POVERTY AS A GREATEST COMMON ENEMY

THE SOUTH ASIAN POVERTY ALLEVIATION


This was a merely short note when to deliver presentation in May 2008, so you may find some sentences are either incomplete or less-elaborated.

SA has been standing between two contrasted ways of hope for a better life and a cataclysmic massive death. The former is understood due to its richness of human and natural resource and diverse cultures, and the latter a probability of a nuclear warfare that may take place at any cost associated with the fact of its being the most impoverished region of the world.

SA's governments have taken a priority of a national security over its' citizen security. The region has perpetually spent a $14 billion a year for this pursuance. This bulwark of budget is simply judged as equal to providing a year's primary school for about 119 million, a two years' safe drinking water for 200 million and a two years' health facility and service for 114 million poor people.

Poverty and Economic Growth Profile of SA

Here we want to explore the economic structure and profile of SA. The SA economic growth has been impressive but this is not comparable to that of other region partly ASEAN. The SA's economic growth rate is lower that ASEAN. The region has the world's highest rate of poverty. It has a 43% population below poverty line while ASEAN 14%, 24% of Latin America and 39% in Sub-Saharan Africa. There are at least three significant factors of economic deprivation that has implications for the quality of human capital and growth policy:

1. Percentage of malnourished children is far greater than that of poor to the overall population. India 53 and 35, Pak 38 and 29.

2. Percentage of dropping out children before grade 5 is greatest. 41% compared to 31% of developing world.

3. Percentage of (health care, sanitation, safe water) basic services-deprived population is quit high. As far as water is concerned, India owes 37%, Pak 40%.

The fact that large population denied of basic necessities and the growing military and bureaucratic apparatus has shown the state's failure to focus on a fundamental feature of nation building


The SA's Economic Structure

Despite of the high economic growth in SA, the poverty reduction has been low. India (1970-1990) figured from 53% to 35%, by contrast Indonesia (1970-1980) only one decade from 58% to 17%. The structure of economic growth process constrains the ability to reduce poverty. Why?

Among major structural factors of SA's economies that constrains poverty alleviation, partly that of women are:

1. Unequal distribution of agricultural and industrial assets and income for overall groups and gender.

2. The structure of output is concentrated towards low-value added products, thus low Labor productivity and low income

3. The second is due to a low-skilled level labor.

Then what are the Gov's macroeconomic policies?

The SA has been coordinating its policy and initiatives of economic growth and poverty alleviation with a joint cooperation of an IMF’s structural adjustment program. Despite this sound attempt, the program found its irrelevance and failure to address the problem and consequently has an adverse impact on economic growth and poverty reduction in the region, proof:

1. Liberalization of import and withdrawal of subsidies from a domestically produced goods and services.

2. Exchange rate devaluation that stimulates inflation and dependence on imported goods.

3. Constriction of money supply that generate recession; the increased interest rate and shortage of credit for private investment. This is due to the state's failure to locate and classify its annual expenditure and budget, thus wastages.

Again it shows that the macroeconomic policies undertaken with the IMF’s auspices have slown down the GDP, accelerated inflation and accentuated the poverty and unemployment.


What to suggest

Adoption of a participatory development and a pro-poor economic growth through:

1. Building up a village institution ensuring the potentiality of people direct participation.

2. Restructuring the economic growth through a set of a macroeconomic policy providing employments to the poor, direct credit, technical training, and infrastructure.

In short this policy includes:

1. Process meaning to encourage poor people's consciousness and realization of their potential

2. Empowerment, restructuring their identity, upgrading their skill and knowledge base.

3. Participation, direct involvement of poor in identifying projects, formulating, implementing and evaluating it. No longer representatives.

In a broader level, this macroeconomic initiative substantiates the involvement of the government, private sectors and foreign investment to:

1. Accelerate GDP growth gradually from 3 to 5 to 7 and 10 by:
A. To reduce fiscal deficit by a sharp reduction of a non-productive
Governmental expenditure.
B. Tariff rationalization thus easing export by private sectors.
C. To enhance the three sectors' relation

2. A shift from a low value added export products to high requiring the improved skill level labors.

3. Institutional support, training and credit for small industries.