Why Poverty Persists

Why Poverty Persists

Poverty Dynamics in Asia and Africa

Edited by Bob Baulch

This edited book analyses what traps people in chronic poverty, and what allows them to escape from it, using long-term panel surveys from six Asian and African countries. The distinguishing feature of these studies, which were commissioned by the Chronic Poverty Research Centre, is they span longer periods or have more survey waves than most developing country panels. This allows a detailed account of the maintainers of chronic poverty and drivers of poverty dynamics. Many of the studies (from Bangladesh, Ethiopia, Nepal, Pakistan, South Africa and Vietnam) are written by leading development economists, and all pay careful attention to the difficult issues of attrition, measurement error and tracking. The book’s comparative perspective highlights the common factors which cause people to fall into chronic poverty and allow them to break-free from it. A number of promising policies and interventions for reducing chronic poverty are identified.

Chapter 4: The Determinants and Consequences of Chronic and Transient Poverty in Nepal, 1995–96 to 2003–04

Saurav Dev Bhatta and Suman K. Sharma

Subjects: development studies, development economics, economics and finance, development economics


Saurav Dev Bhatta and Suman K. Sharma INTRODUCTION As in most other developing countries, poverty reduction strategies and policies in Nepal are primarily informed by periodic cross section household survey data that provide estimates of static poverty measures and poverty profiles. Interestingly, however, the focus of these policies appears to be chronic or long-term poverty – poverty that is not necessarily reflected in cross-sectional survey data. While estimates of poverty at specific points in time might correlate with chronic poverty to some extent, such estimates are more representative of poverty that is transient in nature. Hence, an issue of interest is the extent to which there is an overlap between the factors that explain transient and chronic poverty. If the determinants of chronic and transient poverty are quite different, then different policy measures would be required to address these two aspects of poverty. An understanding of common determinants, on the other hand, could point to poverty reduction strategies that apply to both poverty types. In Nepal, a rigorous analysis of the determinants/correlates of chronic and transient poverty has never been performed although a nationally representative panel of 962 households is available for 1995–96 to 2003–04. Hence, the main objective of this study is to explore the differential impacts of various poverty determinants on chronic versus transient poverty at the household level in Nepal, with a special focus on three explanatory factors: wealth, human capital and ethnicity. We also examine the impact that the decade-long Maoist insurgency, which was one...

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