The Failure of Financial-Economic Policies to Reduce Global Poverty

Abstract

The worldwide problem of poverty had amounted to such an extent that the international development organisations designated the highest priority to the eradication of poverty within the context of achieving sustainable development around the globe. While many world leaders, experts, and scientists are dreaming of a world without poverty, there are widely differing notions about the various dimensions of poverty in both the developed and the developing nations. A growing number of authors are now recognising that the financially-based ‘economic development approach’ as implemented by the World Bank does not reach the poor and marginalised people. Also, despite the focus of the United Nations and its agencies on realising poverty reduction through a more people-centered ‘human development approach’, progress still proceeds unevenly as effective participation at the local levels is lagging behind. In this context, an emic—instead of an etic—perspective in development is proposed in order to realise participatory development at the community level. Many had hoped for microfinance to become the new ‘poverty reduction tool’, but reality has shown that its inherent capital-based commercialisation of MFIs, NGOs and rural banks has rendered microfinance in many cases an opposite means of further marginalising the poor, especially in developing countries. This Chapter further elaborates on the failure of microfinance and financial inclusion to reduce poverty, and by linking up to the recent Sustainable Development Goals of the United Nations, it underscores the need for alternative, emic-oriented approaches, as provided by the newly-developed strategy of Integrated Community-Managed Development (ICMD).