The international concern on poverty is expressed in terms of development. The nations of the world are classified as Developed, Developing, Underdeveloped, and Least Developed countries. Priority in terms of international assistance is given to the Least Developed countries or the LDCs, as they are supposedly on the lower rungs of the development ladder.
In 2001, the United Nations set up the Office of the High Representative for LDCs, Land-Locked Developing Countries (LLDCs), and the Small Island Developing States (SIDs). The United Nations defines LDCs as low-income countries that are suffering from long-term handicaps to growth, in particular low levels of human resource development and/or severe structural weaknesses. Their distinction lies in the profound poverty of their people and in the weakness of their economic, institutional and human resources, often compounded by geo-physical handicaps.
The Economic and Social Council of the United Nations adopted in 2006 the following three criteria for determining the status of a country for inclusion in the list of LDCs:
- Gross National Income per capita: The threshold for inclusion is calculated at $745, a three-year (2002–04) average Gross National Income (GNI) per capita. The threshold for graduation was set at $900, or about 20 per cent above the threshold for inclusion, in order to effectively prevent graduating2 countries subsequently returning to that category owing to short-term declines in their GNI per capita caused by exogenous shocks, or exchange rate variations.
- A Human Assets Index (HAI): This index is a combination of four indicators, two for health and nutrition and two for education: (a) the percentage of population undernourished; (b) the mortality rate for children aged five years or under; (c) the gross secondary school enrolment ratio; and (d) the adult literacy rate. The threshold for graduation was established at 10 per cent above the inclusion threshold. Thus, the threshold for inclusion in the list of LDC is an HAI value of 58 and the threshold for graduation is 64.
- Economic Vulnerability Index (EVI): The EVI reflects the risk posed to a country’s development by exogenous shocks, the impact of which depends on the magnitude of the shocks and on structural characteristics that determine the extent to which the country would be affected by such shocks. The EVI is a combination of seven indicators: (a) population size; (b) remoteness; (c) merchandize export concentration; (d) share of agriculture, forestry and fisheries in gross domestic product; (e) homelessness owing to natural disasters; (f) instability of agricultural production; and (g) instability of exports of goods and services.
Currently, there are 49 countries identified as Least Developed Countries; of these, 33 countries are from Africa, 15 from Asia and the Pacific, and one from Latin America and the Caribbean region.3 These countries are regarded as particularly ill-equipped to develop their domestic economies, which are so vulnerable to external shocks or natural disasters.
It is important to note that these countries are identified as poor on the basis of generalized averages. It should not be interpreted to mean that poverty exists only in these countries and that every citizen of these countries is equally poor. The king of Bhutan, or the former king of Nepal—both the countries described as LDCs—will come in the category of rich not only in their own countries, but also in comparison to many rich families in other countries, including India.
It may be stated that prior to the fall of the communist regimes in Eastern Europe, all the countries of that block denied the existence of poverty. But now these very countries, called the ‘Countries-in-Transition’, formally accept the existence of poverty in them.
In the previous phase, while transiting from capitalism to socialism, they nourished the hope of completely terminating all oppression, and all forms of social inequality. Feeling frustrated, these countries are now experiencing a reverse transition, from socialism to capitalism. Just as the entry into the era of socialism raised hopes amongst the masses of an emerging egalitarian society, the collapse of communism has caused a similar euphoria: people are hoping that all the evils of the past will die down and sudden riches will erupt.
The UNDP Human Development Report (2009) says:
Eastern Europe and the countries of the Commonwealth of Independent States (CIS) have seen the greatest deterioration in the past decade. Income poverty has spread from a small part of their population to about a third—120 million people below a poverty line of $ 4 a day.
The transition from socialism to democracy and market economies has proved more difficult and costly than anyone imagined. The costs have been not only economic, from the dramatic decline in the GDP. They have also been human, from falling wages, growing crime, and loss of social protection. In some countries life expectancy has fallen by five years or more (UNDP Human Development Report, 1997).
Is it a new form of poverty that is emerging, or is it suppressed poverty that is resurfacing? During the socialist era, a distinction was made between the capitalist poor and the socialist poor. The capitalist poor were those who had been victims of the previous capitalist system and as such were given priority consideration in the new system for the amelioration of their situation. The socialist poor were the products of the new system, such as the handicapped, the vagrants, and people with temporary jobs. The latter were never regarded as poor by communist ideologues; they were considered mere ‘aberrations’. To quote Milanovic, ‘Poverty was not only viewed as social pathology and an explicit denial of the “perfectness” of the system but … rather sinisterly, as an explicit anti-social choice by the poor’ (Milanovic, n.d.: 4). That is the reason why poverty was never studied in that part of the world. To quote yet another author, Alistair McCauley,
In Soviet eyes, socialism was a progressive ideology …. Party propagandists liked to claim that, certainly by the 1960s, the USSR had made considerable strides towards the goal of creating a just and equal society. As a result, it was suggested that there could be no poverty. Furthermore, if there was no poverty, there could be no justification for the academic study of the phenomenon (McCauley, 1996: 355).
However, the,
[G]rowing economic crisis that preceded the collapse of state socialism and the break-up of the USSR was accompanied by a growth in poverty—and a belated re-cognition on the part of the Soviet government that poverty existed in the USSR. The transition to a market economy has been accompanied by an enormous further increase in poverty in Russia and, indeed, in most of the other successor states of the former Soviet Union (FSU) (ibid.: 354).
It should be stressed that the situation of poverty in Eastern Europe is radically different from that of the developing countries. In the latter, while the actual number of poor is still on the rise, their percentage compared to the total population is declining, and the poverty gap is also getting somewhat reduced. The situation of Eastern Europe is quite the opposite, where an increase is registered on all three indicators. See Table 16.1 for these comparisons.
Table 16.1 Growth of Poverty in Eastern Europe and the Developing Countries
What is true of the nations is also true of the geographic regions within a country, which can be rated on a poverty or backwardness scale. Regions can have larger or smaller percentage of poor in their populace. But the backwardness of the region may also be measured in terms of other development indicators. The development of the region creates favourable conditions for the people inhabiting that area for moving out of the poverty trap. But the backward conditions of the region affect the population as a whole, and therefore poverty eradication in such a perspective calls for region-specific development strategies, rather than ethno-specific strategies.
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