Economic Policies and Poverty Reduction in Asia and the Pacific: Alternatives to Neoliberalism

Abstract

Since the mid 1990s, poverty reduction has emerged as the overriding objective of the international development community. All policies are now evaluated from a poverty reduction perspective as a well as a growth perspective. This is now as true of economic policies as social policies. Consistent with this approach, the Bretton Woods Institutions require low-income developing countries to formulate Poverty Reduction Strategy Papers (PRSPs) that, among other objectives, would foster “pro-poor growth”. This is a variant of the 1970s approach of “growth with equity”, but with a sharper focus on those in a society who are most deprived. However, the neoliberal, ‘equity-blind’ economic policies of earlier structural adjustment programmes have been imported into PRSPs with little change, except for the addition of an anti-poverty rhetorical flourish. These policies are, regrettably, neither pro-poor nor even pro-growth. Consequently, PRSPs have been obliged to deploy a broad array of targeted social policies to mitigate the adverse impact of inequalityintensifying, growthimpeding economic policies. Had growth been more “pro-poor”, namely, both more rapid and more equitable in its impact, the extensive PRSP panoply of social policies would not be necessary. If “pro-poor growth” should be a primary objective of public policy, how is it defined? The concept incorporates both equity and growth components. “Pro-poor growth” should improve not only the “absolute” conditions of poor households (by raising their level of real incomes) but also their “relative” conditions vis-a-vis nonpoor households (by reducing inequality between the poor and nonpoor). This is difficult enough to accomplish under normal capitalist patterns of development but doubly difficult when the governing economic strategy is neoliberal. During the recent period of domination by neoliberal economics, growth has been slow and pro-rich. In light of these problems, progressive economists have intensified their critical examination of the impact of neoliberal economic policies on growth and poverty reduction. This effort has been motivated by three major concerns: 1) determining,