Economic Research Forum (ERF)

Fighting poverty: innovative policy lessons from the second Arab Multidimensional Poverty Report

1242
Poverty is a complex and multidimensional policy challenge. Understanding the interconnected causes and effects of poverty is a critical first step for policy-makers trying to improve people’s lives. This column presents an updated model for measuring deprivation levels in the Arab region, and proposes a series of policy suggestions to improve economic and social outcomes. Put simply, any reforms in the region should be based on a joined-up policy approach, built on an understanding of the interplay between different aspects of poverty and inequality.

In a nutshell

Poverty is a complex and interconnected policy challenge which requires a broad suite of interventions.

Policy-makers in the Arab region should recognise that reforms must take into account the various ways in which different dimensions of deprivation interact with one another.

Innovative policy solutions should rest on an understanding of this complexity, while acknowledging that there is no ‘one-size-fits-all’ solution for fighting poverty in the Arab region.

There are many factors that affect poverty levels. This makes measuring poverty challenging, and means that a variety of methods need to be used. Important as it may be, the money metric approach to poverty is a narrow lens to view such a complex and multidimensional phenomenon. Recognising the importance of this insight, Arab countries have commissioned the League of Arab States (LAS) and several UN agencies to prepare the Second Arab Multidimensional Poverty Report. The report adopts a regional Multidimensional Poverty Index (MPI), which reflects more directly the experiences and multiple overlapping deprivations of the poor in Arab countries. To design effective policies to combat poverty, accurate measurement is a crucial first step.

The report’s method is backed by institutions around the world. Among the proponents of the multidimensional approach is the Oxford Poverty and Human Development Initiative, which, along with ESCWA, have proposed a revised Arab MPI that builds on the conceptual framework used in the first report and embraces Amartya Sen’s capability approach, all while being guided by recent developments in multidimensional poverty research. As researcher’s understanding of the origins and effects of poverty change, so too should the methods for analysing potential policy interventions.

Better measurement is the route to better policy, and this gives governments in the Arab region the opportunity to keep improving people’s lives. The revised MPI offers a more regional perspective. This helps to better capture the manifestations of moderate poverty in middle-income Arab countries. To this end, the new method focuses on moderate levels of deprivation in its structure, dimensions and indicators. In terms of the index’s structure (and based on a wide consultation process), the main innovation in the revised Arab MPI is its assessment of poverty in both material and social capability spaces, giving both pillars equal importance. Social capabilities include health – child mortality, nutrition and early pregnancy – as well as education – school attendance, age-schooling gap and adult education. Material capabilities include housing, access to services of water, sanitation and electricity, and assets for communication, mobility and livelihood. Arab countries have witnessed progress in social wellbeing but less so in material and living-conditions wellbeing, hence this normative stance. This is reflected in the adoption of the equal weighting scheme between the two pillars.

Poverty levels across Arab countries with different income levels

The report has some good news and some bad news. The good news is that many middle-income Arab countries managed to reduce multidimensional poverty over the past decade (Figure 1). The bad news is that one in four people in these countries was multidimensionally poor in 2019. The report also finds that educational deprivations are the most important challenge facing these countries, followed by deprivation in living conditions (including asset ownership indicators which are closely related to household income and expenditure). The other piece of bad news is that multidimensional poverty is significantly higher in less developed countries (or LDCs), especially in conflict-affected countries within the Arab region.

Figure 1: Multidimensional poverty headcount ratio in Arab middle-income countries over time

Source: Second Arab Multidimensional Poverty Report (ESCWA, LAS, UNICEF, UNDP, UNFPA and OPHI, 2023)

Innovative policy solutions

Three things need to be done. First, policy-makers need to recognise that actions to reduce income poverty will not always reduce multidimensional poverty. So, reducing poverty faster will mean playing it smart with public policy. Right now, many Arab countries focus on making cash transfers to the income poor as a main pillar of their poverty reduction strategy. But this needs to change. Interventions need to target income and multidimensional poverty at the same time.

Can this be done? Yes, but it won’t be easy. For example, cash transfers might help a poor family headed by a single mother make ends meet. But if the state also provides her with access to a close by and affordable nursery, this might empower her to find a job with higher and more sustained income. If that nursery offers a subsidised balanced diet to her child, this might significantly reduce the possibility that the child will suffer from malnutrition or stunting. So, poverty reduction efforts, whether income or multidimensional, require a concerted and coordinated effort from multiple line ministries and partners, not just one entity. A joined-up approach is vital.

Second, in some countries national efforts alone will not be enough. In Arab LDCs and conflict-affected countries, additional regional and global support is necessary. The good news is that the Arab region has enough resources to foot the bill. According to a recent ESCWA paper, the resources required to close the poverty gap are miniscule when compared with the region’s income and wealth. But eradicating poverty is not only a problem of finding financial resources. There are other critical factors to consider.

This brings us to the third and final recommendation. Arab countries need to reform their governance systems to make their public sectors more efficient in delivering the kinds of support that are needed by the poor. This means (among other things) having more effective delivery of public schooling and health systems, better infrastructure and communications systems, and better targeted public investments. This will enable the private sector to thrive and generate more jobs for the poor. No doubt such institutional reforms will be the toughest part of any policy agenda, but they are necessary to achieve the UN’s Sustainable Development Goals (SDGs).

Finally, it should be noted that unfortunately there are no ready-made international fixes and recipes for making these policy recommendations work. The Arab region will have to draw on home-grown solutions that build on centuries of accumulated wisdom. Fortunately, the region has significant untapped potential, including educated, youthful and passionate future leaders. The challenge is to transform Arab economies and governance systems in a way that allows these potential leaders equal opportunities and spaces for innovative approaches to fighting poverty. This will not only reduce income poverty but will also ensure the region’s trend of improvement in terms of multidimensional poverty reduction is sustained.

Notes:

The Second Arab Multidimensional Poverty Report was prepared by the League of Arab States in partnership with the United Nations Economic and Social Commission for Western Asia (ESCWA), the United Nations Children’s Fund (UNICEF), The United Nations Development Programme (UNDP), the United Nations Population Fund, (UNFPA), and the Oxford Poverty and Human Development Initiative (OPHI).

Most read

The economics of Israeli war aims and strategies

Israel’s response to last October’s Hamas attack has led to widespread death and destruction. This column outlines the impact thus far, including the effects on food scarcity, migration and the Palestinian economy in both Gaza and the West Bank.

Happiness in the Arab world: should we be concerned?

Several Arab countries have low rankings in the latest comparative assessment of average happiness across the world. But as this column explains, the average is not a reliable summary statistic when applied to ordinal data. The evidence from more robust analysis of socio-economic inequality in happiness suggests that policy-makers should be less concerned about happiness indicators than the core development objective of more equitable social conditions for citizens.

It’s too early to tell what happened to the Arab Spring

Did the Arab Spring fail? This column presents a view the consensus view from ERF’s recent annual conference in Morocco: careful analysis of the fundamental drivers of democratic transitions suggests that it’s too early to tell.

Arab regional cooperation in a fragmenting world

As globalisation stalls, regionalisation has emerged as an alternative. This column argues that Arab countries need to face the new realities and move decisively towards greater mutual cooperation. A regional integration agenda that also supports domestic reforms could be an important source of growth, jobs and stability.

Reformed foreign ownership rules in UAE: the impact on business entry

In an effort to stimulate economic growth and diversify the economy, the government of the United Arab Emirates has recently implemented regulatory reform that allows 100% foreign ownership of companies operating in the country. This column examines the implications of the reform for entry of new firms in Dubai, using unique data on new business licences in the emirate.

Self-employment in MENA: the role of religiosity and personal values

How important are individual’s values and beliefs in influencing the likelihood that they will embrace the responsibilities, risks and entrepreneurial challenge of self-employment? This column presents evidence from 12 countries in the Middle East and North African region on the roles of people’s religiosity and sense of personal agency in their labour market choices.

Gender differences in business record-keeping and planning in Iraq

Only one in every ten informal businesses in Iraq is led by a woman. Yet as research summarised in this column reveals, those businesses are more likely to set budgets and sales targets, and to keep business records. This may be evidence of the role of social exclusion in motivating greater reliance on the formal bureaucratic system.

Conflict and debt in the Middle East and North Africa

With the global economy is in its third year of deceleration amid declining inflation and oil prices, the Middle East and North Africa grew by just 1.9% in 2023, with a forecast for growth in 2024 at 2.7%. In addition to heightened uncertainty brought on by the conflict centred in Gaza, many countries in the region are also grappling with pre-existing vulnerabilities, including rising debt levels. This column summarises a new report that unpacks the nature of debt in MENA – and explains the critical importance of keeping rising debt stocks in check.

Making aid-for-trade more effective in the MENA region

Aid-for-trade represents an important opportunity for developing countries to enhance their trade capacities. But the positive effect of aid-for-trade on exports can hinge on the quality of institutions in recipient countries. According to research reported in this column, in the Middle East and North Africa, it is specific aid types – such as aid to support trade policy reform and aid to enhance productive capacities – that matter most for exports.

Sanctions and carbon emissions in Iran

How are Iran’s energy use and emissions of carbon dioxide affected by the imposition of economic sanctions? This column summarises new research that analyses a range of different scenarios and which takes account of multiple economic, social and environmental dimensions, notably what happens to growth and energy intensity, and whether sanctions are lifted.




LinkedIn