US research finds ‘best’ way to fight poverty in Bangladesh

The Copenhagen Consensus Center has published a new academic research highlighting the ‘smartest’ ways of fighting extreme poverty in Bangladesh.

Published : 18 March 2016, 07:08 PM
Updated : 18 March 2016, 07:09 PM

The US non-profit think tank founded and headed by Dr Bjorn Lomborg published a press release regarding its project titled ‘Bangladesh Priorities’ on Thursday.

The project aims to identify the best policies for Bangladesh -- including the choices that make the best use of each taka spent for the benefit of society.

In collaboration with BRAC, Copenhagen Consensus has commissioned a wide range of the best economists from Bangladesh, the region, and the world to estimate the costs and benefits for 78 Bangladeshi projects.

In May 2016, a group of eminent Bangladeshi and global economists, including Nobel laureate Finn Kydland, will look at all of the research and identify the top priority investments for Bangladesh.

Despite cutting the rate of extreme poverty from 34 percent in 2000 to just 13 percent today, 20 million Bangladeshis still live in conditions considered ultra poor.

The founder Dr Bjorn Lomborg said, “Tackling poverty is clearly one of the crucial issues for Bangladesh. But it needs to be done most effectively.”

“We need to think about whether it is the best way to help with every taka spent. Research for Bangladesh Priorities indicates that there may be other, smarter ways to help,” he added.

In new research on one of the many topics examined by Bangladesh Priorities, economists Munshi Sulaiman of BRAC International and Farzana Misha of Erasmus University Rotterdam examine three ways to tackle poverty in Bangladesh.

The well-known poverty tackling strategies like Cash transfer and Livelihood programmes bring benefits of Tk 0.8 and 1 per taka spent, respectively.

The PR reads, the research found that the most promising strategy is “graduation”, which involves helping recipients through a variety of methods and over a particular time sequence.

In total, each taka spent on graduation programs in Bangladesh could achieve two takas of social good, allowing participants to save for the future and, ultimately, escape extreme poverty.

Munshi Sulaiman said, “The most critical aspect in reducing extreme poverty through targeted interventions is how sustainable these improvements are.”

“Children from ultra-poor households should be able to achieve enough human capital that they are not classified as ‘poor’ when they become adults,” he added.

In ‘graduation’ programs, participants first receive a small gift of cash or food, which eases the stress of daily survival and allows them to start saving. After that, they receive an asset, maybe a cow or a goat, along with basic financial and technical education.

This component often involves animal-husbandry training delivered by a veterinarian. Many graduation programs also provide healthcare support so that participants will not be forced to sell assets in the event of an emergency.

Finally, participants get a confidence boost through social training—an important factor for escaping poverty that is often overlooked.

Investments like cash transfers actually deliver less than a taka back on every taka spent, suggesting that this is not the best way to help first, says the research.

One reason cash transfers were not effective relative to other strategies is that the impacts diminished over time—a one-time stipend for someone in extreme poverty may help for a little while, but the effect is fleeting.

According to the PR, “so-called ‘livelihood’ programs that are designed to give people a “boost” out of extreme poverty so that they can prosper on their own were not as effective.” The return on spending devoted to these efforts was merely one-to-one.

Copenhagen Consensus experts believe that there should be more study of the long-term impacts of livelihood and cash transfer programs in Bangladesh. But based on their research, graduation seems the most promising of these three strategies.

Toufique Imrose Khalidi
Editor-in-Chief and Publisher