Reducing Global Poverty

Reducing Global Poverty: The Case for Asset Accumulation

Copyright Date: 2007
Pages: 305
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  • Book Info
    Reducing Global Poverty
    Book Description:

    A daunting challenge to the international community is how to go about lifting the world's huge poor population out of poverty. "Asset-based" approaches to development are aimed specifically at designing and implementing public policies that will increase the capital assets of the poor -i.e., the physical, financial, human, social, and natural resources that can be acquired, developed, improved, and transferred across generations. In this pathbreaking book, Caroline Moser and a group of experts with on-the-ground experience provide a set of case studies of asset-building projects around the globe. The authors use a cutting-edge research framework that moves beyond quick snapshot solutions to the problem of poverty. They highlight the ways in which poor households and communities can move out of poverty through longer-term accumulation of capital assets. Contributors include Michael Carter (University of Wisconsin), Monique Cohen (Microfinance Opportunities), Sarah Cook (Institute of Development Studies, Sussex), Hector Cordero-Guzman (Baruch College, CUNY), Lilianne Fan (Oxfam, UK), Pablo Farias (Ford Foundation, New York), Clare Ferguson (formerly DFID), Andy Felton (FDIC), Sarah Gammage (Rutgers University), Anirudh Krishna (Duke University), Amy Liu (Brookings Institution), Vijay Mahajan (BASIX, India), Paula Nimpuno-Parente (Ford Foundation, South Africa), Manuel Orozco (Inter-American Dialogue),Victoria Quiroz-Becerra (Baruch College, CUNY), Dennis Rodgers (London School of Economics), and Andres Solimano (CEPAL, Santiago, Chile).

    eISBN: 978-0-8157-5858-7
    Subjects: Business, Sociology

Table of Contents

  1. Front Matter
    (pp. i-iv)
  2. Table of Contents
    (pp. v-vi)
  3. Foreword
    (pp. vii-viii)
    Lael Brainard and Pablo Farias

    Asset-based approaches in development focus on how the poor use their resource base to develop strategies for acquiring, mobilizing, expanding, and preserving their assets. The asset accumulation approach addresses important shortcomings in income- or consumption-focused poverty reduction strategies by emphasizing the way the poor themselves establish a base of resources under their control. Over time they can mobilize this base to generate income, produce additional resources, and transfer resources across generations to broaden opportunities for their children. Ownership and effective mobilization of assets help establish personal and family security and encourage risk taking and diversification of productive and social activities....

  4. Acknowledgments
    (pp. ix-x)
  5. 1 Introduction
    (pp. 1-12)

    As poor communities, policymakers, and politicians all seek to identify new, innovative, and more appropriate policies and strategies for confronting poverty, it is clear that successful reduction solutions are not easily found. This book addresses this challenge by introducing asset accumulation, both as a conceptual framework and as an operational policy to address poverty reduction in a globalized context. In the United States, asset building is already well established as an antipoverty strategy (see Sherraden 1991; Oliver and Shapiro 1990). The Ford Foundation, in particular, has actively supported grantees focusing on community asset building through its Asset Building and Community...

  6. Part One: Lessons from Research

    • 2 Intergenerational Asset Accumulation and Poverty Reduction in Guayaquil, Ecuador, 1978–2004
      (pp. 15-50)

      This chapter focuses on the relationship between long-term changes in income poverty and asset accumulation. The use of longitudinal data here varies from the usual short-term, “snapshot” approach to collecting data on poverty, while the focus on asset accumulation complements the more common income and consumption measures of changing poverty levels. The chapter draws on the results of a research project that analyzes how, over the past twenty-six years, poor households in a low-income community in Guayaquil, Ecuador, have struggled to accumulate assets and get out of poverty.

      A “narrative econometric” methodology, combining econometric measurements of change with anthropological narratives,...

    • 3 Learning from Asset-Based Approaches to Poverty
      (pp. 51-61)

      Poverty is most frequently measured and analyzed in terms of income flows or the stream of consumption expenditures financed by those income flows. While these flow measures permit calculation of a suite of indicators that variously count the number of people whose standard of living falls short of a predetermined poverty line, they do not reveal much about who the poor are, why they are poor, or whether their material situation is likely change over time.

      Information on the asset stocks that underlie and generate income and consumption flows can be used to help answer these questions.¹ At a descriptive...

    • 4 The Stages-of-Progress Methodology and Results from Five Countries
      (pp. 62-80)

      A new participatory method, the Stages of Progress, was developed in 2002 to assess and explain households’ movements out of poverty. It was found in the first investigation (conducted within thirty-six rural communities in Rajasthan, India) that almost as many households fell into poverty over the past generation as were able to escape from it. Subsequent investigations—conducted among a total of 236 diverse communities, covering 25,866 households in India, Kenya, Uganda, Peru, and North Carolina, United States—also showed that escape and descent have occurred concurrently in all locations. While some households have escaped from poverty, other households in...

  7. Part Two: Asset Policy—Social Protection or Asset Accumulation Policy?

    • 5 Asset Accumulation Policy and Poverty Reduction
      (pp. 83-103)

      This chapter provides an introduction to asset accumulation policy and its contribution to sustainable poverty reduction.¹ It distinguishes between an asset index conceptual framework for poverty diagnosis and asset accumulation policy as an associated operational approach. This distinction is further clarified as follows:

      An asset index conceptual framework is an analytical and diagnostic tool for understanding poverty dynamics and mobility.

      An asset accumulation policy is an operational approach for designing and implementing sustainable asset accumulation interventions.

      In describing these two components, the chapter seeks to demonstrate the value added by asset-based approaches, for both better understanding poverty and developing appropriate...

    • 6 Addressing Vulnerability through Asset Building and Social Protection
      (pp. 104-121)

      The Asian financial crisis of the late 1990s dramatically exposed the vulnerability of populations across the region. From Thailand and Indonesia to South Korea, incomes had been steadily rising. But in the absence of formal social protection, and as structural change and mobility undermined traditional family and community “safety net” arrangements (which are rarely able to cope with covariant shocks), the crisis thrust large numbers of people back into poverty. In the wake of the crisis, the Ford Foundation’s Asia offices initiated a program of research on Social Protection in Asia.¹ This chapter presents an overview of the program, highlighting...

    • 7 Social Protection and Asset Accumulation by the Middle Class and the Poor in Latin America
      (pp. 122-134)

      Globalization, new technologies, and the market economy offer new opportunities but at the same time introduce new risks and vulnerabilities to the poor and the middle class in Latin America, who have few ways to protect themselves against economic crises, health crises, and natural disasters. This fact has led to an increased demand for social protection, a term carrying a slightly paternalistic flavor, as it implies that the state or special agencies will protect vulnerable citizens. Of course, a deeper question is, Should the focus instead be on how to design and reform the economic systems that generate such risks...

  8. Part Three: Asset Accumulation and Consolidation in Practice

    • 8 Building Natural Resource–Based Assets in Southern Africa: Workable Scenarios
      (pp. 137-148)

      Most of southern Africa’s people live in environments that are rich in natural resources. However, people have not been able to use these resources to generate sustainable livelihoods because in many instances conservation has been prioritized at the expense of the people neighboring or living in these protected areas. The focus on conservation has ignored the fact that a peaceful and profitable coexistence between people and protected areas is possible. The purpose of this chapter is to examine strategies that will enable low-income groups in environments that are rich in natural resources to build a sustainable economy by wise and...

    • 9 Protecting Land Rights in Post-Tsunami and Postconflict Aceh, Indonesia
      (pp. 149-166)

      This chapter has two objectives. The first is to delineate some of the critical land rights issues that have emerged over the last two years in the Indonesian province of Aceh, the place worst affected by the earthquake and tsunami of December 2004, and one already deeply scarred by thirty years of armed conflict.¹ The second objective is to consider these developments within the conceptual framework provided by asset-based approaches to poverty reduction and development.

      The tsunami caused a dramatic loss of life as well as huge damage to land and property in Aceh. One hundred sixty-seven thousand people were...

    • 10 Hurricane Katrina: Impact on Assets and Asset-Building Approaches to Poverty Reduction
      (pp. 167-178)
      AMY LIU

      With a death toll of more than 1,700, Hurricane Katrina was the deadliest natural disaster in the United States since a hurricane struck Galveston, Texas, in 1900.¹ In late August 2005, Katrina’s category-four winds destroyed or severely damaged approximately 160,000 homes and rental units in the New Orleans area (Department of Homeland Security 2006). Over 1 million people from the Gulf Coast were displaced, and approximately $81.2 billion in total damages were generated (National Weather Service 2006).

      More than one year later, the long-term recovery of the New Orleans region remains a steep climb. Many hard-hit neighborhoods look essentially unchanged...

    • 11 Gangs, Violence, and Asset Building
      (pp. 179-195)

      The past decade has seen an increasing interest in policy interventions concerned with the promotion of sustainable asset-building strategies for the poor. Building on Amartya Sen’s seminal work (1981) on entitlements, such approaches identify assets as the foundation upon which social agents build sustainable livelihoods, thereby suggesting that poverty and vulnerability are closely linked to deficient asset endowment and constrained possibilities for asset accumulation. The processes by which assets are both obtained initially and then fructified are complex, however, and ultimately determined by “an iterative asset-institutions-opportunities nexus” (Moser 2006, p. 8). In other words, a combination of factors including the...

    • 12 Beyond Microfinance
      (pp. 196-207)

      Economists of all hues, from Adam Smith to Karl Marx, have emphasized the centrality of capital to enhancing incomes and wealth. The classical view about the role of capital in the economic growth of nations is equally applicable to households. Poverty begins with low investment, which leads, in succession, to low productivity, low income, and low or no savings, thus leaving no scope for investment and continuing the vicious cycle.

      One remedy for this situation is thought to be an injection of capital (if possible by borrowing it from someone with a surplus). This breaks the vicious cycle by increasing...

    • 13 Using Microinsurance and Financial Education to Protect and Accumulate Assets
      (pp. 208-224)

      Over the last two decades, microfinance has captured the attention of the international development and business communities as a “silver bullet” for poverty alleviation. Stories abound of village women in Asia, Africa, and Latin America who, upon receiving a series of small loans from a microfinance institution (MFI), were able to use their entrepreneurial skills to lift themselves out of poverty. The reality, however, is much more complicated. While small loans have helped many of the poor worldwide by allowing them to start small businesses or buy assets, the road out of poverty is hardly smooth. Frequent financial pressures and...

    • 14 Migrant Foreign Savings and Asset Accumulation
      (pp. 225-238)

      This chapter explores the relationship between migrant foreign savings and financial asset accumulation.¹ Primarily, it distinguishes between different types of transnational economic activities that migrants engage in and demonstrates that not all of them are equally conducive to asset accumulation. Moreover, remittances in particular offer the dual function of livelihood survival and asset building, depending on the communities and families sending and receiving money. Empirical data demonstrate that savings and investments—and consequently, asset accumulation—are only rarely possible, and few people devote resources to them. In the cases where these assets are present, however, they are strongly related to...

    • 15 Transnational Communities of the United States and Latin America
      (pp. 239-254)

      One of the most moving scenes in Alex Rivera’s documentary film,The Sixth Section, shows how the members of Grupo Union (Unity Group), based in Newburgh, New York, participate in the inauguration of a nearly U.S.$50,000 sports stadium that was to become the symbol of the group’s presence and visibility back in their community of origin, San Vicente de Boquerón, Puebla, Mexico.¹ Grupo Union eventually invested in several other projects, including an ambulance, materials for the local school, renovation of the church, and a basketball court, and was embarking on an ambitious water project. As the group discusses the project,...

    • 16 Gender and Transnational Asset Accumulation in El Salvador
      (pp. 255-272)

      This chapter explores the gender dimensions of transnational asset holdings for Salvadoran migrants and their home communities. It focuses on a number of key assets built up or drawn down in the process of migration: remittances, savings, housing, and transnational social capital.¹ The data used are from a wide range of sources including the Salvadoran National Accounts; the Multi-Purpose Household Survey (Encuesta de Hogares de Propósitos Múltiples [EHPM]) for 2004, published by El Salvador’s General Department of Surveys and Census (Dirección General de Estadística y Censos [DIGESTYC 2004]); and the Public Use Microdata Sample of the U.S. Census 2000 (PUMS).²...

    • 17 Claiming Rights: Citizenship and the Politics of Asset Distribution
      (pp. 273-288)

      Accepting the premise that an assets approach offers a solid basis for addressing poverty and poor people’s strategies for moving out of poverty, this chapter focuses on the proposition that concepts of citizenship and rights can be used as an entry point for analyzing the political processes and power relations that constrain or enable asset accumulation and distribution. First, concepts of citizenship, rights, and power are discussed, and their links to asset accumulation are explored. It is argued that rights can be understood as a form of political capital that enables people to make claims to other types of assets....

  9. Contributors
    (pp. 289-290)
  10. Index
    (pp. 291-306)
  11. Back Matter
    (pp. 307-309)