Poverty and the Millennium Development Goals

A Critical Look Forward

Zed Books Ltd

Contents

POVERTY AND THE MILLENNIUM DEVELOPMENT GOALS: A CRITICAL LOOK FORWARD

Alberto D. Cimadamore, Gabriele Koehler and Thomas Pogge

Poverty has been at the centre of the debate on development for several decades. A series of UN Decades on development and on the eradication of poverty framed the discourse of the international community. Institutional and material resources have been mobilized at national and international levels since the 1950s, but with modest results. Poverty has remained a structural feature in most societies, accompanied by growing and increasingly visible income and wealth disparities. Despite progressive discourses and policies, high- and middle-income countries witnessed an unprecedented accumulation of wealth, and developing countries saw a skewed concentration of welfare and human development outcomes to the disadvantage of poor and socially excluded communities. National and international systems have worked very well for the elites, while the majority of the world population continues to suffer multiple deprivations, foremost among them extreme poverty and hunger.

It does not take an academic or an expert in social relations to realize that the systemic biases towards income and wealth concentration in the face of persistent – and increasing – poverty render current national and international systems ethically unacceptable and politically unsustainable. This is the conviction and the concern which drive this volume.

The new millennium: from an overarching Declaration to specific goals

In the year 2000, the rousing Millennium Declaration and its timid operationalization, the Millennium Development Goals (MDGs), conveyed the message that concrete and stepped-up action was needed: the economic and social systems were reproducing poverty and exclusions at levels that were not compatible with democratic ideals and the notion of dignity and a decent life for all. These had been promised by the UN and the multilateral system since 1945 (Stokke 2009; Koehler this volume).

There was a noticeable change in the discourse and mobilization of resources during the first fifteen years of this century, and another shift may be on its way (UN SG 2014). A critical assessment of the MDGs is necessary and we could have reached a moment in history conducive to producing the meaningful changes required to fulfil the commitment to eradicating extreme poverty and achieving human development and a better life for all. This volume intends to provide that kind of assessment, combined with a look ahead at the new development agenda, currently cast as the Sustainable Development Goals (SDGs).

The Millennium Declaration signed by leaders of 189 states resulted in one of the most visible and unified global campaigns to address poverty in the history of multilateral development cooperation: the Millennium Development Goals (UN SG 2001). A critical review of the MDGs needs to acknowledge their merits, even if the text of the eight MDGs considerably weakened and watered down the core tenets of the Millennium Declaration. Chapter III of the Millennium Declaration, on development and poverty eradication, for example, had clearly spelt out the commitment of the leaders of the world to 'spare no effort to free our fellow men, women and children from the abject and dehumanizing conditions of extreme poverty' and 'to making the right to development a reality for everyone and to freeing the entire human race from want'. The road out of poverty was more vaguely defined as the aspiration to create an environment – at national and global levels alike – 'conducive to development and to the elimination of poverty'.

Still, the Declaration conveyed a strong commitment at the highest level in world politics. Fifteen years later, its fragility and ineffectiveness are more than evident: we observe an environment that is not especially conducive either to the elimination of poverty, or to fair development for all. On the contrary, hunger and poverty remain an oppressive reality for many people, and we observe growing inequality as well as extreme economic, political, social and environmental inequities. Some analysts argue that the depth of income and wealth inequalities is unprecedented (Piketty 2014), and that the exploitation of nature has already outstripped several planetary boundaries (Steffen et al. 2015).

The time has therefore come to critically highlight the shortcomings of the Millennium Declaration. This is primarily because a 'rosy' picture of MDG success tends to obscure their weaknesses and failures. During recent years, UN top officials have been reaffirming 'that the MDGs have made a profound difference in people's lives' and that 'global poverty has been halved five years ahead of the 2015 timeframe' (UN 2014c: 3; see also UN 2014b and UN 2012: Foreword). Many other examples could be cited of international and national politicians, journalists and development professionals making selective use of statistics to proclaim good news about the worldwide decline in poverty. Moreover, and perhaps more importantly, poverty reduction is causally attributed to the MDGs: 'the MDGs have helped to lift millions of people out of poverty' (UN 2011: 3).

There are always different ways to look at the same social reality. The official discourse of states and the UN system tends to focus on progress and success. This is understandable, since they need to remain credible and have a responsibility to sustain the momentum of the development agenda. Academics and civil society, however, need to push the boundaries of knowledge, and have a responsibility to elucidate and advocate for social justice as a necessary condition for better societies. Their task is to provide a critical view: to assess progress analytically, expose the lack of achievement, provide explanations for both – and offer genuine alternatives.

Critical analysis and monitoring of national and international policy responses to poverty, and the offering of alternatives, are among the core objectives of the Comparative Research Programme on Poverty (CROP). For that reason, CROP convened a workshop on the MDGs in 2012, to discuss – among other things – these and other related UN assessments of poverty eradication initiatives, and the plausibility of crediting the MDGs as a driving force for contemporary poverty reduction.

Three interrelated questions shaped the 2012 CROP workshop, with a view to producing a constructive evaluation of the impact of the MDGs on substantially reducing poverty around the world. These questions were:

• Has poverty really declined in a way consistent with international legal and political commitments?

• What role have the MDGs played in producing meaningful changes?

• What are the main lessons to be learned from the joint analysis of the workshop towards conceptualizing a post-MDG agenda – a new development agenda?

This volume was conceived as a response to these questions from an analytical, academic perspective.

Assessing the impact of the MDGs on global poverty

In order to answer the first two questions, workshop participants considered it absolutely necessary to have a precise measurement of the extent of poverty in the base year. Only then is it possible to track performance over time. However, there was considerable controversy about the accuracy of available poverty statistics and measurement, as well as about the baseline chosen to evaluate this complex social phenomenon.

The following problems emerged (Pogge 2013; CROP 2013):

1 Distortion through use of general-consumption purchasing power parities (PPPs). These give much less weight to food prices than these have in the actual consumption of the poor. Because of this distortion, PPPs drastically overstate the purchasing power of poor households with respect to foodstuffs – by roughly 50 per cent.

2 Excessive sensitivity of the measured poverty trend to the selected level of the international poverty line (IPL). For example, between 1990 and 2011, the number of people with less than $1.25 per day had reportedly fallen by 47.4 per cent, but the number of people below the $3.00 IPL had fallen by only 7.1 per cent (iresearch.worldbank.org/PovcalNet/).

3 Excessive sensitivity to the base year chosen to determine the purchasing power of all currencies relative to one another.

4 Distortions through the use of general consumer price indexes which likewise give less weight to food prices than these have in the consumption of the poor. This leads to an overly rosy trend picture during periods when food prices are rising relative to prices in general.

5 A simple binary measure that classifies households as either poor or non-poor incentivizes policy-makers to prioritize people just below the poverty line.

6 Such a measure also disregards the intra-household distribution and varying course-of-life needs, since the aggregated view masks the differing implications of poverty for women, children, seniors and people living with disability in the same household.

7 By focusing on income/consumption expenditures alone, the prevalent methodology also reifies poverty and disregards other dimensions of poverty: the amount of labour required to gain the relevant income, environmental challenges, availability of goods and services, issues such as powerlessness, exploitation or fear, time for the care 'economy' and leisure time for women, men and children.

The World Bank is the primary agency contributing data and analysis for progress on Goal 1: 'Eradicate extreme poverty and hunger' and its Target 1A: 'Halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day' (UN 2014c: 56). The World Bank's Development Research Group produces its statistics based on data obtained from government statistical offices and World Bank country departments (UN 2003). As a result, the data tend to be biased in the direction of an optimistic trend, because governments and international institutions want to convey a sense of success for the policies they employ or recommend.

In addition to these methodological biases, there are also significant gaps in the data. One of the MDG Reports acknowledges the problem: 'The task of monitoring progress on poverty reduction is beset by a lack of good quality surveys carried out at regular intervals, delays in reporting survey results, and insufficient documentation of country level analytical methods used. It is also hampered by difficulties in accessing the underlying survey micro-data required to compute the poverty estimates.' These gaps remain especially problematic in sub-Saharan Africa, where the data necessary to make comparisons over the full range of MDGs are available in fewer than half the countries (UN 2011: 7). These are central problems for both academic and policy evaluation, and are difficult to solve in the short term.

According to the latest information provided by the World Bank on data and analysis for Goal 1, the number of people living on less than US$1.25 a day (2005 PPP) declined globally from 1.922 billion in 1990 to 1.011 billion in 2011. The proportion of extreme poor (that is, living on below US$1.25 a day, 2005 PPP) as a percentage of the population of the developing countries decreased from 43.35 per cent in 1990 to 16.99 per cent in 2011 (iresearch.worldbank.org/PovcalNet/). As we can easily see, even though the number of poor people was not halved, 'the proportion of people whose income is less than $1.25 a day' was. Therefore, Target 1A was reached because the World Bank and UN agreed to operationalize the poverty definition in this particular way.

It is quite clear that, according to this measurement, extreme poverty can be reported as reduced. Figure 1.1, based on the World Bank data, also represents this optimistic view.

'Poverty rates have been halved, and about 700 million fewer people lived in conditions of extreme poverty in 2010 than in 1990' (UN 2013). Such 'quick facts' are presented to show that the MDG campaign is moving in the right direction.

The important question is now how this assessment was made. The following figure provides some information.

China reduced the number of extreme poor from 694 million in 1990 to 123 million in 2010 (iresearch.worldbank.org/PovcalNet/). This is the most significant reduction of acute income poverty made by a single country in the history of humankind. If we also consider the region where China is located, we can see that the number of extreme poor fell from 939 million in 1990 to 207 million in 2010 (iresearch.worldbank.org/PovcalNet/).

Accordingly, the number of people categorized as living below the absolute poverty line was reduced by 732 million in the East Asia and Pacific region. This fact accounts for most of the reported global success of the MDGs campaign (see also Koehler this volume).

However, Figure 1.2 shows that developing countries in general, and sub-Saharan Africa in particular, are not doing well. In fact, the number of people living in extreme poverty increased noticeably from 287 million in 1990 (baseline) to 416 million in 2011 (iresearch.worldbank.org/PovcalNet/). According to the latest available estimates measuring Goal 1, Target 1A, sub-Saharan Africa will have 403 million people living in extreme poverty when the MDGs are assessed and replaced by a new development agenda in September 2015 (World Bank 2015).

Moreover, the projections are not encouraging. The calculations on poverty and poverty projections from the World Bank PovcalNet database indicate that by 2030 the number of people living in extreme poverty will reach around 335 million (ibid.: Table 1).

This projection reveals three great challenges for the future. First, it signals the need for a methodological shift – to use the absolute number of poor as a measuring rod for progress, instead of the proportion of poor, which was the indicator used to guide evaluations of the MDGs. The goal set in the new proposal to 'end poverty in all its forms everywhere' (UN 2014a) implies reducing extreme poverty to zero while at the same time dealing with other forms of poverty within the context of the SDGs. Secondly, the consistently high level of extreme poverty in low-income countries, and the number of extreme poor in sub-Saharan Africa, brings into question the strategies implemented or encouraged by the agents of the MDGs process. Thirdly, it points to the need to introduce meaningful policy changes when adopting the SDGs.

What was the causal role of the MDGs?

Over the past decades, the international community and individual countries have been mobilizing towards the common objective of poverty eradication. The official discourse voiced by UN top officials (and uncritically reproduced by many) suggests that the MDGs had in fact a causal effect in reducing poverty globally. This is the implication of statements such as 'the MDGs have made a profound difference in people's lives' (UN 2014c: 3) or 'the MDGs have helped to lift millions of people out of poverty' (UN 2011: 3). Such pronouncements are, at best, ambiguous as they suggest a causal role for an international initiative, disregarding (in analytical and practical terms) the specific role of states and government policies on the one hand, and international systemic issues on the other.

States can be – and in fact often are – part of the problem as much as the solution. Nevertheless, the performance of the state in reducing or eliminating poverty has been crucial in recent history and its efforts need to undergo empirical evaluation (Cimadamore et al. 2005: 16). If we analyse countries' performances, we can easily see which public policies and historical forms of states produced or are producing the best and worst results respectively in substantially reducing poverty. This is something we can learn from. The point here is not to respond to these very relevant questions but to emphasize that any search for causal explanations in poverty reduction strategies needs to include the role of the state from the outset.

Identifying the analytical level where relevant variables are located is as important as having a clear understanding of the type of policies that have been effective. This is particularly true when one of the goals on the international agenda is to 'end poverty in all its forms everywhere' (UN2014a), which implies reducing extreme poverty to zero while at the same time dealing with other forms of poverty. Extreme poverty cannot be eradicated if states maintain, as they currently do, policy frameworks and development strategies that contribute to the creation and re-creation of massive poverty. As Albert Einstein observed, doing the same thing over and over again and expecting a different result can be considered a form of insanity.