The governance factor

Spotlight on Development
OECD Observer

Traditionally, we have always considered poverty to be a lack of means. It is certainly that in part. Without resources, people cannot satisfy even their most basic physiological needs. But a more meaningful definition of poverty is based on deprivation of capability, a concept associated with Nobel prize winner Amartya Sen, and elaborated in UNDP's Human Development Report of 1997, which called it ‘human poverty’.

Capability deprivation means that people are unable to play a full part in society, are economically inactive, marginalised by conflict or discrimination. While they lack income, simply providing more money will not be sufficient to lift them from their deprivation. In any case, being incapacitated inhibits people's abilities to earn a living.

As highlighted in UNDP's Human Development Reports and most recently in the study on Voices of the Poor conducted for the World Development Report 2000/2001, the poor themselves often allude to the importance of non-material deprivation. They often define their own lot in these terms. Not 'lack of money' but lack of empowerment. Resources are important, and a measure of economic dynamism is a prerequisite for making progress against poverty. But while the economic engine may be revving, the transmission may be faulty. And often governance is the missing link.

In today's developing world, the overall lack of resources is commonly not the stumbling block, but the use of them is. In countries where progress towards poverty alleviation is slow, public spending intended for basic social services is not put to best use and may not always reach the needy. Sound governance makes the links more solid between resources and needs. If people have a say in the choice of elected decision-makers, can give expression to their views through a free media, and can have fuller access to information about government activities, resources are more likely to be used productively.

Empowering the poor is itself a means of overcoming poverty, because it allows the poor to gain greater control over their lives rather than remaining the hapless recipients of benefits delivered from some far away centre. Take the case of Andhra Pradesh in India. There, village women have organised themselves into self-help groups and with their own resources are increasingly able to respond to the growing needs of the poor for access to credit, information, skills and technology.

Similarly, in Cambodia's Seila initiative, local communities are encouraged to formulate their own anti-poverty projects. In Ghana, district authorities are raising their own revenues for poverty reduction projects. In Uganda, the government has made efforts to increase the transparency of its budget procedures, both at the central and at the local government level, and set up a poverty reduction strategy, the Poverty Eradication Plan, with broad participation.

These examples demonstrate that through governance the leaders of the poorest countries have the power to make a direct attack on poverty. By helping to decentralise power and authority, promote land reform, encourage community solidarity and the emergence of independent civil society organisations, governments can make a difference. 


• UNDP 1997 and 1999 Human Development Reports, New York: Oxford University Press.

• UNDP, Overcoming Human Poverty: UNDP Poverty Report 2000, United Nations Publications: New York, 2000.

• Ferreira, Francisco, Giovanna Prennushi, and Martin Ravallion, “Protecting the Poor from Macroeconomic Shocks”, World Bank, Policy Research Paper No. 2160, 1999.

• Narayan, Deepa with Raj Patel, Kai Schafft, Anne Rademacher and Sarah Koch-Schulte. Voices of the Poor: Can Anyone Hear Us?, New York, Published for the World Bank, Oxford University Press, 2000.

©OECD Observer No 223, October 2000

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
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Unemployment: 5.2% July 2019
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