Poverty Reduction Dictionary

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0.7% ODA/GNP target - in 1969 a UN Commission recommended that the industrialised countries should provide at least 0.7 percent of their Gross National Product (GNP) as overseas development assistance (ODA). The target was accepted by most industrialised countries but has been met by only a few.

accountability - providing an explanation for, or justification of, your actions. Public accountability is where government and business people explain why they made a decision e.g. on patterns of government spending or, for a private business, its decision to introduce a specific way of working or to locate in a certain place.

advocacy - publicly supporting or recommending a particular cause or policy.

Bretton Woods Institutions Collective name for the World Bank Group and the International Monetary Fund (IMF), which were set up in 1944 at Bretton Woods in the USA.

budgeting - gathering information about money coming in and about spending needs, and deciding on the best pattern of spending.

budget deficit - a situation where government expenditure exceeds government income. Government gets its income from taxation and other revenue. When this is less than the money the government is spending on defence, education, health, welfare and so on, this is called a budget deficit.

campaigning - working in an organised and active way towards a clear goal

 

capacity building - increasing the ability of individuals, organisations or communities to meet their own needs. This includes confidence building, training, and the supply of materials and equipment.

"Too many capacity building efforts have floundered in the past because they have not been rooted in local ownership" [John Wolfensohn, 1999, President of the World Bank]

capitalism - an economic and political system where a country's trade and industry are controlled by private owners for profit rather than by the government or citizens for the greater good of everybody.

Civil Society Organisations (CSO) - these organisations fill the space between the activities of the state (the public sector) and the market (the private sector). They include arts and culture groups, faith-based groups, issue-based activist groups, non-profit think-tanks, cooperatives, mutuals and social enterprises, parents and teachers associations, senior citizens groups, sports clubs, trades unions, volunteer and charity groups, and workers clubs. Some are small and local, others are large and international.

colonialism - the policy or practice of taking political control of another country or its resources, and sometimes occupying it with settlers, and exploiting it economically.

command or planned economy - an economic system where the State owns and then allocates resources through some form of central planning process.

conditionality - economic polices or structural reforms that borrowing countries agree to follow as a condition for the use of IMF and World Bank loans.

consultation - where one group approaches another group to get information, advice, approval or permission.

corporate citizenship (or responsibility) - where companies, particularly the transnational corporations (TNC), accept a range of social and environmental obligations to balance their economic rights.

We urge businesses to take into account not only the economic and financial but also the developmental, social, gender and environmental implications of their undertakings. [Monterrey Consensus (March 2002)]

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DAC - the Development Assistance Committee of the Organisation for Economic Cooperation and Development (OECD). It is where 21 donor countries, together with the European Commission, decide on how to increase the level and effectiveness of aid flows to all countries that receive aid.

debt relief - the process of cancelling or reducing debt owed to multilateral institutions and other lenders, usually conditional on accepting programs for domestic, economic and social reforms. Debt relief may take the form of cancellation, rescheduling, refinancing or re-organisation of debt.

decentralisation - transferring authority from central to local levels. This can be at the global, regional, national, local or household level. When more people are involved in decision-making, management and service delivery at all levels, there is a greater chance of effective, sustainable and equitable development.

 

democracy - a form of government in which the people have a voice in how power is used - often through elected representatives but also increasingly through advocacy and lobbying by civil society groups and social movements.

"True democracy - true decision-making power in the people's hands - is always demanded, never granted." [Naomi Klein (2002) Canadian Writer]

deregulation - removing or reducing government rules which control the workings of a particular market or the economy as a whole.

development - a process of changing for the better (making progress) - socially, technically, environmentally, economically and politically (STEEP). There is an issue in deciding who does or should decide what is 'better'. Whose reality counts?

empowerment - a working style which aims to help people achieve their own purposes by building their confidence and capacity.

Enhanced Structural Adjustment Facility (ESAF) - an IMF scheme set up in 1987 to provide support to low-income countries with long term balance of payments problems. It supports macroeconomic and structural adjustment programmes. The ESAF developed from the SAF - Structural Adjustment Facility and was replaced in 1999 by the PRGF - Poverty Reduction and Growth Facility.

enterprise - a business or company driven by a bold idea.

entrepreneur - a person who sets up a business and takes more than normal financial risks in order to do so.

evidence - factual information which shows whether or not an idea is true.

fiscal policy - the use of government spending and government tax policy to influence the economy.

foreign aid - the international transfer of public and private funds in the form of loans or grants from donor countries to recipient countries.

foreign direct investment (FDI) - the purchase or construction of real assets (including land, buildings, equipment and enterprises) in one country (host country) by businesses and residents of another (source country). It does not include foreign investment into the stock markets.

free market - where the economic activities of production, distribution and exchange are carried out by private individuals or corporate bodies following the laws of supply and demand, and with minimal regulation by governments.

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G-7 - group of seven leading industrialized countries - USA, Britain, France, Italy, Japan, Germany and Canada (responsible for 45% of the world's wealth - 21 trillion dollars in 2001)

Gross Domestic Product (GDP) is a measure of National Income and therefore of economic activity. It is the total value of all goods and services produced over a given time period (usually a year) excluding net property income from abroad. It can be measured either as the total of income, expenditure or output. Gross National Product (GNP) is the same except that it includes net property income from abroad. This is similar to the Gross National Income (GNI).

 

globalisation - the process where an increasingly free flow of ideas, certain types of people, goods, services, and capital leads to an increased connection between economies and societies. governance - the way a country is governed, including its economic policies and regulatory framework. Heavily Indebted Poor Countries (HIPC) - forty one countries which are classified as being both heavily indebted and poor (thirty three in Africa, four in Latin America, three in Asia and one in the middle East). A country's debt must be worth at least 150% of its exports before it can qualify.

"So many of the debates that we have about globalisation theory are actually about power: who holds it, who is exercising it and who is disguising it, pretending it no longer matters." [Naomi Klein (2002) Canadian Writer] "For while globalization offers great opportunities, at present its benefits are very unevenly shared, while its costs are unevenly distributed." [UN Millennium Declaration (Sept 2000)]

Heavily-Indebted Poor Countries Initiative - a system for reducing multilateral, bilateral and private sector debt for the poorest, most indebted countries. It was set up by the IMF in 1996. Qualifying countries must adopt agreed adjustment and reform programmes and carry these out for a certain period. In 1999 the Enhanced HIPC Initiative was introduced. This included a condition that countries should adopt a Poverty Reduction Strategy (PRS) which makes sure that the funds released by debt relief are used to reduce poverty.

 

human rights - the General Assembly of the United Nations set out the Universal Declaration of Human Rights in 1948 - there have been modifications since then. The idea is that 'All human beings are born with equal rights and fundamental freedoms that cannot be taken away from them'. A 'rights-based' approach to development is one which makes sure that 'progress' does not rob people of their rights (eg 'Everyone has the right to form and to join a trade union for the protection of their interests')

"Men and women have the right to live their lives and raise their children in dignity, free from hunger and from the fear of violence, oppression or injustice. Democratic and participatory governance based on the will of the people best assures these rights." [UN Millennium Declaration (Sept 2000)]

International Monetary Fund (IMF) - an international organisation, made up mainly of government Treasury officials and Central Banks, founded in 1944, with 184 member countries. Its job is to promote the health of the world economy. The IMF gives advice to governments on sound macroeconomic policies, helps manage crises, and provides loans to help governments manage balance of payment problems. In 1999 the IMF adopted poverty reduction as a goal in addition to economic stability. The IMFs strategy for helping reduce poverty, in partnership with the World Bank, consists of debt relief, promoting economic growth, and targeted social sector spending.

imperialism - a policy of extending a country's power and influence through colonization, use of military force, control over a country's natural resources, or other means.

 

income groups of countries - countries are described by dividing their GDP by the number of people. The groups are: low income, $745 or less; middle income, $746 - $9,205; and high income, $9,206 or more.

Be pleased to reform the abuses of all professions: and if there be any one that makes many poor to make a few rich, that suits not a Commonwealth. [Oliver Cromwell (1650) Letter to the Long Parliament]

informal economy - the household and community sector of the economy, where people don't have jobs, work is unpaid (e.g. housework or volunteering) and goods and services are largely given away, exchanged or bartered.

informal sector - the part of an economy that is not controlled by the government, particularly in the areas of contracts, taxation, and company and labour law.

information and communication technology (ICT) - ways of finding, gathering, and manipulating information and then presenting or communicating it. ICT includes making computers and providing software, programming and communication services such as email and the internet.

infrastructure - the basic physical and organisational structure needed to run a country (eg buildings, roads, power supplies).

international financial institutions (IFI) - these range from development banks, such as the World Bank and Asian Development Bank (ADB), to monetary authorities, such as the IMF.

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justice - we can think about justice (fairness) in two ways. (a) distributive justice - deciding who should get what goods and (b) corrective justice - punishing people who commit crimes.

Least Developed Countries (LDC) - Forty-eight poor and vulnerable countries, defined by the UN as having an annual per capita income of less than US$ 1 per day.

liberalisation - opening up to the free market forces of supply and demand. In global terms, some markets are more free than others.

lobbying - an organised attempt by members of the public to influence a decision maker.

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macroeconomy - national performance and policy on money, prices, inflation, interest rates and investment, output, growth, trade, exchange rates, national budgets and budget deficits, systemic causes of unemployment. It is influenced by monetary policy (money supply policy, including interest rates) and fiscal policy (government expenditure relative to revenue).

monetary policy - the attempt by a government or central bank to influence economic outcomes through its ability to control interest rates and/or the domestic money supply.

natural resources - gifts of nature that can be used to create wealth. Some can renew themselves eg fish and forests while other cannot eg coal and oil. Pollution and overexploitation can destroy the ability of our natural resources to renew themselves. Natural resources are the basis of a nation's wealth. There is an issue about how and to what extent they should be owned by private individuals and corporations.

negotiation - the process of reaching an agreement or compromise by discussion with others.

New Partnership for Africa's Development (NEPAD) - an African programme launched in 2001 by Heads of African States. It presents a vision and plan of action for the redevelopment of Africa. Its goal are to promote accelerated growth and sustainable development, to eradicate widespread and severe poverty, and to halt the marginalisation of Africa in the globalisation process.

Non-Governmental Organisation (NGO) - a voluntary grouping of individuals or organisations which is (a) independent and not-for-profit-sharing (b) organised locally, nationally or internationally and (c) aimed at influencing patterns of social, environmental and/or economic development through advocacy and lobbying.

non-state actors - people involved in development who do not come from government. They are from the private sector and from civil society

Official Development Assistance (ODA) - term defined by the Development Assistance Committee (DAC) of the (OECD) for aid to Developing Countries that (a) is given by governments and (b) is aimed at promoting economic development and welfare. Technical cooperation is included in aid. Grants, loans and credits for military purposes are excluded. All governments now give ODA in the form of grants.

Organisation for Economic Cooperation and Development (OECD) - a group of 30 countries which share the principles of 'adherence to market economies, democracy, and respect for human rights'. Mostly industrialised nations and transitional economies,

ordinary people (citizens) - stakeholders who do not belong to the public or private sectors

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partnership - where individuals or organisations join with others to achieve a common goal and to share risks and profits. This is similar to an alliance or a coalition. It can be more or less formal.

planning (project) cycle - systematic planning is a four stage process. (1) Study the present situation to identify problems and possible solutions. (2) Make strategic and action plans with clear goals, targets and indicators. These should say who will do what by when and how much it will cost. (3) Put the plan into action and measure the indicators to make sure that you are still on track. (4) Study the new situation and decide whether the plan or project worked out as expected and whether it was a good thing. [Note - step 4 of one project can easily link to step 1 of the next project - this makes the process into a cycle]

policy analysis - this involves studying the sometimes hidden choices a nation makes about what people collectively will do about problems they understand to be public. This involves (a) describing the key facts about the policy issue, (b) identifying the claims, concerns and issues of the various stakeholders, (c) identifying the costs and benefits of various options for action and (d) making clear recommendations about next steps.

 

poverty eradication - the goal of most people, but poverty reduction is a good first step poverty reduction strategy (PRS) - A Poverty Reduction Strategy Paper (PRSP) describes a national strategy drawn up by governments of low-income countries, for how they will spend money to reduce poverty. A PRSP starts from a diagnosis of the causes of poverty, then identifies the poverty reduction outcomes a country wishes to achieve and the key public actions - policy changes, institutional reforms, programmes and projects - needed to achieve these outcomes. It should establish targets, indicators and monitoring systems. The PRSP approach began in 1999 as part of the HIPC initiative of the World Bank and the IMF.

"Poverty has many dimensions, and they combine to create and sustain powerlessness, lack of voice, and a lack of freedom of choice and action." [Narayan, Deepa (2000) Voices of the Poor]   "Poverty anywhere is a danger to prosperity everywhere" [The Philadelphia Declaration, 1944]

privatisation - transfer of a business, industry or service from public to private ownership

pro-poor growth - this depends on decisions, programs and processes that put poor people at the centre of development policy. Policies need to be built on the productive use of the assets of the poor and giving them access to markets. Different strategies are needed for the rural landless, smallholders, women with binding time constraints, informal sector workers and those with jobs. To be effective pro-poor economic growth has to be linked to pro-poor human development and pro-poor social and political change.

protectionism - the practice of taking steps to look after what one sees as one's own interests. Most commonly used to describe steps taken by countries to protect their domestic industries from foreign competition.

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sector - a subdivision of society. Three main economic sectors are (a) public, state or government sector, (b) private or business sector and (c) civil society, social, voluntary or citizen's sector (this includes cooperatives, mutuals and self help organisations)

Small and Medium Enterprises (SMEs) businesses employing between 50 and 250 workers.

social movements - these develop when individuals and civil society groups with different backgrounds and interests join together to advocate and lobby decision makers about an issue that is in their common interest. They are most effective when they are well organised, well informed and able to act quickly. They come in many shapes and sizes and are an important part of participatory democracy.

 

social safety nets - public sector measures to protect the poor and vulnerable. They can include public work schemes, unemployment benefits, food security measures, etc. Safety nets were traditionally provided by families and communities.

"The most important asset is an extended and well-placed family network from which one can derive jobs, credit and financial assistance." [Senegal 1995 - Voices of the Poor]

solidarity - where people with a common interest share feelings and act together

stakeholder - a person with an interest or concern in something

statistics - facts which come from gathering and analysing large amounts of information

"There are no facts, only interpretations." [Friedrich Nietzsche (1844-1900) German Philosopher]

structural adjustment - a programme of free market reforms that multilateral agencies such as the IMF lay down as conditions for lending funds (see ESAF)

sustainable development - defined in the 1992 UN Rio Declaration on Environment and Development as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs."

systematic - according to a fixed plan or system; methodical

tolerance - where people respect each other despite differences of belief, culture or language

 

trade - the buying and selling of goods and services trade deficit - the amount by which the cost of a country's imports is greater than the value of its exports

"Money is not the only input, or even the most important input. If the aid goes to countries with poor policies and institutions, it is likely to be wasted." [Devarajan et al (April 2002)]

trade union - an organised association of workers in a trade, group of trades or profession, formed to protect and further their rights and interests.

transnational corporation (TNC) - a company which owns and operates manufacturing or service businesses in more than one country. There are presently over 60,000 transnational corporations with over 600,000 foreign associates. The combined sales of the 200 biggest TNCs are more than the combined economies of all countries minus the biggest ten. The largest TNC is a supermarket chain (Wal-Mart) with global sales of $206.8 billion in 2002.

 

trickle down effect - the theory that the gains from economic growth will pass down from the rich to the poor and eventually give rise to development for everybody.

"I sold my land and now I have nothing. I can never buy my land back because the prices go up every year." [Tanzania, 1999 Voices of the Poor]

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wage slave - a person who is wholly dependent on income from employment.

World Bank Group - five linked financial institutions established in 1944. The World Bank works in more than 100 developing economies with the primary aim of helping the poorest people and the poorest countries. The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty by promoting sustainable development, through loans, guarantees, and analytical and advisory services. In fiscal year 2002, the group provided more than US$19.5 billion in loans to its client countries.

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