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Poverty and Inequality: Could it end?
Objective: To explore appropriate measurements of multidimensional poverty, well-being and
inequality and propose strategies for improving policy making and resource allocation in the
Caribbean.
Critical issues:
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The implications of the graduation of Caribbean economies to High and Middle Income
status on the fight against poverty and inequality in the Caribbean
Recognition of poverty as multidimensional and the inadequacy of income thresholds to
measure poverty
The use of multidimensional poverty indicators to influence resource allocation and policy
interventions
Existing practices for measuring poverty which can be considered by Caribbean leaders, for
example the Multidimensional Poverty Index (MPI)
Using the MPI to develop and implement innovative solutions to reduce poverty and
inequality
Introduction
The graduation of the Caribbean as High and Middle Income Countries (HMICs) reflects the
global trend of using per capita income levels as a major benchmark for development. Despite
the graduation of many countries, poverty and inequality persist within the region. Guided by
MDG 1, poverty in the Caribbean, similar to other parts of the world, is primarily measured as
persons living on less than US$1.25 per day. However, the use of income thresholds to measure
poverty overlooks the multidimensional complexities of poverty and human deprivations and
masks stark inequalities within countries. While an increase in income tends to be correlated
with improvements in well-being such as education and health, the strength of these correlations
can vary considerably. In this regard, poverty and inequality, in addition to the other “constraints
and challenges associated with development must not be treated as related in a linear fashion to
countries’ per capita income levels.” (ECLAC Secretariat, 2012, p. 3)
Former U.N. Secretary General, Kofi Annan asserted that poverty “causes inadequate standards
of living, weak health, hunger, unsanitary housing, homelessness, unemployment, social
exclusion and illiteracy.” (Annan, 1998) Given the myriad ways in which poverty manifests
itself and its effects on the vulnerable members of society, strictly reducing the number of
persons living below US$ 1.25 per day is unlikely to meaningfully address the many overlapping
deprivations poor persons encounter. (Alkire and Sumner 2013). This is evident in the fact that
numerous persons who have escaped poverty as defined by the MDG goals are still poor or
experience its associated deprivations. In addition, there are persons who no longer live in
poverty but remain vulnerable to it as risks at various stages of an individual’s life-cycle and in
different situations can move him/her in and out of poverty. Poverty is therefore not only about
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income nor is it static. Furthermore, the use of global aggregate indicators like the MDGs’
poverty line is unable to capture the efforts of individual countries, obscures important
differences and fails to reflect unequal gains in reducing poverty within and across countries,
communities and demographic groups.
Inequality must similarly be examined from a multidimensional perspective as it involves
analysis of differences in opportunities and outcomes. It reflects persistent differences in
opportunity between defined groups. The level of inequality can also change over time shifting
across individuals. Thus, inequality and resource redistribution are equally legitimate policy
considerations. High levels of inequality, like poverty, can impede economic growth. Also,
inequality weakens the linkage between economic growth and poverty reduction since a
relatively small reduction in inequality can have a significant positive effect on the poverty
headcount. Thus, it is important to increase economic growth which results in higher income
with reduced poverty and improved well-being along with measures to equalise incomes and
opportunity through redistribution.
The fundamental weakness in measuring poverty and inequality which influences the targets
chosen and policies adopted must be addressed in all its dimensions. It is therefore important to
look at a broader range of people than just those falling below a defined income threshold as well
as non-income dimensions of poverty. To focus solely on income without taking into account the
multifaceted nature of how people experience poverty and inequality can lead to short term
unsustainable polices and strategies. This is why economic growth alone is not sufficient to end
poverty and inequality or to benefit everyone and tackling vulnerability and promoting resilience
among individuals is paramount. A multidimensional approach to poverty and inequality is
required which highlights the effects of the compounded vulnerabilities on the lives of
individuals for the most strategic and impactful response and allocation of resources. The
promotion of inclusive and sustainable development policies that enhance well-being and enable
everyone to participate in and benefit from growth and redistribution is critical.
Multidimensional measures of poverty should however also account for national and subnational realities, employing appropriate strategies to build resilience and integrate
environmental objectives. To ensure success in the utilisation of multidimensional measures of
poverty, data collection needs to be improved and indicators of the many dimensions welldefined.
Caribbean context
There have been noticeable improvements in the overall quality of life in the Caribbean but
poverty and inequality continue to challenge development in the region. A number of reasons
have been proposed including labour market imperfections, class, status, power, education,
income and even a “culture of poverty” created by the colonial history of the region which set
the initial conditions of a highly concentrated distribution of income and an equally concentrated
and cheap labour supply influenced by a ‘dependency syndrome’ (Thomas and Wint). Despite
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this, there has been insufficient attention to understanding the nature and dynamics of poverty
and a reluctance by some countries to undertake surveys and improve data quantity and quality
as a prerequisite for designing effective poverty reduction programs. It is therefore imperative to
launch a comprehensive review of poverty reduction programs to improve targeting, ascertain
results, redesign for effectiveness and most importantly to ensure sustainability (Bobb 2013).
Since 1995 the Caribbean Development Bank (CDB), with support from the Canadian
International Development Agency (CIDA), the Department for International Development
(DFID) and the United Nations Development Program (UNDP), has been assisting Caribbean
countries in conducting Country Poverty Assessments (CPAs). CPAs provide the most current
information on living conditions in the region and creates a conduit through which citizens,
institutions and agencies can contribute their own perspectives on and solutions to poverty and
inequality. The objective of CPAs is to determine the characteristics, geographic concentration,
severity and causes of poverty and inequality, as well as propose possible solutions. They seek to
identify and analyse possible relationships between employment statistics in both the formal and
informal sectors and estimates of poverty, rural and urban poverty and macro-economic policies
and consequent structural changes in the society which continue to create and/or maintain
conditions of poverty and inequality. They combine quantitative and qualitative methods to
measure income and non-income poverty and estimates the level of inequality in income
distribution using the Gini coefficient.
The UNDP has also been carrying out work using the Multidimensional Poverty Index (MPI) in
the Eastern Caribbean. “The global Multidimensional Poverty Index (MPI) reflects the combined
simultaneous disadvantages poor people experience across different areas of their lives,
including education, health and living standards. If people are deprived in at least one-third of
ten weighted indicators, they are identified as multi-dimensionally poor.” (Oxford Poverty and
Human Development Initiative, 2015) The MPI is currently used in over 100 countries.
The Panel
During the Forum, panellists will explore strategies for improving approaches to measuring
poverty in the Caribbean context and addressing inequality and vulnerability. It is anticipated
that panel presentations and discussions would focus on the following:
1. Improving Measures of Poverty and Inequality
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Proposals on measures that sufficiently capture the multidimensional nature of poverty
and inequality and go beyond global, national and sub-national aggregates to reflect each
country’s situation and poverty characteristics with a view to informing targeted policies
that could address the multiple deprivations experienced by vulnerable groups.
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Approaches for measuring well-being across or within countries based on indicators
identified as essential for material living conditions and quality of life. A well-being
approach may elucidate the implications of excessive inequality and encourage policies
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for more inclusive and sustainable economic growth in both developed and developing
countries.
Measures that focus on the political and sociocultural domains of life with the aim of
strengthening social cohesion (OECD 2012a).
2. Improving data quantity, quality and availability and strengthen statistical capacities
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The importance of strengthening statistical capacity in the region, particularly the
implications of the introduction of new measures based on a broader definition of
poverty, deprivation, well-being, opportunity and empowerment and the need for greater
disaggregation at all levels.
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The opportunities presented by new technologies and new sources for data collection,
possibly involving new types of partnerships among national statistical offices,
universities, donor agencies, the civil society, private sector, etc.
3. Linking poverty and inequality with social cohesion
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Poverty reduction strategies that go beyond economic growth and promote inclusive
growth and redistribution to improve well-being, empowerment, participation and
resilience.
4. Integrating poverty and inequality reduction with environmental sustainability and natural
resource preservation
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The importance of integrating an environmental dimension in the fight against poverty
and inequality. Climate change, natural disasters and unsustainable consumption and
production patterns put added stress on the natural resource base which the world’s
population depends on for its survival. Increased environmental pressures and
competition for limited natural resources will make the poorest even more vulnerable.
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Poverty and inequality policies and solutions which recognise the intricate link between
poverty, growth strategies, environmental sustainability and natural resource
preservation.
5. Improving partnerships and financing for poverty and inequality reduction
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The importance of strategic partnerships and increased co-operation and collaboration
among stakeholders such as government officials, policy makers, multilateral and
regional institutions, civil society and the private sector.
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Given the reduced access of Caribbean countries to concessional funding, the need to
engage donor organizations in a new discourse around different modalities of assistance
to High and Upper Middle Income Countries seeking to address poverty and inequality.
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Works Cited
Alkire, S. and A. Sumner (2013), “Multidimensional Poverty and the Post-2015 MDGs”, OPHI
Policy Briefing, Oxford Poverty and HumanDevelopment Initiative, Oxford.
Annan, K. (1998, October). Poverty: an obstacle to human rights. Retrieved March 10, 2015,
from United Nations Department of Public Information:
http://www.un.org/rights/poverty/poverty5.htm
Bobb, Euric. 2013. The Reduction of Poverty and Inequality Opening Address to UWI’s
Conference on the Economy 2013.
ECLAC Secretariat. (2012). Middle-Income Countries: As structural- gap approach. Thirtyfourth session of ECLAC. San Salvador: United Nations Economic Commission for Latin
America and the Caribbean.
Foster, J., Suman, S., Lokshin, M., & Sajaia, Z. (2013). A Unified approach to measuring
poverty and inequality: Theory and Practice. Washington D.C.: The World Bank.
OECD (2012a), Perspectives on Global Development 2012: Social Cohesion in a Shifting
World, OECD, Paris.
Oxford Poverty and Human Development Initiative. (2015, January 7). The world's poorest
people don't always live where you'd expect. Oxford.
Thomas and Wint (2002). Inequality and Poverty in the Eastern Caribbean. Prepared for ECCB
Seventh Annual Development Conference 21-22 November 2002, Basseterre, St Kitts
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