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Ensuring Escapes from Poverty Are Sustained in Rural Bangladesh

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Ensuring Escapes from Poverty Are Sustained in Rural Bangladesh ENSURING ESCAPES FROM POVERTY ARE SUSTAINED IN RURAL BANGLADESH LEO REPORT # LEO REPORT #32 ACDI/VOCA Credit: Photo JULY 2016 This publication was produced for review by the United States Agency for International Development. It was prepared by Lucy Scott and Vidya Diwakar of the Overseas Development Institute (ODI) for ACDI/VOCA with funding from USAID/E3’s Leveraging Economic Opportunities (LEO) project. Acknowledgements to Mishkat Jahan, Afrin Sultana and Shameem Reza from Development Research Initiative for qualitative data collection and Mamun Rashid and Ferdous Jahan for managing fieldwork. ENSURING ESCAPES FROM POVERTY ARE SUSTAINED IN RURAL BANGLADESH: LEO REPORT #32 DISCLAIMER The author’s views expressed in this publication do not necessarily reflect the views of the United States Agency for International Development or the United States Government. CONTENTS ACRONYMS................................................................................................................................................................ ii EXECUTIVE SUMMARY ....................................................................................................................................... 1 i. INTRODUCTION ............................................................................................................................................ 3 II. The Case Study of Rural Bangladesh .................................................................................................................. 4 A. What Is the Extent of Backsliding in Bangladesh, and Why Is This Important? .................. 5 1. Macro-level Drivers of Poverty Reduction before the 2000’s ............................................................ 6 2. More Recent Macro-level Drivers of Poverty Reduction ................................................................... 7 3. A Micro Perspective: Evidence on the Drivers of Household Descents and Escapes .................. 8 4. The Extent of Different Poverty Trajectories and Backsliding ....................................................... 13 B. Why Do Some Households Escape Poverty only to Fall Back into It, while Others Escape Poverty and Remain out of Poverty over Time? ......................................................................... 14 1. Initial Household Resource Base .......................................................................................................... 15 2. Household Attributes and Capacities ................................................................................................... 18 3. Household Activities ............................................................................................................................... 20 4. Household Shocks ................................................................................................................................... 25 5. Household Strategies............................................................................................................................... 26 C. Analysis of Poverty Dynamics Using a Poverty Band ................................................................ 32 D. Investigating Trajectories out of Extreme Poverty .................................................................... 33 E. Implications for USAID and for Work to Promote Sustained Pathways Out Of Poverty ... 33 III. REFERENCES................................................................................................................................................... 40 ANNEX A: PANEL STUDIES IN THE CHRONIC POVERTY REPORT ............................................. 43 ANNEX B: SUMMARY STATISTICS................................................................................................................. 45 ANNEX C: APPROACH TO PARTICIPATORY WEALTH RANKING ................................................. 48 ANNEX D: LIFE HISTORY INTERVIEW TEMPLATE ............................................................................. 50 ANNEX E: REGRESSION RESULTS AND ANALYSIS APPROACH .................................................... 56 BACKSLIDING IN RURAL BANGLADESH i ACRONYMS BBS Bangladesh Bureau of Statistics BDT Bangladeshi Taka CBN Cost of Basic Needs CFPR-TUP Challenging the Frontiers of Poverty Reduction - Targeting the Ultra-Poor CLP Chars Livelihoods Programme CPAN Chronic Poverty Advisory Network DFID Department for International Development (United Kingdom) FFE Food for Education FGD Focus Group Discussion FTF Feed the Future HIES Household Income and Expenditure Survey IFPRI International Food Policy Research Institute LEO Leveraging Economic Opportunities MG Micronutrients – Gender NGO Non-governmental Organization ODI Overseas Development Institute ZOI Zone of Influence BACKSLIDING IN RURAL BANGLADESH ii EXECUTIVE SUMMARY Bangladesh has experienced substantial reductions in both extreme poverty and poverty. The proportion of the population living below the national extreme poverty line has reduced from 50 percent in 1991 to 18 percent in 2010 while the poverty headcount ratio, using the national poverty line, has reduced from 60 percent to 32 percent over the same period. Economic growth, increased non-farm employment (particularly in the ready-made garment industry), international migration, and investments to improve human development outcomes have all contributed strongly to this success. However, some households escape poverty only to live at a level just above the poverty line: 19 percent of the population lives out of poverty, but has a level of consumption less than 1.25 times the national poverty line. They therefore remain vulnerable to slipping into poverty in the event of a shock or stressor, such as an episode of ill- health or a flood. The specific focus of this report is on “backsliding”: a term referring to households that successfully escape from poverty only to return to living in it once again. Analysis of the Chronic Poverty and Long- Term Impact Study for this case study reveals that backsliding is a significant phenomenon in rural Bangladesh. In particular, between 1997/2000 and 2010, 10 percent of all households backslid into poverty. Of those households that escaped poverty between 1997/2000 and 2006, around 20 percent were again living in poverty by 2010. This report combines analysis from three rounds of the Chronic Poverty and Long-Term Impact Study with qualitative research approaches; in particular: key informant interviews, life histories, and participatory wealth ranking to further investigate the drivers of backsliding. Specifically, it examines why some households are able to escape poverty and remain out of it—that is, they experience sustained escapes from poverty—while others escape poverty only to return to living in it again. The report investigates the resources (land, livestock, and value of assets), attributes (household composition and education level), and activities (including jobs and engagement in non-farm activities) of households that enable them to escape poverty sustainably and minimize the likelihood of backsliding. What matters? Specific findings include the following: ñ Households with a greater value of assets are more likely to experience a sustained escape from poverty. ñ Owning more cultivable land reduces the relative risk of backsliding. Cultivating land is an important source of income and food while ownership of land itself can act as collateral to secure loans; owning land is a measure of social status and can be mortgaged out during hard times. ñ An increase in the number of livestock is associated with a reduced relative risk of backsliding. Buying and selling cattle can be an important source of income as are sales of milk; there is evidence of “livestock ladders” with households moving from rearing poultry and small ruminants to share-rearing and owning cattle. Selling small ruminants, particularly goats, as well as poultry, is an important means to manage risks. ñ An increase in the share of dependents is associated with a higher risk of backsliding. Life histories also highlight dowry payments for girls as being an important driver of backsliding. ñ A more educated head of household is tied to a reduced risk of backsliding and impoverishment. The level of education is also important. Households where the head has completed secondary education are less likely to backslide than those where the head has completed primary education. Those with primary education, in turn, are less likely to backslide than those where the head has no education. BACKSLIDING IN RURAL BANGLADESH 1 ñ Female-headed households are less likely to backslide or become impoverished than to experience a sustained poverty escape. This finding should be contextualized for Bangladesh where there are two primary groups of female-headed households: those where the male head of household has migrated (including internationally); and those where the woman has been abandoned, divorced, or widowed. While the latter are among the poorest households in rural Bangladesh and can have limited prospects for sustained poverty escapes given limited income- generating activities that are accessible to women, the former are among some of the better-off households in rural areas due to their receipt of remittances. ñ Female-headed households that receive remittances are more likely to experience a sustained escape than to backslide. ñ When the head of household is involved in non-agricultural activities, the household is more likely to experience a sustained escape.
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