Like so many other concepts, the economics discipline contains several definitions of development that could easily confuse anyone.
However, what is clear is that certain themes run through the various definitions. Hence, countries that are developing economically usually experience rising per capita income, improvements in the standard of living and overall quality of life, and reduction in the level of poverty.
For many decades and to a large number of advocates, the level of per capita income has been a major indicator of economic development so much so that the World Bank uses it to classify countries as low income, middle income and high income.
These classifications signal to the world which countries are “well-off” and which countries are not. But as meaningful as those signals could be, they normally create lots of controversy because they ignore the special circumstances or characteristics of countries and also do not reflect how the income is distributed in the economy.
The level of poverty is one such important factor that is often overlooked when one focuses on per capita income as the leading indicator of economic development.
Indeed, concerns over the level of poverty worldwide have been growing rapidly because numerous reports from governments as well as international organizations have confirmed increasing rates of poverty in several countries – developed as well as developing.
It is those very concerns that compel many countries to declare war on poverty. But how exactly should this war be waged?
This is indeed a very noble question because too often in the past countries have been focusing on spending vast amounts of money on programmes designed to help the poor but at the end of the process the impact on the level of poverty is minimal.
The United States is a shining example of this unfortunate reality.
In a recent Talking Point Memo, entitled President Obama and the poor, Bill O’Reilly pointed out: “Right now about $1 trillion every year is spent on entitlements. Medicaid, [is] the biggest situation but there are 126 anti-poverty programmes on the books. Back in 1964, President Lyndon Johnson declared unconditional war on poverty. At that time the poverty rate was about 19 per cent. Since then, America has spent roughly $15 trillion fighting poverty. Yet, right now the poverty rate is above 15 per cent. So you can see all the money has not done much to combat the problem.”
“The reason is that poor education and poor parenting are driving destitution. High school dropouts are almost four times more likely to end up in poverty than those who graduate. And children growing up in single parent families are four times more likely to be poor than those living with both parents.”
Indeed, the lesson here is simple: excessive spending as the major feature of the war on poverty may not necessarily bring desired results vis-a-vis lowering the rate of poverty in any country. That approach treats poverty as a single concept, but in reality, poverty is multi-dimensional as illustrated by O’Reilly.
Most countries in the Caribbean now seem to accept that money is not the main cure for poverty and are therefore putting in place comprehensive poverty reduction strategies that would address all of the different elements of poverty.
That is indeed how the war on poverty should be waged!
