Poverty and Wealth Lecture given by Duncan Green Head of Research at Oxfam GB Notre Dame University, September 2009Part of a series of From Poverty to Power lectures.
Main messages Orthodox economics must be expanded to incorporate environment and unpaid work Markets, and poor peoples’ involvement in them, are evolving rapidly, raising new threats and opportunities Redistributing power in markets is essential to reducing inequality and overcoming poverty Redistribution is not the only issue: effective states are needed to generate growth where it benefits poor people most, provide infrastructure, and build national technological capabilities
Economics for the 21st Century Orthodox economics and its indicators (income GDP etc.) lead to biased policies and blind spots in crucial areas of poverty and inequality A new economics of human sustainability must address: – Environmental constraints and sustainability – Non-monetary economics, e.g. unpaid women’s work – Weighting policies and outcomes for equity – Focus on well-being, not just income
Making agriculture pro-poor Small farmer based agricultural growth has led to take-off in Viet Nam, India, etc. Requires both Effective States and Active Citizens acquiring power in markets Active Citizens: producer organization, consumers Effective States: access to credit, investment, pro-poor technologies Good news: commodity prices, biofuels (perhaps) and shift to low carbon production Challenges: supermarketization; outmigration Dilemma: food v feed v fuel – can we have all 3?
How Change Happens:Winning ‘pond rights’ in India
How Change Happens:Winning ‘pond rights’ in India Fish ponds are crucial for 45,000 families in Bundelkhand, a poor region of India Many fisherfolk are driven from the ponds After a long process of organization, today over 100 ponds are controlled by the fisherfolk How did it happen?
Components of Change Context: Technology (new varieties of fish and ‘seeding’ the ponds) raise profits and lead to mass expulsions of fisherfolk by landowners Institutions: Protests win partial support from the state government for cooperativization – triggers mass mobilization Events: Dirty tricks and some violence are break points Agents: Local NGOs facilitate contacts with police and politicians
Tikamgarh: Dynamics and Politics Slow accumulation of political and social mobilization, punctuated by moments of protest and conflict Violence over a particular pond became a ‘lightbulb moment’ Changes to state laws were key Astonishing decision by local police chief to implement the law! NGO allies contributed advice and links to ‘decision makers’
Decent work Several trends are driving up inequality – Flexibilization and rise of the informal economy – Downward pressure on labour rights Incorporation of women brings mix of costs and benefits What needs to change: – Rebuild and change trade unions – Reform supply chain management – Recognize role of unpaid work
Private sector, public interest Private firms create jobs, buy and sell to the poor, pay taxes and generate externalities The human impact of any firm is firstly determined by sector, but within that different firms can choose to be more or less pro-poor TNCs differ from large national firms on linkages, technology, capital flows and employment Active Citizens ensure the private sector benefits the poor (trade unions, consumer organizations) Effective States need to regulate and refocus attention on SMEs and national upgrading
Trade and development Trade is (or was) booming Trade can be a crucial tool in overcoming poverty (East Asia) Rigged rules and double standards Official story on trade liberalization in conflict with evidence: – In manufacturing, protection and state-led industrialization is the norm – Liberalization as an outcome not an initial condition Rise of China could change the script, by overcoming commodity trap and kicking away the ladder from other developing countries
“ For centuries England has relied on protection, has carried it to extremes and has obtained satisfactory results from it. There is no doubt that it is to this system that it owes its present strength. After two centuries, England has found it convenient to adopt free trade because it thinks that protection can no longer offer it anything. Very well then, gentlemen, my knowledge of our country leads me to believe that within 200 years, when America has gotten out of protection and all that it can offer, it too will adopt free trade. ”
A Growth success story: Botswana Should be a basket case: small, arid, land-locked and dependent on diamonds Instead is Africa’s most enduring success story – GDP per capita is up 100x since 1966 Reasons include traditional inclusive governance system, leadership, hands-on role for the state, lucky timing on diamonds and good use of aid and technical assistance
Should we set limits to growth? Growth has always been central to development – redistribution on its own seldom works (let’s see if we can make the Rosling graph work…..) But growth is becoming more disequalizing and less effective at reducing poverty While continued growth means rising carbon emissions So who needs growth and how much of it?
Carbon intensity:falling too slowly, and has now gone into reverse 30,000 1,200 25,000 1,000 20,000 800 tCO2 / US$m MtCO2 15,000 600 10,000 400 5,000 200 0 0 1980 1985 1990 1995 2000 2005
Does growth make people happier? 9 8 7Life satisfaction 6 5 4 3 2 1 0 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 GDP per capita ($ PPP, 2005)
Further Reading from the Blog The backlash against microfinance, http://www.oxfamblogs.org/fp2p/?p=623 Measuring wellbeing, http://www.oxfamblogs.org/fp2p/?p=551 Why we need to limit growth, http://www.oxfamblogs.org/fp2p/?p=253 Why equality matters more than growth, http://www.oxfamblogs.org/fp2p/?p=250 How do people move out of poverty? http://www.oxfamblogs.org/fp2p/?p=195
Further Reading From Poverty to Power, Part 3 Ha-Joon Chang, Bad Samaritans (2007) Dani Rodrik: One Economics, Many Recipes (2007) Gapminder website