From Poverty Traps to Indigenous Philanthropy: Complexity in a Rapidly Changing World
Authors: Jarrett Stephen 
Published: September 2013

Poverty persists around the world and is exacerbated by growing inequality especially within countries. The majority of the poor are ‘trapped’ in specific rural and urban localities in countries now classified as middle‐income where domestic policy and resources are not sufficiently focused on poverty and where international aid is not significant. The majority of those who manage to move out of poverty report that they achieve this through their own initiative, adapting to changing circumstances. Poverty must be treated as principally domestic and local, with the poor as the principal actors in its reduction.

Poverty is characterised by its multidimensionality, spanning across a number of factors that can be broadly related to education, health, finance and environment, and which can create poverty traps from which the poor have difficulty in escaping. The dominance and interconnectedness of any of these factors can differ between poverty traps, as can the effect they have on different population groups, with young children and girls being particularly vulnerable. Traditional coping mechanisms help alleviate some immediate aspects of poverty in some populations, but with increasing urbanisation they are weakening considerably, and a greater ‘monetisation’ of help is emerging. More modern coping mechanisms have come into play, not just support from the diaspora, but also help mechanisms being set up by the growing number of wealthy and influential indigenous philanthropists in developing countries, who are on the ‘winning side’ of growing inequality.

Poverty is closely aligned with deficits in assets, where assets are broadly defined as physical, human, infrastructural and institutional, and originate in the household, community, private sector and the State at local, regional and national levels. The State is often unable or unwilling to deal with poverty, given the difficulty and cost of reaching the poor, and the low political return. Publicly‐run services, such as health and education, which are central to building human capital, are notoriously ineffective, with public workers underpaid and conducting private business on the side, leading to the poor, especially in middle income countries, using the private sector for many of their needs. Public works programmes and social protection measures do not have significant penetration amongst the poor in many countries, and the granting of entitlements to specific population groups is of generally low coverage. The rapid spread of mobile phone access, even within poorer populations, is a powerful new asset to be taken into account, both in terms of immediate access to information and also as a channel for financial flows, both of which can enhance livelihoods.

The poor, trapped in poverty, the State, deficient in its response to poverty, and the evolving development environment, spurred by changing inter‐country alliances, rapid technological change and the increasing activity of the private sector and indigenous philanthropy, all demand a new way of analysing solutions to poverty. This has to be context‐specific and with the engagement of all stakeholders, including the poor themselves, throughout the entire process of decision‐making and action. Analysis using complexity science, which is potentially better able to address the multidimensional framework of poverty, should be added to the more traditional and often sectoral linear cause‐effect analyses. Methods and tools generated from complexity science offer an interdisciplinary approach to reaching emerging solutions based on a multiplicity of factors facing the poor in any given locality, using local knowledge and accounting for patterns of change that are taking place. Pluralism is considered key to analysing poverty and identifying and monitoring solutions, and applies as much to the State as it does to the for‐profit and not‐for‐profit private sector interventions.

A central question to be answered in analysing emerging patterns will be how to increase the poor's physical (financial) and human (labour) assets to enable their effective access to infrastructural (services) and institutional (political) assets. The State, through its governmental bodies and inter‐governmental allies, will have the key responsibility of ensuring the availability of necessary and appropriate infrastructural and institutional assets, and providing entitlements to specific populations, aimed at reducing inequality of access and opportunity. The private sector, both for‐profit and not‐for‐profit, will play a significant role in building physical, human and infrastructural assets, both through contracting with the public sector and through indigenous and global philanthropy.