Economic+Development

Economic Development
Content regarding the role of government, NGOs, and microfinance

> > This article definitely raises some interesting points, and for all number of ethical and practical reasons, human rights must be perceived as a corollary (if not a complement) to the Millennium Development Goals. Based on what's relevant to our project, I'll reiterate the question as to whether or not poverty is a human rights violation (758). If it were to be perceived as such, it would serve as a unifying force between the UN MDGs and various NGOs and human rights organizations. Poverty as a human rights violation also raises the question of accountability - who is imposing the violation? The government of the impoverished country? The global market and corporations? > > Due to the length of the article, I'll just respond to some of the human rights critiques of the MDGs (765-766). > > Detractors of the MDGs insist they are a "top-down rather than grassroots effort... an imposition by governments," and this is a valid point, especially in light of our generally positive analysis of microfinance and NGOs. Those involved with the MDGs claim that extensive research has gone into the bureaucracy, organization, and implementation such that the goals are tailored to each situation. I think that's essential if they are to succeed because merely foisting universal "aid" on people rarely does little more than alleviate the immediacy of the situation with little impact on the long-term effects. Similarly, it lacks the empowerment and do-it-yourself quality of microcredit. I think the MDG organizers should cooperate with microfinance institutions and local NGOs in order to personalize the program. > > "The MDG definition of poverty is too narrow": the definition of poverty has always been an elusve thing, and research shows that it's a relative and psychological condition as well. (The article I linked in the government/NGO thread addresses this issue.) Clearly the priority of the MDGs is to eliminate destitution, starvation, and the incontrovertible realities of absolute poverty, but I'd be curious to know the degree of affluence to which the goals intend to raise people / to whom they're applicable. > > "The MDGs are state-focused at a time when privatization and other policies are making the state less capable of responding." Rischard, the author of High Noon, would probably agree with this statement. He argues that the power of the national government and dramatically declined with the ascent of the global market and private sector. If indeed national government is becoming more symbolic than influential, this is a valid criticism as well. I don't know if it applies to the UN as well, if it's exempt from the growing impotency of government. Clearly certain nations, the United States included, weigh more heavily on the policies of the UN than others, so any such governmental weakness would affect the UN's powers of implementation and thus by default the effectiveness of the MDGs. The private sector and the multinational corporations will probably have to come on board in order for the MDGs to succeed. The corporations are the most powerful force out there and are behind a number of national governments (and with an interest in the UN as well). The MDGs, by not addressing these private actors, are remiss. > > Amartya Sen notes that regardless of location, relative deprivation limits a person’s capacity for social achievement because “Being relatively poor in a rich country can be a great capability handicap, even when one’s absolute income is high in terms of world standards.” Cassidy thus argues that because such relative deprivation confers the disadvantages of absolute deprivation, it should still be included in poverty statistics – something that would definitely change the figures in the United States. Then, if poverty is perceived as a relative phenomenon, the government would have to monitor how poor families fare as compared to everyone else – not their isolated, quantitative living standard. According to Cassidy, this idea has been proposed by economists and academics and repeatedly rejected by politicians because government doesn’t feel itself up to the task. Furthermore, Americans generally have negative and limited conceptions of poverty – i.e., the impoverished are responsible for their misfortune. As a result, a change in the definition of poverty would require raising public awareness to change attitudes toward the poor. (One could argue that relative poverty will exist as long as some people earn more than others, so the implied solution is to reduce income inequality.) Poverty is certainly connected to the larger problem of social exclusion here (based on race/ethnicity, gender, age, etc.), so presumably relative poverty is another way to address that issue. > India as a country has an ongoing fight against poverty since time immemorial. the demographic explosion, illiteracy, diseases, infectious diseases etc are some of the common factors which aggravate poverty in India. developed nations cannot imagine the extent of poverty in India. i am posting a video. its just the tip of the ice berg. check it out and post your views, comments and suggestions. > would just like to add though throughout the world the factors that contribute to poverty seem common, Indian poverty is also inextricably linked to its social setup. > Thus, we see that the task of poverty alleviation as well as other social welfare measures by and large are the domain of government action in all countries around the world. > > Poverty and unemployment are the two most formidable problems of the Indian economy. Employment generation has been an important objective of development planning in India. Though employment opportunities have increased over the years, growth of population and labour force has aggravated the unemployment problem year after year. The achievement of employment-for-all objective is nowhere in sight. > Due to lack of employment opportunities, millions of people still live below the poverty line. More distressingly, there is no hope of the two formidable problems of poverty and unemployment being solved in the near future. The 5 year plans acknowledge that the unemployment problem would aggravate, much less mitigate, during the Plan period and thereafter. > Indian economy took a new direction when the Government announced its new industrial policy in the Parliament in July 1991. Since then, the economic reforms process has encompassed all areas of the economy. The wide-ranging reforms, initiated and implemented since 1991, have induced greater efficiency and competitiveness in all spheres of economic activity. How these reforms have impacted on the growth pattern in terms of employment generation and reduction in poverty is a matter of intense debate among economists and social scientists. The present work is a small contribution to the existing and growing body of literature on various aspects of economic reforms in India > As for the government of a country ….for eg India political willingness is an extremely important factor for government polocies on poverty alleviation. . That means the government must play an active role in poverty alleviation. No other organization or group can take the role or replace the government in this. In the developing countries the government must lead this whole process. NGOs or other groups are also very helpful but as a complementary agency. The government must take an active interest and want to reduce poverty. > The government must adjust is policies to favour the poor groups. Markets cannot solve poverty problems of people. Thsu in developing countries, the government must play a key and direct role in reducing poverty. > Agriculture reforms contribute a lot to poverty reduction. Due to the reforms, farmers benefiT a lot and their income is raised and agricultural output improves. crop subsidies, introduction of new crop species. variable policies to incentivize farmingare some of the reforms.. > The government of a country like India really needs to improve its working efficiency. > Building a file (database) on rural farmers needing poverty alleviation and the corresponding methods and fund (financial poverty reduction fund), are important. The plan and the persons who will implement that, and the measures, alll this ensures the plan is implemented effectively > For rural areas, especially where the environment is in a serious condition. Also, the farmers who have been lifted out of poverty are a very vulnerable group. A lot of work needs to be done to keep them away from poverty. > > Till recently private sector was never thought of as an agency for poverty alleviation or social welfare. Of course, as a part of ‘Corporate Social Responsibility’ (CSR) at times private sector played a role in providing social welfare, but it is accused that CSR is often used by the corporate sector more for getting propaganda mileage than real welfare of the society1. Besides, profit maximization is the main goal of any business venture. It was thought that profit maximization and poverty alleviation are antithetical to each other. Thus, the question of poverty alleviation or social welfare by the private sector does not arise at all except as a part of CSR, with a limited scope. Thus, before we entered the new millennium the world was happily living with the fact that private sector will only try to maximize profit and the task of poverty alleviation will remain primarily government’s responsibility. But today in India due to economic development and awareness the private sector is slowly rising to the occasion and doing its bit for alleviation of poverty. > Secondly, when I see our very own politicians spending huge sums of money on bodyguards, my blood boils! How can they even think of providing of themselves when their citizens are dying of starvation, diseases, and terrorists! Although, its quite funny to think how they naturally presume that some lone assasin, sitting on a rooftop, would want to waste so much as a single bullet on them... > Anyway, coming back to what I was saying, this is the change of mindset we need. Where the people at the top think about what's going on below as well. What has happened now is that the majority (the poor) don't care about the minority (the rich) and vice versa. > All these resources which are going to waste (which in my opinion they are) can be diverted to help the poor in a major way. > In doing this, we can, successfully, help the poor; provide financial assistance to the poor, without depriving or ignoring the other aspects that need attention. > Also, to reiterate what was said in the book we all got, we should never start from the top, because by the time it trickles down to the needy, hardly anything is left. So, in an effort to make our efforts worthwhile, we need to start at the bottom, and work our way up; tackling the problems one at a time. > Thus, in conclusion, we need to focus on the aspects that are really important, and not sideline them; and we need to start at the grassroot level, which is the only way we can solve this major problem > > Ð To promote Information collaborations and Constructive communication between NGOs, to develop effective partnership with each other. > Ð Networking for the access, sharing and dissemination of information > Collaboration and Partnerships between NGOs themselves and with other organizations. > Ð Electronic Networking to strengthen community organizations by boosting its knowledge base and its ability to share information and experiences with strategic allies and other partners in relevant field. Ð Capacity building of grassroot level NGOs, social workers through free online resources and information on a single platform. Ð To serve non-profit organisations, charities, grassroots and community groups, educational and research institutions. Ð Sharing of ideas among NGOs and development agents. Ð Avail free, easy and instant access to information. Ð Help NGOs in their fund-raising efforts. Ð Provide more options before Funding Agencies to select the right choice of organisation to support and work with. > with the expectation that the loan will be repaid in the future. The goal of a microfinance institution is to become self-sustaining so that it can use the interest from loans to cover its costs, and therefore not need to rely on outside funding. > > Swayam Krishi Sangam (SKS) is a microfinance institution that operates in rural India, designed based on the Grameen Bank model. This organization was founded in 1998 with the establishment of a woman’s banking center in the Medak District in the State of Andhra Pradesh, a region considered to be one of the poorest in India. > > Before the presence of a microfinance institution, there was no way for certain segments of the population to finance the skills and/or resources necessary to pull themselves out of an impoverished existence. Now that such institutions have been established, it opens up the possibilities for a blanket weaver to purchase more wool and thereby aspire to a family-supporting level of income, and it allows for countless other possibilities that are not feasible without a reserve of capital. > > Overall, microfinance has shown significant results in alleviating poverty within the rural areas where it has been established. While it still has a way to go in achieving selfsufficiency and in expanding its outreach and impact, it has made a difference in the lives of many individuals. YASHFEEN AND SHILPIS DISCUSSION ON MICRO FINANCE
 * Government**
 * Kari: response to Alston's "Ships Passing in the Night," an article articulating the connection between the Millennium Development Goals (MDGs) and the (more decentralized) human rights campaign.
 * Kari: response to an article about relative poverty published in the New Yorker - the article questions the "definition" of poverty and examines how the relative and psychological characteristics of poverty complicate quantitative poverty-alleviation programs.
 * I just encountered an article in The New Yorker that has an interesting and somewhat original perspective on poverty, both in terms of its definition and potential alleviation. The author, John Cassidy, doubts the ability of government (specifically, the United States government) to intervene and eliminate poverty – he doubts the legitimacy of how poverty is measured based on the persistence of endemic poverty. In the United States, the poverty threshold is the same across the country even though situations obviously differ between a rural family in Mississippi and an urban family in New York City. As a result, Cassidy argues that the poverty line should be revised to reflect variables such as taxes, benefits, childcare, medical costs, and regional differences. Politics impedes such a revision – the inclusion of more people as “poor” hardly reflects the agenda or purported progress championed by Democrats or Republicans. There’s no definitive way to determine who’s impoverished and who is, and in the United States, such a determination is complicated by the consumer goods that are cheaply available even to fiscally deprived people. Cassidy thus introduces “relative deprivation,” because compared with the destitute in Africa and Asia, many poor people in America are quite well-off.
 * Christina: the question of government role is crucial here and can determine and shape the future of poverty alleviation within our country. Before the New Deal, it would have been unheard of to suggest that the government participate actively in poverty relief, but with the adoption of the welfare state, federal power has undergone considerable expansion with endorsement from the American people. I think now, with the established federal roles and expectant public, poverty relief from the United States' government will take on a crucial balance between policy that shapes the economic climate and programs that actively combat suffering. Especially now, within the economic crisis, the maintenance and development of policy that shapes the economy to be more conducive for relief is incredibly important, and goes much deeper than than traditional blanket recovery means. Secondly, the program component will also grow and develop in accordance with government policy, but hopefully the government will also utilize, fund, and support national non-governmental organizations that aim to alleviate poverty. These two broad and critical steps are obviously more complicated than I am willing to discuss here on this Wednesday night, but it goes without saying that change lies at the center of their enactments. Change that will hopefully come from within the government to facilitate the needed balance between funding important programs to relieve poverty. With the current funding distribution, it is difficult to imagine the government taking any concrete and deliberate steps towards ending poverty, but hopefully the promised change from the new administration will include measures that better support this difficult and important task.
 * Gurvisha: I agree with christina. the world today is facing an economic crisis . developing nations are struggling to get through this crisis and that is the primary concern of every country today. a united world global coalition seems highly improbable considering the present circumstances.
 * Jack: I think, especially with our current economic crisis, people want help and those who don't need it want to give help. As Christina said before the New Deal it was unthinkable for one to expect the national government to help them out in the U.S.. Today programs such as welfare, medicare and social security are expected of our government. So there is the possibility that things that I see as impossible to happen will happen due to the hard times. We are in the worst economic situation since the great depression and if redistribution can happen here I think it would have to be in a time like this. But to get back to the original question, I don't think redistribution of wealth would go over very well in the US. In a capitalist country like ours most people work hard for their money and expect what they earn to be theirs. But people do need help, and there is a delicate balance to be struck. Perhaps it will just have to be spun the right way as FDR spun social security in a false manner to sell it the the American people. I do not think full redistribution can occur without depriving certain people (at least in a capitalist frame of reference). However, there could be a balance to be struck. I don't think we need revolution to get such a system, but I don believe our current system, as is, will not support redistribution. To once again reference the new deal, the new deal was not so radical, it did not shake the foundation of the American system, but it was certainley a significant change. Something would have to be similar to that.
 * Gurvisha: “The Government is supposed to be the main actor in ‘poverty alleviation’ both under socialist and communist regimes. Capitalism works under the assumption that the individual is mainly responsible for his or her poverty. Under capitalism the government may play a role in alleviating poverty only for those who are considered as destitute. However, under ‘welfare capitalism’ again government plays an important role in poverty alleviation.”
 * Aditya: Well, i certainly believe that we need not only a radical transformation in the system, but also a radical change in the mindset of the people running the system. The system sometimes spends extremely large amounts of money, on issues of little or absolutely no concern! For example, India needlessly spends huge amounts of money on defence, fearing war with a certain neighbour;firstly.
 * Arjit: I agree with you all. I think you have covered enough. Now it is the real time to act against this unwanted crises that India is facing today. Since enough time has passed discussing on this, I would like to confront some points and causes. There are two extreme perspectives on the basis of which we can analyze the dreadly cause of poverty-old and modern. The old causes are related to the 20th century and now let me not talk about that. The real and the modern cause of poverty are politicians and we the humans. Slogans cannot help remove poverty. Politicians have to take initiative to discuss this, not just read out slogans like fools. The biggest reason is that we should now stop heling the needy, giving them clothes, money. This will not help, instead this will become their daily habits. " We think sometimes that poverty is only being hungy, naked and homeless. The poverty of being unwanted, unloved and uncared for is the greatest poverty."
 * “We think sometimes that poverty is only being hungry, naked and homeless. The poverty of being unwanted, unloved and uncared for is the greatest poverty.
 * NGOs**
 * Gurvisha: Giving below are the main objectives of NGOs in INdia:-
 * Shilpi: One of the most interesting discussions centered on the idea of microfinance, which has the promise of being a financially self-sustaining method for helping the poor. Rather than involving direct grants or subsidies to the poor, microfinance gives the poor much-needed access to capital
 * Kari: It will be interesting to see how microfinance passes the test of longevity because I think it has a lot of potential for democratizing economic growth. Thus far feedback has been almost universally positive, so I thought I'd mention an article in the Economic & Political Weekly (it's a big PDF, but I'll try to find a way of linking it) that expressed skepticism. Using empirical evidence, the authors assert that microcredit brings about only "marginal" improvement in the beneficiaries' income. In addition, they claim that the Grameen Bank perpetuates "debt cycles" by paying off loans with fresh loans from moneylenders. Another criticism is that micro-credit is limited to a restorative mechanism - that is, it brings the impoverished up to a certain standard of living and self-sufficiency but then prevents them from further ascent. Because microfinance is such an evolving phenomenon, it's difficult to draw any conclusions regarding the validity of such criticisms, but do these problems seem at all apparent in India? And how do micro-credit programs compare with the state-led poverty alleviation schemes?
 * Matt: it seems as if microcredit could raise everyone to a new level economic standing but they might still be in relative poverty. I am a fan of microcredit because it is trying something, and brings people out of the most destitute forms of poverty, but there could be hidden problems, especially if the companies funding the microcredit do not have the best intentions.
 * Christina: I agree with both Matt and Kari that since microlending is such a new phenomenon, that its long-term affects are still questionable, but the observable ones do offer some insight about how the system can be adjusted to promote more sustained economic growth and relief versus the "marginal" improvement you mentioned Kari. I was just browsing through some articles (because that's what I do naturally--research articles about microfinance and poverty relief), and I came across this statement from Roy Jacobowitz, who is the senior vice president for resource development and communications at Acción International, a Boston-based group that has established and supported the creation of a network of microlending banks. Jacobowitz stated that, "Microfinance boosts the very best parts of capitalism, because it boosts people’s ability to make their own choices and to work their way out of poverty." While this kind of by-your-bootstraps self-improvement is celebrated by the capitalist nation-state, it seems like a limited process for many that are existing well below the poverty line. I mean, I don't really know what I'm talking about here, but it seems that microlending + other programs that aid people in the microfinance process could promote the kind of sustained economic relief needed.
 * Microfinancing**

One of the most interesting discussions centered on the idea of microfinance, which has the promise of being a financially self-sustaining method for helping the poor. Rather than involving direct grants or subsidies to the poor, microfinance gives the poor much-needed access to capital with the expectation that the loan will be repaid in the future. The goal of a microfinance institution is to become self-sustaining so that it can use the interest from loans to cover its costs, and therefore not need to rely on outside funding. Before the presence of a microfinance institution, there was no way for certain segments of the population to finance the skills and/or resources necessary to pull themselves out of an impoverished existence. Now that such institutions have been established, it opens up the possibilities for a blanket weaver to purchase more wool and thereby aspire to a family-supporting level of income, and it allows for countless other possibilities that are not feasible without a reserve of capital. A. Reduction of Vulnerability of poor households B. Increased Consumption per head C. Reduced Income related Poverty · There are a variety of problems and shortcomings associated with the microcredit and microenterprise cluster models of poverty alleviation. One is the problem of using the loans effectively. · A second problem is that microcredit loans don’t reach the poorest of the poor. Instead they tend to reach the moderately poor members of society. · A third problem is the danger of borrowers becoming dependent on microcredit, rather than using it as a means to escape poverty. · Fourth, successes in poverty reduction may not hold up over time. Clustering brings with it a different set of problems. Microcredit has some merit within certain narrowly defined limits. It can be a great help to poor people with good math skills, and some predisposition for entrepreneurship. Such programs are especially helpful for the moderately poor, and for enterprises located near roads and crossroads. Successful microentrepreneurs also need to be able to choose good, money making investments, and be able to pursue them without undercutting from other microentrepreneurs or cheap imports. Finally, if the enterprises are going to be encouraged to cluster they must not be of a kind that is likely to produce large negative externalities. With all of these restraints and qualifications, it should be obvious that microcredit programs are not going to be solving all of the world’s poverty problems. If our grandchildren go to museums to see what poverty was like, it is not going to be as a result of the spectacular success of expanded microcredit initiatives. The problem of poverty is too multi-faceted. It just can’t be addressed by a single solution. Microcredit will never have significant impact on the world-wide phenomenon of poverty.
 * Introduction**
 * Benefits**
 * Drawbacks**
 * Analysis and Conclusions**