalamoros, Mexico

38. MOP Families are rated the most important institution for asset accumulation by all mobility groups in Indian study regions

39. MOP Finance/credit/saving groups are more common than livelihood, health, education, religious, or ethnic groups

40. MOP Community’s propensity for collective action has mostly negative association with movement out of poverty

41. MOP Concluding remarks