Chronic Poverty Research Centre

CPRC Research Theme 5: Assetlessness, Low Returns and Inequality

• Introduction to Assetlessness, Low Returns and Inequality theme
• Key CPRC publications
• Contacts

Introduction to Assetlessness, Low Returns and Inequality theme

CPRC’s research theme on assetlessness, low returns and inequality seeks to study the different ways in which lack of assets, or low returns to assets, drives poverty and inequality in practice. We also examine what can be done to combat chronic poverty by targeting these areas.

Ownership of or access to material and human assets is a critical determinant of scope for upward mobility, and protects against downward trajectories and destitution, until eroded. Loss of assets, or lack of access to assets, can drive chronic poverty. Our understanding of assets is developed from the sustainable livelihoods framework, and we mean not just material or financial assets (e.g. land, or money) but also human (e.g. good health, education) and social assets (e.g. social status, political power).

Different assets are important in different situations. For example, in drought-prone agrarian societies, livestock represent a key strategy, as they multiply naturally. Loss of all stock means having to buy them at high post-drought prices. Exclusion from, or inability to own livestock is a severe disability in these communities, caused by structural indebtedness or gender, for example. Elsewhere, while land is still a basic asset for many of the rural poor, access to finance, education or social networks is central in other contexts – particularly in urban or urbanising societies. In those situations where households pursue multiple and diverse livelihoods in order to prosper, combinations of assets tend to be crucial.

Assets are also important because they allow access to other goods and services, such as credit. Political participation may in some contexts be more open to the ‘assetted’ – those with property, education etc - as assets act as status signals that grant ‘permission’ to speak in public. Levels of assets and their distribution within the household also matter.

However, it is not only possession of assets, but also their productivity and usefulness which has to be realised. Low returns to assets can maintain poverty. This is a function of the broader institutional, socio-economic and political environment. Education without jobs, or land without organised agricultural markets may provide for security, but do little for upward mobility – an endowment-opportunity mismatch. Similarly, one asset without another – land without education – may limit the degree of mobility (in this case through participation in the non-farm economy or more sophisticated agricultural markets). A particular concern of this research theme has been the geography of chronic poverty and low returns, and the existence of isolated rural areas in particular, where lack of access to markets and services may create ‘low return’ poverty traps.

For example, significant attention was given to asset redistribution in development policy between World War II and 1970, in order to counter the inequalities that were hampering development. Today there exists a significantly improved understanding of the way in which high inequality hampers economic growth. However, because of potential disincentive effects, asset redistribution remains largely off the development agenda, except through provision of education and health services – and even there ambitions have often remained modest over long periods, constrained by resources and elitism. By contrast, other forms of redistribution, such as land reform, are very much on the agenda of certain countries – not only in Southern Africa, but also, in different forms, in Southeast Asia and West Africa. There is now a clear task to bring redistribution back onto the international agenda in updated and useful forms, and in consideration of any disincentive effects. Indeed, fiscal policy is a critical determinant of the extent to which growth will benefit the chronically poor, and will be a strong focus of CPRC’s work.

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Key CPRC publications

Hulme, D. and McKay, A. (2005) Identifying and Measuring Chronic Poverty: Beyond Monetary Measures, CPRC-IIPA Working Paper 30.

Moser, C. and Felton, A. (2007) The Construction of an Asset Index Measuring Asset Accumulation in Ecuador, CPRC Working Paper 87.

Chimhowu, A. (2006) Tinkering on the fringes? Redistributive land reforms and chronic poverty in Southern Africa, CPRC Working Paper 58.

Osmani, S. R. (2006) When endowments and opportunities don’t match: understanding chronic poverty, CPRC Working Paper 78.

Quisumbing, A. (2006) Investments, bequeaths, and public policy: inter-generational asset transfers and the escape from poverty, paper presented to the “Concepts and Methods for Analysing Poverty Dynamics and Chronic Poverty” conference, Manchester, October 2006.

Woodhouse, P. (2002) Natural resource management and chronic poverty in Sub-Saharan Africa: an overview, CPRC Working Paper 14.

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Contacts

Andrew McKay, Theme Coordinator, Assetlessness, low returns and inequality
Tel 44 (0) 1273 678739

Department of Economics
Arts Building E, University of Sussex,
Falmer, Brighton, BN1 9SN
UNITED KINGDOM

44 (0) 1273 678889 (Tel)
44 (0) 1273 673563 (Fax)

http://www.sussex.ac.uk/economics

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