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Why officials and NGOs disagree on poverty analysis

6 February 2001

Ravi Kanbur, who resigned as lead author of the World Bank’s Poverty World Development Report last May, has produced a paper on the disagreements which surround debates on poverty. The reflections are based on Kanbur’s worldwide consultations during the 18 months that he was in charge of the WDR process. The paper discusses the gulf between how officials and NGOs understand poverty.

Kanbur, now back at Cornell University, lists the following major disagreements on economic policy: “the pace and sequencing of fiscal adjustment, monetary and interest rate policy, exchange rate regimes, trade and openness, internal and external financial liberalization including deregulation of capital flows, and the scale and methods of large scale privatization of state owned enterprises”.

He depicts two stylized groups. Group A contains people who work in finance ministries, many economic analysts and academics (particularly those trained in the Anglo-Saxon tradition), economic policy managers and operational managers in the development banks as well as the financial press. Group B includes analysts and advocates in NGOs, people in some of the UN specialized agencies, aid ministries in the North and social sector ministries in the South and non-economist researchers.

Kanbur points to differences in perspective and framework on three key features which affect assessments of the consequences of economic policy. These features are market structure, aggregation and time horizon. Group A tends to view markets as neutral instruments, while Group B finds them riddled with power relations and therefore often failing to benefit the poor.

Group A also tends to view the consequences of economic policy in highly aggregated terms. Many in Group B mistrust poverty analyses which argue that the proportion of people living below the poverty line has fallen. The paper gives the example of the Ghana Living Standards Survey. The headline poverty ratios produced from such surveys often fail to capture the value of public services. So, for example: “if the bus service is cancelled, the health post runs out of drugs, or the teacher does not turn up to teach, it will not show up”, leading to a gulf in what is observed by people on the ground and what is understood by officials who only read surveys. National poverty count statistics also often hide wide variations in outcomes for different regions or population groups.

Group A typically adopts a medium term perspective while Group B is more focussed on the short run and the very long run. Group A mainly addresses the five to ten year consequences of policies, while Group B is worried about short term consequences of economic policy which can drive a family into starvation, or to pull children out of school. Group B members are also often concerned whether economic growth can be sustained in the long-term given current rates of resource depletion and the earth’s limited carrying capacity. Group A tends, in contrast to be techno- optimistic

This non-technical 15-page paper will make interesting reading for many people working on poverty. Whether the gulf between camps A and B can be bridged will partly depend on whether Group A members can move beyond their negotiating rather than listening mindset. Kanbur finds that: “especially among some parts of the IFIs and the G7 Treasuries the tendency is for the policy messaging – for example on trade and openness – to be sharp and hard, for fear that to do otherwise wouldbe read as a sign of weakness by ‘the other side’”.

Economic Policy, Distribution and Poverty: The Nature of Disagreements