The Sustainable Development Goals Part 2

Higher knowledge

20130728rawle's business pageIn the column of last week, the 17 goals for sustainable development were identified.  This week an attempt would be made to understand what those goals mean for a country like Guyana.  As the government proceeds with the development of the country, it must take account of the collective demands of the international community to achieve sustainable development.  While sustainable development is concerned with the survival of the planet, it starts with putting people in a position to protect and take care of themselves.  People destroy resources around them to survive.  At a basic level, they disturb the earth or the trees or animals to eat.  They destroy the environment to provide housing and fire to create a warm space when it is cold.  Possession of higher knowledge enables people to extract resources and live in relative comfort.  Sustaining life and development therefore starts with achieving a healthy balance between knowledge and nature.

Dependable public institutions

Getting to that point is not easy in a world of scarce resources and increasing and competing demand for those resources.  The point from which most people start varies with knowledge and how to gain access to the scarce resources.  Everyone starts with the basic need for food, clothing and shelter, even if they do not get all three at the same time.  Lack of access to any of the three basic needs could spell doom for a person.  It is not surprising therefore that the first of the goals of sustainable development deals with eliminating poverty in all its forms, and the second calls for the elimination of hunger.  Poverty is the bridge that must be crossed for anyone to move from destitution to being well-off, from threatening the planet to how to save it.  How it is done is left to each government, but experience has revealed that open markets, fair trade, modern infrastructure, capable human resources, and good governance are essential ingredients for achieving growth and sustainable development.  It gets people more income and at lower prices.  By implication, it also means that governments are expected to have good regulatory practices and dependable public institutions for the effective and proper management of their societies.

Perspectives of poverty

Discussing poverty will help one to understand the production needs and economic development strategy that ought to be pursued by government.  Normally, poverty is discussed from two perspectives.  One is absolute poverty which refers to the inability of someone to meet his or her basic needs.  Under a system of capitalism, it means that the person does not have enough money to feed, clothe or house himself or herself.  The market determines who is rich and who is poor.  It requires people to have income and for the incomes to be able to match prices.  Where prices exceed income and there is no access to financing, people are forced to go without or engage in desperate acts of survival.  Absolute poverty does not go away for as long as people do not have income or are unable to pay the prices asked of them.  This condition will remain the same, even if society is becoming more prosperous, unless something is done about the causes of poverty.  Clearly, employment at a liveable wage, with inflation kept in check, is critical to eliminating absolute poverty.

While good fiscal and monetary policies will help to eliminate absolute poverty, it does little for relative poverty.  Relative poverty refers to the comparative condition of persons within the society.  It measures the economic status of a person vis-à-vis that of other persons within the same society.  It is not the market that influences relative poverty, but the size of income.  A person is only poor in so far as he or she has less money than another person.  But the international community has been expressing concerns about extreme poverty.

Extreme poverty is the inability to meet basic consumption needs and to respond to certain challenges on a sustainable basis. It can therefore be regarded as the prevalence of certain conditions of absolute poverty.  In a perspective put forward by the United States Agency for International Development (USAID), people who live in extreme poverty lack both income and assets.  However, as will be seen further on in the case of Guyana, it is not the mere lack of assets that matter, but the lack of assets appropriate to the economic, social and environmental conditions in existence at the time.  USAID expresses the view too that such persons often experience interrelated, chronic deprivations, including poor health, limited education and marginalization or exclusion.  Further, when severe economic setbacks (including natural disasters or illnesses) occur, people living in extreme poverty lack the resilience to cope with them.  Extreme poverty, in effect, is a condition of helplessness.  It is absolute poverty at its worst.

Income measure

To understand what Guyana must do to meet its obligations under the sustainable development challenge, one must inquire as to where Guyana is today with respect to the elimination of poverty.  Though the determinants of poverty are much wider than income, the international community relies on the income to determine progress in reducing poverty.  At the start of the MDGs period, the international community made use of the World Bank’s dollar-value income measure of poverty.  Initially, this figure was given as US$1.25 per day per person.  Any person earning or having access to income below that threshold was considered to be in extreme poverty.  The World Bank has since adjusted this figure to US$1.90 to take account of price changes and other economic factors.  Today, therefore, a person who earns less than US$1.90 would be thought of as living in extreme poverty.

The premise for making a comparison would be the minimum wage paid in Guyana.  The minimum wage today in Guyana is $55,000.  This translates into US$1.92 each for a family of four or US$1.54 for a family of five persons.  A family with more than four persons in Guyana whose income does not exceed the minimum is in economic trouble.  There is need to ascertain how many persons are in such a situation.  When Guyana started its push to reduce poverty as part of its obligations to achieve the Millennium Development Goals (MDGs), the government of the day reported that 35 per cent of the population was living in poverty.  It further reported that 19 per cent of the population was living in extreme poverty.  According to the 2002 population census, cases of poverty or extreme poverty could be found in 78 per cent of the Neighbourhood Democratic Councils (NDCs) of the country.  Though all regions of the country were affected, the highest incidence of poverty was reported to be in the rural and hinterland areas.

 

Causes of poverty

Poverty in Guyana is linked to several factors.  A major observation is that poverty is connected to unemployment and in cases where people work to the type of work a person does.  The Poverty Reduction Strategy Paper prepared in the previous decade indicated that people who were unemployed were likely to be poor.  The conclusion was reached too that persons involved in certain types of agricultural activities and those performing manual labour in Guyana were likely to be poor.  The agricultural producers were not necessarily persons without assets.  It simply meant that the assets that they had were either inadequate or insufficient to generate enough money to exclude them from poverty.  Without access to financing, their cash flow would always be lacking.

So, even though persons were employed, their income from agriculture and manual labour was not enough to take them over the poverty line.  They possessed income-generating assets which were insufficient to prevent them from being labelled as poor.  Part of the problem was linked to the amount of output they could produce and the prices that they could receive for their produce.  Their economic circumstances were worsened by the size of the economic household that depended on the meagre income that farmers generated.

Poverty in Guyana was also linked to geographic location.  The highest incidence of poverty was observed in hinterland communities.  This condition was attributed to isolation from significant economic activities.  Economic size, distance and inaccessibility combined to limit the amount of meaningful economic activity that could occur in many hinterland communities.  The lack of good education was also seen as a factor giving  rise to poverty in Guyana.  According to the PRSP, less than 15 per cent of the heads of poor households had completed a secondary or higher level of education at the time.  Educational attainment in rural areas, where many of the poor are located, was reported to be low. In the rural coastal regions, less than 14 per cent of household heads had achieved a secondary or higher level of education as compared to 23 per cent in Georgetown. The situation was worse in interior regions where less than 13 per cent of poor households had any kind of secondary education.

Low income limits the access of people to goods and basic services unless government sees the need to ensure that every citizen has access to important education, health, water and sanitation services.  When one considers what it takes to install a power generating plant to serve a small population scattered over a large area of land, conventional approaches to remedying the situation might not work.  Access to electricity is important for many economic and social activities.  Many hinterland communities do not have electricity-generating plants simply because it would be uneconomical to place assets that require large capital expenditures in sparsely populated communities.  As a result, the use of alternative energy technology becomes important in the strategy to eliminate poverty.  Such technology could play an important part in facilitating education and increasing the number of persons who possess enough skills to earn a liveable wage.

Exclusion

Addressing the issue of nutrition is important as is providing access to good drinking water and sanitation services.  These are issues that the government is required to address.  The fundamental basis for doing so is the production structure.  The market with its price mechanism or invisible hand often excludes many people with insufficient income from meeting their basic needs.  But the exclusion is not only based on market forces.  It also includes discrimination on the basis of race, gender and other social factors. This issue, along with that of the production structure and the supporting activities, will be discussed in the final part of this article.

20160605lucas

(To be continued)

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