What is poverty reduction?

In recent years, the development community has emphasised poverty reduction – defined as increases in economic growth - as the main objective of foreign assistance. In part, this has been to prevent aid from being diverted to other goals. But poverty reduction encompasses many goals, some of which are contradictory. In promoting the over-simplification of development goals, are donors contributing to aid ineffectiveness? This report looks more closely at the relationship between poverty reduction and development assistance.

It is widely acknowledged that poverty is multi-dimensional, and that poverty reduction entails
many different kinds of change. Likewise, different kinds of development interventions make different contributions to the overarching objective poverty reduction, sometimes involving trade-offs between: 

• reducing poverty for as many people as possible, and focusing on a smaller number of people in long-lasting and deep poverty
• activities that reduce poverty today, and those that reduce poverty in the future
• time-limited programmes that provide immediate redistribution of income and long-term funding initiatives, such as the provision of global public goods
  

Under these circumstances, the report argues that donors' emphasis on the goal of poverty reduction has contributed both to poor programme selection and poor programme design and implementation. It calls for a new agenda for aid effectiveness which recognises the multidimensional nature of poverty reduction and the tradeoffs that the goal embodies. In this context, development agencies are advised to broaden their emphasis from one focused exclusively on poverty reduction to aim for a portfolio of objectives that:

• promote long-term and permanent changes in developing countries by investing resources and sharing knowledge
• tackle the causes of poverty by changing the policies of rich countries and investing in global
  public goods
• transfer income and consumption from the world‘s rich to the world‘s poor as a matter of global social justice
• target more assistance to those in chronic and deep poverty

More debate on the contribution that specific programmes make to development goals is also necessary, a process which should be quantified and measured as far as possible.