Poverty and Governance in South Asia

Syeda Parnini

• Publisher: Taylor & Francis
• Year: 2014
• Print ISBN: 9781138492189
• eBook ISBN: 9781317584643
• Edition: 1
• Topic: Politics & International Relations
• Subtopic: Politics
• Index: Politics & International Relations

Across South Asia in the last two decades, there has been widespread emphasis on governance reforms aiming to reduce poverty through Millennium Development Goals (MDGs). The recent development agenda has had great impact over the region, and this book finds that it largely widens the gap between the rich and poor, which combined with rising inflation, contributes to political instability.

The book analyses the discourses of development agenda and governance crisis and provides a survey of the region by not only focusing on India, Pakistan and Bangladesh but also on the smaller countries in the region, such as Bhutan. Explaining three components of the development agenda as criteria for economic development – poverty reduction, governance reforms and civil society participation through liberal democracy – this book explores the consequences of the neo-liberal democracy and recent development agenda coupled with governance reforms. This work argues that the political economy of South Asia is largely derived from experiences of historical colonialism and recent changes driven by contemporary rise of India as a global power after the triumph of new-liberal democracy and market capitalism in the post-cold war era. It proposes a strengthening of the instruments of endogenous governance and people's participation in South Asian countries to reduce poverty through MDGs and other development goals in combination with top-down and bottom up approaches.

Offering an understanding of governance and development in the context of the South Asia, this book will be of interest to academics in the fields of Political Economics, International Development Studies, Political Science, and Governance Studies, as well as policy makers.

1 Introduction

Introduction

In order to examine the connection between governance and poverty, this work provides case studies of governance reforms and poverty reduction strategies of seven countries in South Asia: Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan, and Sri Lanka. This study shows that South Asia can be an excellent comparative study, given the widespread emphasis on governance reforms in the region over the past two decades while highlighting significant inter-country diversity in terms of comprehensiveness of reforms and heavy concentration of poverty.

The concept of good governance was first introduced by the World Bank in the development discourse when they published a report in 1989 about Africa. At that time the World Bank argued that “Underlying the litany of Africa’s development problem is a crisis of governance.”¹ Thus, it can be argued that after the end of the cold war, “good governance” emerged as a fashionable buzzword in the development discourse.² The concept of governance makes explicit a paradigm shift from a traditional development economics approach towards a development politics approach. Since 1989, the “good governance” concept has become prominent on the international aid front. The World Bank defines governance as “the exercise of political power to manage a nation’s affairs.” The officials of the World Bank and the International Monetary Fund (IMF) argue that providing foreign aid to developing countries remains necessary but that good governance plays a crucial role in adapting to the process of globalization.

A number of significant criticisms, however, have contested the free-market fundamentalism and globalization discourse typical of the 1990s and the Washington Consensus.³ This gave rise to a period of more socially aware governance. Of course, globalization has numerous facets. One particular version of interest here focuses on the way in which state functions seem to be being gradually subsumed under broader institutional constructs.⁴ Surprisingly, in this new century, the major threats to the global financial system have come not only from the periphery but from the core.⁵

There has been a complex worldwide expansion, driven by the diffusion of power and influence through international financial institutions (IFIs) such as the World Bank or the IMF as well as the growing salience of private, civil society organizations and other non-state actors. These twin forces have had a profound effect upon the role and capacity of states to pursue national welfare options and have also posed a challenge to development, particularly in South Asian countries. However, states still remain significant actors in world politics, by contesting globalization and the market orthodoxies of the earlier “Washington Consensus” era through active public engagement that has brought to the public sphere a meta-politics of institutional legitimacy in which the procedures of the global governance are subjected to greater public scrutiny. The question is whether or not this process itself is legitimate. After all, the efficiency models of governance are popular among the policy communities that inhabit the corridors of the IMF, the World Bank and World Trade Organization (WTO), but these models can easily be contested.⁶

In the era of globalization, intense intellectual debate about development has been embodied in an ideological choice between either the state or the economic forces of the market as the source of a country’s overall progress. Since the early 1990s, modernization theorists, neo-Marxists and neo-liberal thinkers have contributed to the debate. The post-cold war era has witnessed a reorientation of the development discourse; the novelty of this trend has been attributed, by the donor agencies, to the good governance agenda. The impetus of this change came from the experience of the failed postcolonial “development states” of the Third World, the demise of the communist bloc and the desire to identify the social forces which had arisen to challenge or overthrow authoritarian states in socialist countries, such as in Central and Eastern Europe.⁷

The recent changes in development discourse lie in the triumph of neo-liberalism over communism after the end of the cold war; it is primarily this triumph that produced the good governance perspective in the early 1990s. At that time, the notion pushed forward the “culture” of “the market,” of deregulation, privatization and supply-side economics. This “culture” carried, along with its economic theory, strong normative views on the role of the state.⁸ Although it promotes initiatives that enable citizens to claim and exercise their rights, neo-liberalism also advocates institutional changes that seek to make governance more responsive and accountable.⁹ However, making real the rights, policies and processes that can deliver the promise of better governance remains a challenge and a far cry from current reality, hindered by entrenched power relations, persistent prejudices and inequalities.

Key arguments

This study explains the dynamics of poverty and governance including neo-liberal reforms, poverty reduction strategies and civil society participation viewed as the criteria of overall development. We also try to explore those aspects of governance problems that have challenged the local development and governance systems in South Asia. In particular, this book pays special attention to the neo-liberal development agenda¹⁰ intertwined with governance reforms. This has emerged from development theories influenced by historical colonialism in the developing countries of South Asia.

The central argument of this study warrants the claim that the end of the cold war and the rising concern to sustain US hegemony have led to the notion of creating a new “empire” in the era of globalization. The international development agencies, i.e. the World Bank, the IMF and other international organizations, are largely dominated by the US hegemonic power. The present conditions of political and economic failure that are peculiar to South Asian society have made their impact much more evident in recent decades. In this work, we argue that discussions of the poverty dynamics and governance problems in the context of South Asia have not attended adequately to the ways in which the discourses and consequences are properly understood. Our research uses evidence from South Asia to question current approaches to development learning and to consider the viability of the frequent introduction of new development agenda and poverty reduction strategies in recent years.

We build on the discussion by showing its relevance to the question of globalization. We argue that an increasingly multilateral aid agencies’ concept of “good governance” today poses new challenges to weak governance and mixed developmental outcomes in South Asia. After developing the hypothesis of a state with both weak and competent governance (see Figure 1.2 on p. 15), we paint a vicious cycle of governance weaknesses to show how countries in South Asia remain weak in ensuring good governance to reduce poverty. We suggest that attention to the indigenous systems of governance and genuine democracy might be the guide to becoming a country with competent governance.

The most crucial section of our study, however, concerns the reasons for weak governance and poverty along with the governance agenda as it is set by the development partners and governments of individual countries in South Asia. The arguments are based on insights from various case studies in South Asia. In recent years, solid supportive evidence has begun to emerge that witnesses the results of the Poverty Reduction Strategies (PRS), the public sector reforms, the Millennium Development Goals (MDGs) as well as an increasing focus on “civil society” to accelerate development in the countries of South Asia.

Some scholars emphasize the negative effects of weak governments on rent seeking and, ultimately, economic growth. Weak governments that constantly are in fear of losing office are likely to be vulnerable to the pressure of lobby groups, which bias economic policies in favor of some groups at the expense of economic growth (Shleifer and Vishny 1993). An extensive literature supports the links between strong governance institutions and economic growth. The uncertainty associated with an unstable political context reduces investment and the rate of economic growth, which further contributes to political instability (Barro and Lee 1994). The high likelihood of a change of government is associated with uncertainty about the economic policies of a new government. Risk-averse economic elites and foreign investors hesitate to invest in economies which show uncertainty about policies and property rights (e.g., Alesina et al. 1996). Furthermore, foreign and domestic economic elites will shy away from investing in economies where bureaucrats have high levels of discretion, and they are subject neither to the oversight of state agencies nor to the scrutiny that is intrinsic to competitive elections (Beazer 2012).

Due to the individual countries’ particular political settlement, most South Asian countries show rampant government corruption, fierce political competition, relatively inefficient bureaucracies, and weak political leadership. Moving from periods of military rule and strong one-party rule, the dynamics of political contestation in most South Asian countries have settled on a system of competitive clientelism, dominated by rival political parties, which compete on divergent views of nationalism rather than on economic ideology and policies. In recent years, successive governments in South Asian countries have pursued policies emphasizing privatization and export-led growth.

Conceptualizing poverty and governance

Poverty can be defined as a multifaceted crisis and a state of want or utter deprivation, caused by ignorance, unfair exploitation as well as natural disaster. Generally, a person is said to be poor when his inability to cope affects him both internally psychologically and externally. Poverty is sometimes not viewed as being closely connected to a person’s system and will result in impatience, irritability, stress, anxiety, an inferiority complex, general fears and worries. Poverty can be viewed as having a physical effect on a person, such as family problems, poor nutrition, poor health, illiteracy, shabby appearance and lack of shelter and clothing.

Poverty is currently viewed in both an absolute and a relative sense. In the absolute sense, it is referred to as a condition of acute physical wants, starvation, malnutrition, disease, and lack of clothing, lack of shelter and almost total lack of medical care. Relative poverty, unlike absolute poverty, is more a matter of a subjective definition than the objective condition. Poverty, being a relative concept, is not confined to poor nations alone. Absolute poverty is understood as the condition of falling below the minimum standards of subsistence appropriate to each society. Absolute poverty is a growing phenomenon in both developing and industrialized countries.

The meaning and dimensions of poverty vary from situation to situation. There is no universally applicable measure or yardstick to describe poverty. However, efforts have been made by economists and other social scientists to define the term poverty. Gillin, for instance, defines poverty as:

That condition in which a person, either because of inadequate income or unwise expenditures does not maintain a scale of living high enough to provide for his physical and mental efficiency and to enable his natural dependents to function usefully according to the standard of society of which he is a member.¹¹

Thus, with a view to making individuals meaningful, functioning members of the society, every society has certain standards of living regarding minimum food, clothing, shelter, education and other amenities. Those who fall below this culturally prescribed standard, popularly known as the poverty line, are classified as poor.¹² According to the definition of the Canadian International Development Agency (CIDA), income-related poverty is defined by the following characteristics:¹³ basic needs cannot be satisfied due to a lack of income and means; the prerequisites for acquiring an income and means are lacking. The ability to overcome this situation is absent. Especially in the poorest countries, which are subject to general conditions that impede development and can usually not be addressed by “good governance,” present development approaches are increasingly directed towards self-help. However, the above definition of income-related poverty suggests that, due to the absence of resources, the poor have no self-help potential, and that the inability to extricate oneself from the poverty trap is the typical mark of the very state of poverty.

In ancient India, poverty was generally explained in terms of sin. The doctrine of Karma, which developed in India in the pre-Christian era, attributed poverty to the personal misdeeds of the individual in past lives. Buddism shared with Hinduism this doctrine of Karma and the explanation of poverty. Original Christianity visualized poverty as a part of the general calamity resulting from original sin. This tradition continued throughout the Middle Ages. Also wealth was considered to be an ultimate obstacle to spiritual progress.

A variant of the sin theory of poverty appeared in Europe with the development of capitalism and of individualism, the ideology of the political economy of c...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• List of illustrations
• Abbreviations
• 1. Introduction
• 2. The political economy of South Asia
• 3. Governance and development in South Asia
• 4. The poverty reduction and governance paradox
• 5. Poverty dynamics and empirical evidence
• 6. Endogenous governance and democracy in South Asia
• Bibliography and further reading
• Index