Dynamics of poverty in Bangladesh  

Abdul Bayes   | Published: May 14, 2018 22:28:34

The general discourse on poverty in Bangladesh hardly harps on the classification of poverty in line with time dimension. Poverty can both be persistent or short-lived, adducible to structural or temporary factors respectively. Persistent or long-term poverty implies a state of poverty that spans for longer periods of time - mainly fuelled by structural problems. On the other hand, short-lived or transient poverty is related to the swings in socio-political and economic environments in any given society. It is relatively short-lived and mostly derived from shocks - natural or man-made as well as domestic or international. However, households have to live with poverty due to the structural factors. 

On average, roughly one-third of rural households could be identified as poor in a longitudinal survey spanning two decades. If we take a look at short-term view, short-run poverty also stands at the same rate. That means whether for a short or long term, roughly one-third of rural households continues to remain poor.

A quarter of the rural households are reported to have crossed the poverty line in the long-run. This implies that despite facing severe repeated shocks, these households have never fallen in the trap of poverty. All said and done, it is clear that 40 per cent of the rural households remain as transient poor: walking up and down the ladder of poverty. The main reasons for this are not related to structural constraints, but to short-term random shocks like natural calamities, health problems, and risks in business.

According to researchers of the earlier times, 31 per cent of rural households in Bangladesh were chronically poor. And it was almost exactly the same figure we arrived at. Again, the researchers have argued that a quarter of the rural households were chronically non-poor. In between, 45 per cent were led by luck; 26 per cent were moving up and 19 per cent moving down.

What are the reasons then for a descent or slip into poverty? We observe that households facing deterioration in economic conditions are severely constrained by demographic factors. Most of them have large size of household but small number of earning members. For this reason, these households are left with little surplus to invest in productive pursuits. Second, they have no human capital and they increasingly face erosion of their natural and financial resource base. And finally, these households often face random shocks, such as early floods, flash floods, crop failures due to severe droughts or deaths of the earning members.

To come out of poverty-cave, rural households adopt a number of strategies. We can identify them as unsuccessful and successful strategies of livelihoods. Among the unsuccessful strategies, we want to highlight occupational mobility (a) from farm to non-farm sector; (b) agricultural labor to farming; and agricultural labor to non-farming. However, among successful strategies, we can mention (a) geographic mobility; (b) increase in earning members; (c) raising education status of the earning members; (d) cultivation of modern paddy; and (e) increased access to electricity. By and large, the following observations seem to be important from the policy perspective: (a) market-driven occupational mobility brings about peripheral changes in the economic status of the poor; (b) shift to non-farm sector cannot be expected to resolve the underemployment problem; and (c) the emancipation of the poor through livelihood migration to off-farm activities is conditional on enhancement of human capital and better access to technology and infrastructure.

What is the role of economic growth in poverty reduction? It is true that we have observed a decline in rural poverty in tandem with 'satisfactory' rates of economic growth over time. And possibly for this reason, there is a scope to crown growth as the pinnacle of strategies for poverty reduction. But it should equally be argued that proper distribution of wealth should always matter along with growth. This is because distribution not only helps poverty reduction, but also facilitates economic growth. For example, a person is not able to engage in productive activities for shortage of capital and the lack of access to credit. This not only deprives a person but also the nation from additional output.

So, proper distribution, poverty reduction and growth should go hand in hand. Unfortunately, in our society, the message of distribution is not as widely propagated as it yearns only for growth. Again, a pro-growth policy alone cannot be the magic lamp for poverty reduction. To conclude with Professor SR Osmani's (Ulster University) cogent comments:

"Therefore, the pervasive presence of growth-devotees on all fronts needs to be contained. But that should never imply that growth has to be ignored or undermined - as it often used to be the argument in the 1960s. For the sake of poverty reduction, importance should be attached to growth. But it has to be remembered that attaching importance is one thing, and placing offerings at the altar of growth without other considerations is another" (translated).

Abdul Bayes is a former Professor of Economics at Jahangirnagar University. abdul.bayes@brac.net


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