From Poverty to Power - Background Papers

Background papers

Private Sector Microfinance
Pro-poor microfinance institutions have their origins in NGO-managed not-for-profit programmes. As the microfinance industry' has grown and matured, the private sector has become increasingly active in marketing financial products and services to poor people in developing countries, demonstrating that the sector can be commercially sustainable. As well as in-country initiatives to deliver financial services to poor people, microfinance increasingly has an international dimension, such as enabling the transfer of remittances, linking capital markets to microfinance initiatives, and supporting ethical financial consumerism in wealthy countries. The author reviews these trends, and concludes that the expansion of private sector microfinance should broadly be welcomed by anti-poverty campaigners. The entry of commercial actors can result in increased competition, reduced costs, more sustainable services, and greater coverage of financial services for poor people. However, completely commercial services may be unsuitable for the most vulnerable poor, a sub-sector where careful, tailored programming continues to be essential.
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Gambling everything for more: the Earth that development built
The environment forms the basis of all global social and economic systems, and the substrate for all development activities. This paper reviews the current state of the global environment. Whilst debates about the limits to growth continue, several inter-related indicators suggest that limits do exist, and are being dangerously exceeded. While all of earth's inhabitants depend on the environment for survival, poor people often depend very directly on the natural resource base for their livelihoods. Areas of particular concern from a development perspective include climate change, water resource management, and agriculture. Marginalized groups - such as indigenous peoples and women - are often the first to experience the impacts of environmental degradation, yet lack the political influence to redress them. Failure to meet the environmental Millennium Development Goals looks inevitable, in turn putting the achievement and sustainability of the other MDGs in jeopardy.
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Feminist Economics
Feminist economists argue for the primary importance of unpaid work in sustaining the activities of the paid economy. This paper argues that orthodox economics fails to capture the costs and values attached to unpaid productive and reproductive work, much of which is undertaken by women. Where women enter the paid economy as workers, this devaluation of their skills is reflected in their low wages and low bargaining power. When conventional analysis informs policy-making, impacts on the unpaid, reproductive sphere are ignored. The paper gives several examples of how, by failing to recognize this, economic policies may exacerbate poverty and conflict within households ultimately undermining both gender equity and development. The challenge is to develop and mainstream analytical tools that reflect the different economic contributions that men and women make. This depends in turn on wider efforts to recognize gender equity as a key instrument in economic development, as well as an intrinsic good.
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How title deeds make sex safer: women's property rights in an era of HIV
One impact of HIV and AIDS in sub-Saharan Africa has been an increase in the number of poor, female-headed households. With particular reference to Kenya, this paper argues that under customary law, women's rights to own and inherit property are often limited and secondary to those of men. As a result, women who become widows are disproportionately likely to lose their homes, land, and other assets, placing themselves and their children at risk of destitution and exploitation. Modern systems of individual property rights offer women better legal protection, although such systems can discriminate against the poor, and often lack social legitimacy. Collective action to demand women's property rights has been slow to develop in Africa, despite the support of international legal frameworks such as CEDAW. Paradoxically, the author suggests that the threat that HIV and AIDS poses to national development may spur activists and governments to make greater efforts to ensure women's property rights.
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The logic of migration
This paper discusses migration for economic, social and political reasons as a livelihood strategy and as part of a wider development strategy, and challenges some criticisms on the part of both sending and receiving countries, before proposing an agenda for change.
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Notes on Poverty and Inequality
This paper looks at a broad UN definition of poverty beyond the simply economic, bringing together the capabilties' approach and the rights-based' approach. It goes on to discuss the importance of inequality and poverty from a pragmatic and a moral point view, stressing the role of inequality in perpetuating poverty.
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Equality, inequality, and equity: where do these fit in the poverty agenda?
There is growing recognition amongst development policy makers that extreme inequality is bad for healthy economic growth and social stability, as well as being inter-generational in its effects. This paper reviews the state of global inequalities, and analyzes the forces that drive them. Shifts towards manufacturing and service-based economies are biased in favor of educated labour, and away from the poorest countries and workers. Simultaneously, global agricultural trade liberalization is undermining small-scale farmers in the poorest countries. These processes exacerbate inequalities both between and within countries. The author argues that methods to combat inequality skirt around the underlying politics that give rise to such injustices, and tend to focus on technocratic approaches and minor adjustments rather than more radical political solutions. At national level these would include land redistribution, access to basic services, tax reform, and reforms to political participation. At international level, action to reduce inequality must include pro-poor trade reform.
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Insecurity in an Unequal World
Protracted conflicts continue to trap millions of civilians in a vicious circle of violence, displacement, loss of livelihoods, and poverty. Often, the key protagonists - who benefit economically from continued conflict - have little incentive for truce. This paper describes how current global conditions are undermining peace and security. It argues that activities related to the war on terror' have increased insecurity in many parts of the world fueling counter-insurgency, human rights abuses, arms trade expansion, and diminution of the humanitarian space. International commitment to end protracted conflicts is vastly inconsistent, while several global initiatives aimed at reducing conflict and poverty have been deprioritized since 9/11. Meanwhile, new threats such as environmental stress and disease are intensifying. The paper suggests a series of policy and practice changes in support of peace and security. However, these will only be achieved through genuine political commitment at all levels to effective multilateral action.
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Financial Markets
Private capital flows have the potential to bring important investment benefits to developing countries. In reality, however, capital flows are concentrated towards a few countries, and are highly volatile. The first part of this paper discusses the latest developments in international capital flows and financial market regulation. The second section considers the impacts of capital instability and lack of regulation on poverty reduction. It argues that poor people are disproportionately affected by financial crises, while a lack of global governance of taxation and banking deprives governments and citizens of essential resources for development. The final section analyzes the drivers and incentives underpinning financial market behavior, which tend to undermine investment in developing countries. Throughout, the author makes proposals for policy change in support of enhanced volume, quality, and stability in private capital flows to developing countries. These include improved global regulation of capital flows and taxation, changes to the incentive structures governing capital investment, and swifter, more effective response to financial crises.
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The Private Sector and Poverty Reduction

Many commentators claim a key role for the private sector in reducing poverty. This can be achieved through direct benefits, such as the adoption of ethical business practices and the provision of employment, goods, and services to the poor; and through indirect positive impacts on macro-economic policy and business development. This paper argues that the likelihood of business impacts being pro-poor depends also on wider policy and structural conditions. These include the importance of poor people in a company's business model, and the length of local investment and commitment that this demands. Case studies of three companies demonstrate the importance of legislation and civil society as catalysts for pro-poor change in business. Leadership from within the company and a strong business case are also essential. However, multiple entrenched problems with modern capitalist systems work against positive change within international business. Overcoming or mitigating these will be necessary if the pro-poor potential of the private sector is to be realized. Download PDF