The new bottom billion - what does it mean?
In the last issue of The Networker, Andy Sumner outlined the findings of his recent research on where poor people live. Now he goes further to explain what the implications might be for how we ‘do development’. Bond members CAFOD and Progressio share their views.
There is a new 'bottom billion', recent IDS research shows, consisting of 960 million poor people or 72% of the world’s poor.
The new 'bottom billion' live in middle-income countries. This is a dramatic change from just two decades ago, when 93% of poor people lived in low-income countries. The rise of average per capita income in these newly middle-income countries has occurred at the same time as large majorities of the populations of these countries still live below the poverty line. Donors usually focus on the poorest countries, but many of these countries are no longer ‘officially’ poor according to World Bank classifications.
A new, post-Paris Declaration, post-MDG narrative needs to be developed to accommodate this changing situation.
A new approach is needed
Development needs to create an approach that looks to poor people, wherever they live, and establishes new partnerships between governments based on a shared responsibility to the poor. The concepts of human development, human security and human rights are examples of concepts that do this. Something is needed in the vein of the Responsibility to Protect norm (known as R2P in humanitarian aid); perhaps we need a Global Responsibility to the Poor norm, rather than a straightforward donor and recipient view of the world.
This approach could be viewed as an international commitment, which could be laid down in an international agreement. It would provide a minimum level of income, health care and education for citizens, with the financial responsibility shared between rich and poor countries on a sliding scale, depending on the wealth of the country where groups of poor people are living.
inequality is highly emotive and any attempt to discuss it internationally is likely to be viewed as an infringement of sovereignty
There is a real need for this new kind of multilateralism because new middle-income countries may not want development assistance of the traditional sort – bilateral ODA. To cite but one example, in response to discussions in the UK about whether it should give ODA to India, India’s response in a leaked memo was: do we want or need UK development assistance?
Inequality is one elephant in the room
When researchers and policy makers talk of a governance trap, one could argue they are really referring to inequality as an underlying cause of poor or unresponsive governance.
This is a difficult topic to debate. Jan Vandemoortele, one of the architects of the MDGs, has called for a ‘serene debate’ on inequality. This is important as inequality is highly emotive and any attempt to discuss it internationally is likely to be viewed as an infringement of sovereignty. Language matters. Reaching the poorest or, even better, sharing prosperity are more effective ways of framing this charged subject. There are good reasons for all governments to discuss sharing prosperity because poverty could be reduced more quickly and for less money if there was more focus on equity.
Focusing on equity makes it cheaper and faster to reduce poverty
One of the main factors that determine how effectively growth will reduce poverty is 'initial inequality'. As Martin Ravallion, head of research at the World Bank, wrote in his 2005 paper, Inequality is Bad for the Poor, 'the higher the initial inequality in a country, the less the poor will share in the gains from growth'. Put another way, growth reduces poverty faster in countries with more favourable income distributions.
Various international agencies are heeding this call and have argued in favour of taking equity more seriously, even the IMF. There is a sense that the growth agenda or ‘growth-only delusion’ that emerged from Collier’s work, which states that growth is expected to be the primary driver of poverty reduction, simply takes too long for some countries.
The fact that gross domestic product (GDP) growth often happens without social, economic or political transformation might begin to explain the continuing levels of absolute poverty in new middle-income countries (and in the remaining low-income countries).
poverty may be increasingly turning from an international to a national distribution issue
Redistributing poverty
All this points to the fact that in many countries, and especially in middle-income countries, poverty may be increasingly turning from an international to a national distribution issue. This could potentially make governance and domestic taxation and redistribution policies more important than ODA. This is not to say that the global distribution of wealth and assets is no longer important; it is merely less so than was once the case.
However, most large middle-income countries do not have the scope to achieve this redistribution by themselves because the required taxation would be prohibitively high. Therefore, there will continue to be a role for traditional donors to work on poverty reduction with governments in middle-income countries.
A new development narrative
The emergence of a new 'bottom billion' living in middle-income countries does not mean we should stop giving aid. Some of these countries have only just passed the threshold and we should not forget that 28% of the world’s poor still live in low-income countries. What the new bottom billion does mean is that we need a new development narrative based on a new multilateralism of shared ownership, a greater focus on equity and real transformation, and aid beyond traditional ODA.
For more information: www.ids.ac.uk
Read Andy’s article in last issue of The Networker
Bond members' reactions
Dr Amy Pollard, Policy Analyst, CAFOD
“Andy Sumner’s research on the new bottom billion has been on the lips of almost every development professional I know for the last few months. The revelations have implications right across the policy spectrum and forces profound questions of what development work is about and how it can achieve its goals.
An extremely positive outcome of the research, in my view, is that reinforced the argument that we need to think deeply and carefully once again about how much aid Britain should give to different developing countries. As issues of poverty and injustice in our world become more complex, there is no doubting that our aid policies must become more complex to address them (CAFOD will be working on these issues in 2011).
Sumner’s research gives a powerful illustration of something we knew already – that aid flows will only ever be a small (but important!) element any successful efforts to tackle to poverty and injustice. Trade flows, tax regulations, the private sector, market justice and a host of other issues have a much greater impact on poverty issues, and especially on levels of inequity in developing countries. We now need analyse across our foreign, business, trade, aid and security policies to ensure the North is acting to support poor people, wherever they may live.”
Tim Aldred, Advocacy Manager, Progressio
“Action to address the inequality highlighted by the IDS is clearly required, but what form should that action take? Are there legitimate ways for the international community to intervene to promote changes that could help improve the lot of the poorest, without being denounced as inappropriate interference by the governments of middle income countries and by local civil society organisations as well?
Progressio works with poor communities in some middle income countries. For us, the IDS research reinforces the importance of achieving change for the poorest not through service delivery, but through enabling advocacy and participation. Our ‘legitimacy to act’ comes not from a self-declared ‘responsibility to protect’, but rather in response to the appeal for solidarity and collaboration from civil society partners in the countries where we work.
Through advocacy from local civil society actors, states with growing resources can be encouraged to make the benefits of higher national income available to the poorest. The role of an international agency looks more like a ‘specialist supporter’ of state or civil society initiatives, and less like the funder, designer, or implementer of services. Working relationships between international agencies and civil society organisations therefore become more about collaboration for poverty reduction and addressing the root causes of poverty and powerlessness. Such support for civil society’s efforts will continue to be legitimate and useful, whether poverty is mainly due to a lack of resources, or primarily down to inequality.”
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