The World Bank is slowly publishing a series of books on the subject of “Moving Out of Poverty;” while the subject isn’t novel, the incredibly rich data set that underpins the series certainly is. The World Bank study included 60,000 interviews in 15 countries, with the purpose of explaining how and why households move out (and in to) poverty. I am working through the online samples while waiting for the price to come down on “Moving Out of Poverty, Volume 2: Success from the Bottom Up,” by Deepa Narayan, Lant Pritchett, and Soumya Kapoor. For a rundown of the book, check out Duncan Green’s post from last year.
The breadth and depth of the data set powers some startling factoids.
For example, upward mobility is local:
… a simple analysis of variance across communities shows that only 25 percent of the variation in upward movement of the poor can be attributed to the study region or country; the remaining 75 percent depends on the community.”
We focus on the effectiveness of democracy at the local level, irrespective of the state of democracy at the national level. At the local level, we find that there is much more variation within countries than across countries; indeed, 93 percent of the variation in the quality of local-level democracy is explained by within-country variation. Hence, the importance of understanding how local politics affects poor people’s efforts to move out of poverty.
When asked to cite the reason behind their household’s move out of poverty, individual initiative was cited 77% of the time. NGO assistance? 0.3%.
That is not to say NGOs have no role to play. Narayan et. al frame their vision for bottom-up development focused on local political and economic development:
Collective action that involves federated organizations of poor people has the potential to transform lives by connecting poor producers to markets and involving them in economic activities higher up the value chain. But creating such organizations takes time and financial resources and does not produce immediate returns; as a result, this is an area of investment failure on a massive scale. Such a transformation in thinking and practice is not easy. It requires the coming together of people who understand local realities and community organizing, on the one hand, with people who possess capital, business skills, and market access, on the other. As long as these two groups, civil society and private business, remain at war, poor people will remain excluded from markets, and important innovations, including poor people’s corporations and changes in mainstream business models to ensure fairer returns, will not be achieved.
What does local economic assistance look like?
Chapter 5 discusses interventions to increase prosperity at the local level and make markets work more fairly for poor people’s tiny enterprises. The business climate for poor people is very different from the one that large businesses enjoy. We call for liberalization from below. This includes removing restrictive government regulations; expanding access to markets, especially by providing connectivity through roads, bridges, and telephones; and integrating poor people’s businesses on fairer terms in new business models. Poor people’s economic organizations and business know-how are very important in helping them overcome problems of scale and move up the value chain in order to get higher return for their labor.
And role of local political leadership?
But the combination of good local leaders, fair elections, improved access to information, participation, and collective action can enable poor people to demand accountability from local leaders. Local leaders can do much to liberalize and expand economies from below.
They do so through two channels—one community-wide, the other individual. They can provide essential community services like health and schooling, secure law and order, and make and enforce rules and regulations that favor livelihoods and poor people’s initiative. Local officials also distribute government aid to households, including food, agricultural inputs, houses, and land. They may provide skills training through a variety of agricultural extension and nonagricultural training programs.
I’d highly recommend checking out the various Moving Out of Poverty publications; whether you’re interested in India, Afghanistan, or more general poverty analysis based on 60,000 interviews, there is good reading to be had.