Bangladesh's poverty and Martin Ravallion

The two issues at the heart of economics are growth and equity, with which poverty is irrevocably entwined. Economists around the world have focused their research on growth and growth-related matters and policies. But it was Martin Ravallion who was among the pioneers of the much less traversed field of research pertaining to equity, income inequality and poverty. This Australian economist passed away on 24 December. His book, 'The Economics of Poverty: History, Measurement and Poverty' will remain as a beacon for researchers dealing with income inequality and poverty.

At the time of his death he had been the Edmond D Villani inaugural chair of economics at Georgetown University. Prior to that, he had been chief economist of World Bank's research department. He had been the president of The Society for the Study of Economic Inequality. He had received many awards including the Galbraith Award from the American Agricultural and Applied Economics Association in 2012.

Martin Ravallion was born in a poor Australian family. Given his experiences, he took the decision that he would not remain poor. Later in his career, he took the pledge to free the people of this planet from poverty.

He was aware that most economists did not support his view of life. He once quoted historian Max Hartwell, saying, that "economics is, in essence, the study of poverty." That is why he researched extensively on poverty and poverty eradication in developing countries. In 1990 he proposed a poverty line of one US dollar (now equivalent to 1.9 US dollars on the basis of the value in 2011). He and his colleagues at the World Bank measured poverty and the progress achieved on this basis. As the main co-writer of a report in 2008 along with others, he showed that the number of people living in extreme poverty in 1981 was 1.9 billion (one in every two), which came down to 1.4 billion (one in every four) in 2005 and this was the reason of global economic growth. At the same time he pointed out, however, that growth alone was not enough for poverty eradication.

He also said that if the fight against poverty was to be won worldwide, inequality in human development (primary education and health) would have to be eliminated and the poor must have access to credit for investments. That is why instead of declaring victory over poverty, he cautioned that if the present income inequality prevailed, over the next 15 years, despite economic growth, one billion people would not be freed from the shackles of poverty. Brought up single-handedly by his mother who was separated from her husband, Ravallion spoke of the influence of progressive social values on his life, particularly education services for the poor. He said he would not have been able to study without this assistance.

A research paper written by Ravallion became the basis of the World Bank and later the UN's determination of the target to eradicate extreme poverty by 2030.

Martin Ravallion researched on Bangladesh's poverty too. In his paper (co-authored by Binayak Sen), 'When Method Matters: Monitoring Poverty in Bangladesh,' published in the journal 'Economic Development and Cultural Change,' he questioned the method of measuring poverty in Bangladesh and gave guidelines to amend this. They pointed out that the so-called improvement in the state of poverty in the eighties was simply based on methodological errors and erroneous survey formats. They corrected the methodology and showed that till the mid-eighties while the degree, depth and acuteness of poverty had decreased, that did not prove to be sustainable later on. They also saw that in various studies, the reduction of urban poverty was more than the rural poverty--but such claims do not ring true. All their measurements saw rural poverty to be more than urban poverty and this had remained unchanged. The little improvement in the poverty situation in the eighties only benefitted the urban poor.

Other than poverty measurements, Ravallion and Binayak Sen's paper also pointed to the inaccuracies of Bangladesh statistical system. This has become even weaker in present times due to political pressure. Of the state of poverty is to be improved, first of all the errors in the statistical system must be fixed and this department must be freed of political interference.

The Covid-induced fall in economic growth, even negative growth and the subsequent unemployment, has led to an increase in poverty globally, including in Bangladesh. According to the World Bank, in 2020 alone, due to the Covid pandemic, 97 million people worldwide fell below the poverty line. It is estimated that due to the Covid pandemic, the state of poverty has fallen by three to four years.

In Bangladesh too, poverty has increased due to the pandemic. Before the outbreak of Covid, the rate of poverty in Bangladesh had been 20.5 per cent. According to a survey by the South Asian Network of Economic Modelling (SANEM), a non-government research institute, this rate went up to 42 per cent during the Covid outbreak. The percentage of ultra-poor has increased the most. This rate has tripled to 28.5 per cent at present.

The Covid outbreak put a dent in the drive against poverty. Hundreds of thousands of people fell below the poverty line anew. While Amartya Sen, Abhijit Banerjee, Esther Duflo and Michael Kremer won the Nobel Prize for their research in poverty, generally speaking research in income inequality and poverty lags far behind other areas of economic research. After all, the profit-making wealthy holders of capital, only lend their patronage to research that sings in praise of growth. But there is need for much more extensive research on poverty, such as corruption and poverty, autocracy and poverty, and such topics. But in the case of Bangladesh, first and foremost the method and design of collecting statistics must be accurate and free of political influence. Also, taking effective measures to eradicate poverty must be made focal to development initiatives globally and in Bangladesh. Only if that is done, will due honour be bestowed upon the memory of Martin Ravallion.

* Muhammad Fouzul Kabir Khan is a former secretary and economist.

* This column appeared in the print and online editions of Prothom Alo and has been rewritten in English by Ayesha Kabir