Few would dispute that ‘a world free from poverty’ is the overwhelming challenge of the 21^st century. The crucial issue is how to achieve this. In Just Give Money to the Poor:  The Development Revolution from the Global South (Kumarian Press, 2010), Hanlon, Barrientos and Hulme discuss a wave of new thinking on development that is sweeping across the South. Instead of relying on a large and expensive aid industry to find ways to ‘help the poor’, it is better to transfer money and resources directly to the households in poverty so that they are able to find effective the most effective ways to escape from poverty.

This is the premise behind social transfer programmes such as Mexico’s Oportunidades, Brazil’s Bolsa Familia, South Africa’s Child Support Grant, and India’s National Rural Employment Guarantee Scheme. They all provide regular transfers of money to households in poverty with the aim of improving their nutrition, making sure children go to school, and ensuring that expectant mothers have regular check-ups.

This does not rule out the need for investment in economic growth and basic services. Small transfers to very poor households help provide access to new economic opportunities and vital health and education services. Without such transfers, the costs of transport, school uniforms, medicines, and job search could well be prohibitive.

Social transfer programmes do not throw money from helicopters. They carefully select and monitor recipients, ensure they are well informed about objectives, and track outcomes. In Latin America, transfers are paid directly to mothers thus strengthening their voice within the household. The responsibilities of the government and the households are carefully discussed at registration.

Despite attempts by the aid industry to take credit for these initiatives, social transfer programmes are most often national responses to local problems. Brazil’s Bolsa Familia began as a municipal programme in Campinas in 1994/5 and is built on domestic learning and experience of what works to reduce poverty. India’s National Employment Guarantee Scheme, which guarantees one hundred days labour on demand to unemployed rural heads of household, also builds on a careful assessment of similar programmes in Maharashtra and elsewhere.  . Social transfer programmes have high set up costs and for this reason international assistance is important in low income countries. Nonetheless, sustainability and legitimacy requires domestic political support and finance in the medium term. Giving money to households in poverty is a ‘Southern project’, as the considerable diversity of programmes around the developing world demonstrates.

Important challenges remain, especially in low income countries lacking the capacity to design, deliver, and finance social transfer programmes. In many countries their institutionalisation is precarious. The existing social transfer programmes need to be seen as a first stage in the development of  strong and stable institutions,  able to protect poor and vulnerable populations in the South from the volatility and crisis of the global economy on. Acknowledging these challenges, the book makes the important point that knowledge on how to eradicate poverty is already freely available if only we care to learn from the South.

Armando Barrientos – Professor and Research Director, Brooks World Poverty Institute

In a recent article on This is Africa, Columbia Professor Jeffrey Sachs wondered if the world leaders would be “brave enough to invent new programmes and institutions that have the legitimacy and commitment to pull the world through this crisis to a fairer and more sustainable future”. A new architecture is the only path to the world of 2050, a world of cornucopia (food abundance) and eutopia (universal welfare). A new architecture is the only approach to building up new programs and institutions that have Sachs’ legitimacy.

Extreme poverty continues to perpetuate because we have failed to eliminate its causes. Extreme poverty is originated and perpetuated because developed countries have failed to reform in six areas that represent the Axis of Feeble, an Axis that has to be defeated in an intellectual war with Weapons of Mass Persuasion. The six components of the Axis of Feeble are agriculture, trade and labor rights, small arms trade, extractive industries, financial architecture and brain drain.

Past wars defeated the Axis Powers and current wars aim at defeating the Axis of Evil. Past and current wars had to identify and defy the enemy and the opposition forces to be defeated. The Axis of Feeble is maintained and perpetuated by the Pirates of Heartless Capitalism and the Bretton Woods Elites, who will use their propaganda tools to oppose a paradigm shift.

In the first part of his autobiography, the American diplomat George F. Kennan pointed out that “We of this generation did not create the civilization of which we are part and, only too obviously, it is not we who are destined to complete it. We are not the owners of the planet we inhabit; we are only its custodians”. The Axis of Feeble will not be defeated unless all custodians become passengers of a Journey of no return, and not simple spectators.

My forthcoming book may be appealing to the truly learned readers. We must all become passengers of the Journey of our lifetime. The Monfort Plan is designed having in mind every audience. It proposes new content with the ability to entertain every audience. It is through entertainment that the average citizen in Europe and North America can be educated in issues that are vital for the future of our planet and the humankind. It is through education that the average citizen can raise his or her level of awareness. Only if we, as a society, raise our level of awareness, will we welcome reform in the six components of the Axis of Feeble.

For decades we lived with an architecture that played its role, an architecture that has become a caricature of what it once was, a vintage architecture not designed for the challenges of the twenty-first century.

We live the best world we have ever inhabited. We are approaching our tipping point as a global society. We must become men and women of stature. I identified the One Hundred Expert Dreamers that will become the best team of experts that has ever been put together to serve the global public interest. With their combined wisdom and intellectual strength the Expert Dreamers will defeat the Axis of Feeble and the Pirates of Heartless Capitalism.

We are not the dwellers of the blue planet, only its custodians. We must recuperate the courage of the visionaries of the 1940s and 1950s who created an architecture that changed the world for good. The Expert Dreamers are the disciples of Marshall and Truman, of Clayton and Kennan, of Monnet and Schuman. The orthodox thinkers and the current political leaders condemned the imagination and creativity in the policy-making process to perpetuate in the cage of the orthodox. We must start living a life in full color. We must again love and dream. The Sleeping Beauty must wake up and embrace the forgotten continent. The American friends will fall in love, one more time, with the Sleeping Beauty.

It is time. It is our time. Let’s move ahead.

Jaime Pozuelo-Monfort is Author of The Monfort Plan (Wiley Finance, April 2010). More information can be found at http://themonfortplan.com

Earlier this week the film ‘Slumdog Millionaire’ won an extraordinary eight Academy Awards, including for best film and best director. Set in the teeming slums of Mumbai, India, ‘Slumdog Millionaire’ provides a moving account of a poor orphaned teenager’s quest for recognition and dignity, overcoming numerous obstacles en route to winning the grand prize on a lucrative game show, and in the process the heart of his true love. It’s a well-made and uplifting film; we applaud its success, and extend our sincere congratulations to all those involved in its production. But to the extent the film draws its moral force and emotional energy from its context, what can ‘Slumdog Millionaire’ teach us about slums? More generally, what are the strengths and limitations of cinematography as a medium for conveying complex realities about the causes and experience of mass poverty?

As with most successful films, ‘Slumdog Millionaire’ works to the extent it is able to tell a captivating story, in this case drawing on timeless themes of love and yearning, of taking great risks, and enduring injustice and overcoming discrimination, in order to realize one’s heart’s desire. For the central protagonist Jamal Malik, however, the stakes are raised even higher, given his lowly circumstances and lack of education, which make it not only highly unlikely that he will ever have the means or opportunity to extract himself from the squalor of the slum, but more importantly, that he is powerless to prevent his beloved Latika from being taken away, first by a slum pimp, and then by a crime lord. After years of searching fruitlessly for her, she is tantalisingly taken away from him again just as they are about to be reunited. Not knowing how to get back in touch with her, he tries out for the Indian equivalent of ‘Who wants to be a Millionaire?’, which he knows she will be watching. In an improbable—but ‘bizarrely plausible’—manner, Jamal overcomes the odds and wins the show, thereby reconnecting with Latika.

In the end, ‘Slumdog Millionaire’ is of course just a film, and makes no claim to be a work of social science or a ‘representative’ account of the causes and consequences of living in a slum. But for most western cinema-goers, however, such films—like ‘City of Joy’ and ‘City of God’ before it—are a rare chance to see a portrayal of the circumstances encountered by tens of millions of poor people in developing countries every day. To this extent, even if such films are primarily concerned with entertainment and profit-making in less than a two-hour timeframe—and mainly follow a neat, conventional and arguably quite conservative narrative arc of struggle and ultimate redemption that inherently appeals to emotion (as opposed to ‘empirical evidence’) and often works via crude individualistic juxtapositions (good guys vs. bad) —they arguably nevertheless offer some insight into the lives of others living elsewhere, which can only be a good thing. The question, then, is whether they can be said to convey an accurate picture of slum life.

In this regard, although we are far from being film experts, we have collectively spent many years studying slum life up close in Latin America, South Asia, and—to a lesser extent—the Caribbean. In our view, films such as ‘Slumdog Millionaire’—perhaps more so than any other medium—give outsiders a rare sense of the vibrant energy, frenetic pace and ‘ordered chaos’ of life among the poor in urban settlements. Carefully done, such films can provide instructive insights on the precarious state of many slum dwellers’ lives (i.e., the constant threat of conflict, illness, the confiscation of precious assets), of the immense influence wielded by the powerful, of the paradoxical role played by the police (simultaneously part of the problem and solution), and yet also the full range of emotions that the inhabitants of slums endure like any human being—from abundant joy and hope to relentless grief and enduring sadness. If these features seem contradictory, then that is just another feature of slum life. Good novels, such as Rohinton Mistry’s A Fine Balance, stress precisely these issues, but rely on the power of imagination to concoct scenes that are far removed from most readers’ own direct experience; a good film—even when its screenplay is adapted from a novel, as is the case of ‘Slumdog Millionaire’, based on Vikas Swarup’s Q & A—can convey that reality like none other.

Cinema-goers should not think, however, that films such as ‘Slumdog Millionaire’ provide a full account of why poor people are poor (‘it is fated’) or a basis on which to respond to it (‘get motivated, take a chance’). Unlike the questions on game-shows such as ‘Who Wants to be a Millionaire?’, the answers to questions pertaining to grinding urban poverty can’t sensibly be reduced to multiple choice options. The existence of slums is not merely the product of individual actions writ large, but large structural forces of industrialization, inequality, politics and migration writ small. How, why and the extent to which these forces play out in different regions, countries, and states is properly the subject of detailed historical and social scientific analysis. There is no single ‘answer’ as to what can be done to enhance the welfare of slum dwellers, but neither is social science mute or indifferent. Guaranteed work programmes, identity registration schemes, securing property rights, citizen report cards to enhance service delivery, micro-credit systems, innovative criminal justice facilities and the involvement of the poor in urban design are all responses that have made a constructive difference in the lives of slum dwellers, in part because they are more often than not context-specific responses to a deeply complex problem.

The success of ‘Slumdog Millionaire’ is a signature accomplishment for the British film industry, and should be recognized and celebrated as such. But it should also be encouraged and applauded as a form of artistic representation that raises peoples’ general awareness of how millions of poor people live. Such awareness is not only important in its own right but also because it is part of the process by which broad political constituencies for change are forged. The issue is thus not whether ‘Slumdog Millionaire’ has represented urban poverty ‘better’ than social scientific or policy-oriented analysis, but rather how different kinds of knowledge convey different kinds of issues for different kinds of audiences. A judicious integration of popular and formal representation can be the basis of both enlightening entertainment and solid public policy.

If you had to choose three words to sum up the future of ICT4D, they might well be “mobiles, mobiles, mobiles”. And the way to that future is being more clearly indicated as the promise of mobiles-for-development research comes to fruition; reflected, for example, in the recent 1st “m4d” international research conference.

But such research is starting to throw up some perplexing – even worrying – findings about mobiles. At its bluntest, such research suggests mobiles are doing more economic harm than good, and sometimes making poor people poorer. Let’s have a look:-

a) Kurt DeMaagd’s “Pervasive versus Productive” paper analyses country-level data on mobiles and national productivity as measured by GDP. He finds that, short-term, there is a negative association between investment in mobiles and GDP in developing countries, possibly because “mobiles represent a diversion of resources away from other productive uses”.

b) Kathleen Diga’s “Mobile Cell Phones and Poverty Reduction” dissertation (Ch.5) shows at the micro-level that some rural Ugandan households are sacrificing expenditure on purchased food (e.g. sugar, milk, flour) so they can pay for mobile airtime. This includes households that “admit to some days of hunger in order to maintain the mobile phone”. They are also diverting savings into mobile phone purchase and saving for airtime by foregoing attendance at social functions.

c) Hosea Mpogole, Hidaya Usanga and Matti Tedre’s “Mobile Phones and Poverty Allevation” paper at the m4d conference researches mobile use in rural Tanzania. “48% of respondents reported that they sometimes substitute important needs (e.g. education, buying food, and clothes) for mobile phone ownership/usage”. Modal monthly costs of mobile phone maintenance and use were US$10-20: around 30% of respondents’ monthly income. And, in a digital variant on the workload of water-carrying in rural Africa, many respondents were undertaking 3-7 kilometer walks 2-3 times per week in order to recharge their mobile batteries.

Very interesting research. To which one might offer four responses.

First, I find all three pieces of research to be credible. However, one should always mine into research methods: what exactly is being measured; exactly what questions are being asked, and what answers might respondents think they are being asked to give; what is the sample size; what assumptions are built into calculations; is the difference between correlation and causation recognised?

Second, we have research evidence of mobiles increasing incomes of the poor such as the studies on Keralan fishermen or Heather Horst and Daniel Miller’s work on mobiles in Jamaica or (from a mobiles-as-tools-of-production not tools-of-consumption perspective) studies of “umbrella people” and GrameenPhone operators. We also have evidence of mobiles saving costs for the poor e.g. work on the informal sector in Nigeria.

Third, there is a bigger picture that this research recognises. DeMaagd notes that, longer-term, mobile-associated GDP downticks seem to be replaced by upticks as “learning and integration with business processes” take place. Diga echoes this macro-level explanation at the micro-level: households see short-term sacrifices as investments that will provide longer-term security and opportunity.

Fourthly, we need to explain a surprising finding in Mpogole et al’s work. Less than 15% of mobile phone owners interviewed stated that the benefits of owning a mobile phone justified the costs. Um . . . so if you believe that guys, why on earth do you own a mobile?

Diga’s research offers some insight but we can get much more from Harsha de Silva, Ayesha Zainudeen and Dimuthu Ratnadiwakara’s paper (earlier version as: “Teleuse on a Shoestring“) that looked at mobile use in poor communities in five Asian countries.

The most negative explanation is that mobiles represent one more step in the ingestion of the poor by the consumer society. They are sacrificing food for (potentially economically-valueless) status and an identity of modernity, youth, urbanicity, etc that they believe mobile ownership brings.

Mobile owners may also be associating questions about financial benefits with direct, enterprise-based income generation via mobile: something that only a few achieve as yet. They may thus set aside from their cost-benefit calculations the so-far key financial impact: savings from substitution of journey costs.

And finally, most research tells us that the poor are using mobiles for social more than business purposes. This, again, they may set aside from their cost-benefit calculations. Yet a) the social benefits, such as knowledge that help can be at hand in an emergency, are often highly rated when asked about directly; and b) there is no easy separation in reality of the social and the economic: social networks are often utilised by the poor to maintain or generate financial flows such as remittances or help during a crisis.

I think my overall conclusion (apart from the obvious: more research needed) would be two-fold:

- Setting aside the possibility of irrationality, the significant amounts being spent by the poor on mobiles indicate that phones have a significant value to the poor. But that value is some rather complex mix of the financial, the economic, the psychological, the social and the symbolic.

- For some poor consumers, the financial benefits of mobiles outweigh the costs. For some poor consumers they do not. But we have long known (e.g. via the livelihoods framework) that “poverty” is not just about money and, hence, that poverty interventions and tools can usefully target more than just financial benefits.

What we see here, then, is not an argument to try to slam on the mobile brakes. At most, we have an argument to invest more in sharing or building innovative uses of mobiles that are more directly connected to income generation.

An excellent set of pictures on the theme of climate change in Bangladesh can be seen at the BBC here.

BWPI will be undertaking with BRAC a new research programme on climate change and its implications for poverty in Bangladesh. Watch this space over the coming months. In the meantime check out the BWPI and CPRC working paper series for more on Bangladesh.

If you are in New York you can catch it at the Lincoln center this Wednesday (3 December).

In the meantime, check out Joe’s interview with Alex Jones on YouTube on his book The Three Trillion Dollar War: the True Cost of the Iraq War, with Linda Bilmes. And Joe on the sub prime crisis on CNBC.

“… donor countries can talk the talk but not walk the walk. According to the Unesco study, the aid required for even the most basic primary education provision in poor countries is US$11 bn (£7.2bn) a year. In 2006, spending amounted to around $4bn, leaving a funding gap of $7bn. To put that figure into context, it is around 10% of what Britain spent this autumn recapitalising the banking system”.

Maybe they will walk the walk at the UN Financing for Development summit now underway in Doha. But I wouldn’t hold your breath. “When financial systems fail, the consequences are highly visible and governments act,” concluded UNESCO’s Director-General Koïchiro Matsuura. He added “When education systems fail the consequences are less visible, but no less real”.

I would add that education is the only investment you can be sure of getting at least some return on – provided it’s of good quality and children complete a minimum of 4 years primary education. Well-educated people earn more in the labour market, and find it easier to absorb new technologies and methods when they run micro-enterprises and farms. Education is a means to break the inter-generational transmission of chronic poverty (see this CPRC study for Bangladesh).

And even if it didn’t raise income much – which might be the case in economies that are growing only slowly – it certainly improves health status, especially of children, when mothers are educated. Educated mothers are 50% more likely to immunize their children than mothers with no schooling (go here). Gender inequality in education has high costs for both the family and society (see this IFPRI study).

So the chronic underfunding of education reminds me of that old quotation: if you think education is expensive, try ignorance.

The last quarter of 2008 has seen a lot of talk-talk on development finance. The long-awaited High Level Forum on aid effectiveness was held in Accra in September as well as the UN’s high level event on the MDGs in New York. Calling an event ‘high-level’ lets the international community claim that progress has been made – just by getting senior people together in one place.

What will Doha bring? Can it make headway against the very strong currents now running through the global financial system? Will rich country donors be able to afford aid? On this and other issues see my WIDER Angle article with George Mavrotas – Development Finance: New Opportunities for Doha. We explore the topic further in our new UNU-WIDER book Development Finance in the Global Economy: The Road Ahead (Palgrave).

Remember the issue is whether foreign aid to Uganda is deterring export production via a “Dutch Disease” effect. If so, then aid is having perverse effects, hindering rather than helping economic growth.

How does this work?

Short explanation: A capital inflow like foreign aid raises domestic demand. This pushes up domestic prices and, if the exchange rate is not fixed by the government, the currency tends to appreciate as well (a shilling buys more dollars). Hence: exporting is less profitable and imports are cheaper (putting pressure on domestic producers of import-substitutes – for example domestic food crops suffer competition from cheaper food imports). Result: economic growth falls.

(Long explanation: The money is spent on two types of goods and services. First, non-tradables, that is items whose prices are mainly determined by domestic supply and demand. The price of a haircut in Kampala for example. Haircuts aren’t internationally traded. Second, tradables. These are goods and services whose prices are driven by international markets. The price of Uganda’s coffee, for example (Uganda is a ‘price-taker’ in commodity markets: some countries are big enough exporters to affect world prices – Saudi Arabia and oil, for example). A demand expansion caused by a capital inflow tends to push up the prices of non-tradables more than tradables, because the former are less-responsive (more inelastic, as economists say) in supply. The ratio of non-tradable prices relative to tradables prices rises, making it more profitable to produce the former. If the exchange rate is flexible – i.e. the central bank doesn’t fix it as a matter of policy – then it tends to appreciate as well. This adds to the appreciation of the real exchange rate that is caused by the rise in domestic prices as non-tradables prices outpace tradables prices. Result: people give up producing tradables such as coffee and move into the non-tradables sector, and growth falls).

Aid is not the only capital inflow that might cause this. The term Dutch Disease was first coined (and is most often used) to describe the impact of a natural resource windfall (natural gas in the case of 1970s Netherlands). Nigeria and other oil exporters suffered catastrophically from Dutch Disease in the 1970s when oil prices boomed (resulting in a severe contraction in Nigeria’s agriculture, a highly tradable sector).

However, much depends on what aid (or oil revenue) is used for. If it finances infrastructure construction, and if this is the right kind of infrastructure, then aid will have a supply-expanding effect. This could be of sufficient scale to offset any Dutch Disease effect (or the latter might be evident for a while until the infrastructure is built and then productivity effect kicks in: see Chris Adam and David Bevan).

So much for the theory. What about Uganda? The country has certainly had a large injection of aid, which has a big budgetary impact (see Martin Brownbridge and Emmanuel Tumusiime-Mutebile). An IMF study, by Mwanza Nkusu argues that Dutch Disease does not necessarily occur – especially when the economy has unused capacity (which is typical of countries like Uganda recovering from civil war). So the academic jury is still out.

What does recent data tell us? Economic growth was just under 10 per cent over 2007-08 according to a recent IMF staff mission to Uganda. Exports grew by 50 per cent over the same period. The Fund expects both to fall – the result of the global financial crisis that is weakening commodity prices (go here). Uganda is dealing with high inflation (core inflation is 14.5 per cent) – but this is more the result of the run-up (until recently) in global energy and food prices. The shilling has depreciated, not appreciated, recently. So, no indication of aid having Dutch Disease effects: the shilling is down, not up, and exports are up, not down.

But certainly the economy faces a tricky adjustment as it responds to the global economic shock of the last 6 months (true of all low-income, primary-commodity dependent, economies).

Whatever the other effects of aid on Uganda (whether it is being well spent, whether it targets the poor effectively etc.) there does not seem to be a Dutch Disease effect – at least recently. Perhaps more worrying is the potential Dutch Disease effect of the oil revenues that come on stream next year. If Uganda can manage oil well then it will be the first country in Africa to do so. Now that would be an achievement.

Tony Addison is Executive Director of the Brooks World Poverty Institute, University of Manchester.