Effectiveness needed in fight against poverty

Effectiveness needed in fight against poverty

Siwage Dharma Negara, Indonesia Institute of Sciences (LIPI), Jakarta

UN Secretary General Kofi Annan once mentioned that poor
people in poor countries were not asking for a handout; what they
wanted was a handup. They possessed enormous, untapped reservoirs
of initiative and entrepreneurship. Indeed, poverty had confined
them to exploit their resources unsustainably and wreck their
opportunity for promoting their well-being.

Many talented people live in poor countries, but whose talents
are not realized or nurtured because of an absence of food
security, limited access to health services, or educational and
financial resources. Considering how detrimentally poverty can
affect human well-being, in 1974, Robert McNamara, then president
of the World Bank, stated that overcoming poverty was the key
goal for the bank. After more than a quarter of a century,
poverty remains plaguing every part of the world.

Some 1.2 billion people currently live in extreme poverty. In
Indonesia 15 percent of the total population, or 33 million
people, live below the poverty line. More than half of those can
be classified as living in extreme poverty. Even more frightening
is the fact that half of the total population of 220 million is
very close to the poverty line. Thus they are extremely
vulnerable to another economic crisis or abrupt economic
fluctuations that negatively affect income distribution and
resource allocation.

Poverty is a multidimensional problem. It is not just a matter
of technical or economic issues but also social and political
problems. For this very reason, the eradication of poverty cannot
be achieved without an extensive strategy that takes into
consideration economic, social, and political issues.

The recent global development trend has put poverty
eradication on its top-priority agenda. This indicates the
ongoing paradigm shift about how people perceive development
itself. Instead of viewing development as something abstract, now
people tend to adopt a new perspective as it is concerned with
human well-being. Development should be followed by real change
in the lives of real people. Therefore the development goals
should be focused on increasing human well-being through fighting
poverty.

The success of global development policies and strategies is
best depicted by changes in the quality of human life in the poor
countries. Although the struggle for lifting the poor out of
poverty has to be carried out by themselves, often they cannot
lift themselves without meaningful assistance from others.
Occasionally, their efforts are hampered by a lack of basic
security, a rule of law, or an honest and transparent
administration, plus limited financial, technological, and human
resources, all of which indeed typify developing countries.
However, the struggle can be accelerated and eased through
development aid from richer countries.

The recent Monterey consensus has asserted how concrete action
is needed in order to free the world from poverty. To reach the
Millennium goal of halving extreme poverty in the world by the
year 2015, not only human and natural resources are needed but
also equally crucial are financial resources.

However, it is clearly understood that providing more
financial assistance will not be of much benefit in the absence
of an adequate and positive environment. Therefore, developing
countries must promote reform in their economies and increase
spending on the needs of the poor.

The first is related to adopting the right policies to
mobilize investment, embracing the market, ensuring economic
stability, increasing efficiency in tax collection, fighting
corruption, upholding the rule of law and protecting property
rights. Meanwhile the latter, which is more important, is
attributed to promoting education, health, and other public
facilities both in terms of quantity and quality.

Inadequate human resource capabilities are one of the biggest
challenges in the poor developing countries. As a consequence of
small budget allocations for education, health and other public
services and the damaging impact of poverty, the potency of human
resources has been wasted. This was exacerbated by
underutilization of existing qualified human resources, as well
as the inappropriate placement of highly qualified people. In
response to this, it can be seen how crucial is the allocation of
more resources for human resource development in developing
countries.

The fundamental idea of development aid is that it contributes
to building up the productive potential and the institutional
structure of a poor country and in turn it could promote the
self-reliance of that country. Technical assistance is regarded
as investment in human capital in a broader sense. It involves an
increase in levels of education so that the capabilities to
absorb new technologies can be increased. Investment in human
capital will also smooth out the process of adopting foreign
technologies to local circumstances in developing countries.

It is no use providing capital goods without training and
schooling on how to use them effectively. It is also useless to
increase levels of knowledge and capability when there are no
physical means of production where such knowledge can be
utilized. Therefore, any development project should include a
combination of both financial and technical assistance.

Instead of arguing about the worthiness of development aid,
more attention should be paid toward the quality and
effectiveness of aid flows. Indeed, the challenge ahead is how to
ensure that aid finance will be used effectively to finance the
development, to mobilize resources, increase production and
exports, increase technology transfer and other economic benefits
in the recipient countries.

Both the donor and recipient countries have to participate in
creating more transparent and effective aid distribution. The
richer countries still have to increase their share of overseas
development assistance (ODA), while the recipient countries have
to improve their governance in a clean and transparent way so
that the apparatus of government itself is not an obstacle to
development. If this could be assured then aid would ideally
benefit recipient economies, and the world in general would be
better off.