Breaking the Poverty Trap

Targeted investments can trump a region's geographic disadvantages
By Jeffrey D. Sachs
Economists and policymakers are turning more urgent attention to the poorest regions of the planet. Unlike most other parts of the world, these places—in Africa, Central Asia, the Andes and a few other places—seemed to be trapped in poverty. For related reasons, they also seem prone to internal violence and political collapse, a phenomenon known as state failure. The policy question is how best to break the poverty trap. The regional distribution of these poverty traps is not random. None are in Europe or North America. Asia now has only a few. Most of tropical Africa is in a poverty trap or barely emerging from one, but northern Africa and South Africa are not. What can we learn from these geographic patterns? As noted in previous columns, the primary problem in most impoverished places is low food productivity, typically as a result of dependence on irregular rainfall rather than irrigation; on weak and easily weathered soils; and often on steeply mountainous, degraded land. Cereal yields are often below one ton per hectare, with complete crop failures every few years, compared with three or more tons per hectare in most developing countries. Food insecurity leads to poor nutrition, high disease burden and hunger-induced violence. The farm households have little or no cash income, leaving them without the means to invest in farm improvements. The second problem is a heavy burden of disease. The tropics, especially in Africa, are home to lethal and debilitating diseases, such as malaria, soil-transmitted helminthes, filariasis and several others borne by water or insect vectors. In the temperate zones of North America, Europe, China and Japan, those afflictions may be nonexistent or easily controlled, but they are much harder to contain or eliminate in the hot tropics. Malnutrition also raises the disease burden markedly. The third obstacle is physical isolation. Many impoverished states are landlocked, with no easy access to sea-based trade. And even countries with seaports can face extreme transport problems because of mountainous terrain, large inland populations and overall remoteness from marine world trade routes. These problems, rooted in geography, set the poverty traps, which manifest in several ways. Because impoverished households must use all of their income to survive, they cannot generate financial savings. They are not creditworthy to borrow. Moreover, they may have to “mine” the local environment unsustainably by depleting the soils, overfishing the lakes and streams, over-hunting bush meat and cutting down forests. Birth rates are high for several reasons: little or no access to family planning and contraception, low child survival, girls not in school, and children regarded as the only old-age security. Many of the poorest regions are also being squeezed by climate change, with increased drought frequency and the spread of tropical diseases. Birth rates stay high for multiple reasons: little or no access to family planning, contraception or education for girls, low child survival and a persistent view that children represent the only security for parents in their old age. Many of the poorest regions are also squeezed by climate change, and suffer increased drought and the spread of tropical diseases. The political consequences are equally stark. Recent authors have documented how extreme poverty raises the likelihood of violent conflict and a collapse of the state in lawlessness and perhaps anarchy. For example, in his book States, Scarcity, and Civil Strife in the Developing World (Princeton University Press, 2006), political scientist Colin H. Kahl of the University of Minnesota describes the two main paths. First, when deepening poverty leaves the population desperate and the government unable to respond, groups may “self help” by fighting for resources with other groups. Somalia has experienced such a collapse in the past 20 years. Alternatively, if a government takes sides, it may use the state apparatus, even violently, to favor one group against another. The Rwandan genocide was such a phenomenon. Geographic factors do not change easily. Yet programs of targeted investments by outside sources can break poverty traps at surprisingly low cost. Begin by focusing investments on raising food security and agriculture productivity; enable farmers to gain access to fertilizers, high-yield seeds, small-scale water management technologies and improved livestock management. The result can be a rapid boost in food production and farm incomes, commonly called a green revolution. Africa is primed for such a breakthrough, if donors support it. A second area for targeted investment is disease control. The tropical diseases, especially malaria, worm infections and many other water-borne and insect-borne diseases, are readily preventable and often completely treatable. What is needed is a supply chain of crucial commodities, the construction and availability of primary health units in rural areas and trained village health workers. The results can be dramatic, with a sharp drop in child mortality and a sharp uptake of family planning in as little as a few months. Investments in infrastructure can also break economic isolation. Such improvements include all-weather roads, wider cellular phone coverage, the extension of power grids to rural areas (like the New Deal program of rural electrification in the U.S.) and the extension of broadband Internet services through fiber-optic cables and satellite connections. Connecting formerly remote villages to regional and world markets enables them to earn much more cash income through sales of agricultural commodities, processed goods (such as textiles) and services (such as tourism or even IT-based rural services). The Earth Institute at Columbia University, in partnership with the United Nations and the nongovernmental organization Millennium Promise, is putting these targeted investments to work Millennium Villages in Africa, Asia and Latin America. The early results are enormously positive with respect to food production, disease control, connectivity and confidence in the community (learn more at www.millenniumvillages.org). Governments around Africa, including some in former war zones, are now requesting such projects in their countries. The World Bank, the U.S. government, the European Union, Japan and other donors would be wise to respond favorably, because such investment is the best hope for peace, security and long-term prosperity in impoverished regions. Further Reading States, Scarcity, and Civil Strife in the Developing World, by Colin H. Kahl (Princeton University Press, 2006) The Bottom Billion: Why the Poorest Countries are Failing and What Can Be Done About It, by Paul Collier (Oxford University Press, 2007)