Factors Affecting Poverty in Pakistan

Economists, sociologists and humanitarian organisations have produced voluminous literature on different dimensions of poverty problems, and on the need and importance overly alleviation from the point of human welfare, sustainability of economic growth, social cohesiveness and political stability. In fact, if one was to avoid the risk of being out of date on subject, one is required to read an ever-increasing volume of articles and reports on poverty issues, social safety nets, meanstested transfers and the like. While going over the relevant material most of these articles and reports seem to cover more or less the same ground and give the same policy advice, leaving an impression in one's mind as if the same motion picture was being shown over and over. However, there is a consensus emerging on the diagnosis of poverty problems and the need for, and means of, poverty alleviation in the developing countries.

There has indeed been an evolution of thinking on the subject. In the 1960s, it was argued by some very bright economists, including those from Pakistan, that more equitable distribution of income would hurt growth, or conversely, that inequalities of income and wealth would promote savings, investment and growth. As growth was associated with income inequalities, government intervention in favour of the poor was not particularly welcome. This line of reasoning prompted the conclusion that high growth rates and rising income levels would eventual trickle down to the lower-income groups without necessitating equity-promoting government interventions.

This approach soon fell in disrepute with a general recognition of the failure of the market mechanism to deliver the promised land. It was generally recognised that in the absence of redistributive or interventionist policies, the benefit of growth was likely to accrue mostly to traders, landed aristocracy, emerging industrialists or some other high-income or well-placed group and that the poorer segments of the society could be left behind even in the context of high growth rates. The persistence of poverty in some growing economies was taken as evidence against the trickle-down theory, and a consensus emerged that high growth did not automatically reduce poverty.

Accordingly, in many countries the search turned to finding ways to directly help the poor and three seemingly competing but in many respects complementary, approaches to poverty alleviation became popular; the first focused on the redistribution of existing income and wealth through taxation policies, the second on increase in expenditures for the development of human capital, and the third on ensuring basic needs of the poor. All these approaches have encountered political resistance in most of the developing countries because all required diversion of resources from the rich to the poor. Redistributive tax system, larger expenditures on basic needs such as water supply, urban sanitation, low-income housing, public transportation, or on basic infrastructure aimed at improving the productivity of the poor, did not receive priority from the ruling elite in most of the developing countries. Accordingly, with the exception of Asian tigers and China, poverty alleviation remained a dream rather than a reality in most of the developing countries. No wonder that over one third of the total population of developing countries, or over one billion people, live in dire poverty, the bulk of them in South Asia and Sub-Saharan Africa.

Dr. M. Yaqub

Source: Poverty Alleviation in Pakistan: Present Scenario and Future Strategy, Mohibul Haq Sahibzada. Republished with permission.