POVERTY, SOCIAL STRUCTURE, WEALTH DISTRIBUTION AND MARKETS: UNDERSTANDING THE NEXUS

Poverty and distributional concerns for developing economies (Sub-Saharan African in particular) have since the 2000’s re-emerged centre-stage in national and international development. This discourse is re-emerging after the preoccupation with growth and efficiency in the structural adjustment decades of the 1980’s and 1990’s. There is now a solid consensus that poverty eradication should constitute the number one development priority. However, the formulation of appropriate poverty-oriented macro policy seems hampered by a lack of clear understanding of the fundamental causes of poverty. The conventional approach to poverty analysis informed by neoclassical thinking conceives poverty in positionist terms; thus simply as shortfalls in income or consumption below a pre-determined poverty line. Poor individuals or households thus are conceived as those unable to acquire or earn incomes to purchase a pre-determined basket of basic goods, or can get access to the latter at an inadequate degree. An individual or household is thus classified poor if; the disposable income is less than the poverty line. In this perspective, the analytical approach is, typically microeconomic, focusing on individuals and households and their initial endowments albeit abstracted from their institutional setting. This paper adopts an empirical review approach and departs from this positivist conception of poverty, arguing instead, that the poor are embedded in certain structural and institutional constraints, often inherited and caused by political leaders, such as insufficient access to productive assets, which limit or undermine their effective participation in the more dynamic sectors of domestic and global markets where there is scope for benefiting from the opportunities created by economic development. The paper thus seeks to show that poverty is often the result of a number of interactive and mutually reinforcing structural constraints and restrictions in which individuals or households are trapped.