Toolbox: Rethinking Poverty

Some time ago, the Ministry of Economy and Public Finance exposed a set of books from the economic library, which can be accessed by both the general public and public servants, I like to say the “toolbox”. I excitedly searched for women authors, and Pope Francis in his book Let’s Dream Together: The Path to a Better Future (2020) pointed out that a sign of hope in this crisis is the leading role of women and, among them, of women economists whose innovative and questioning look at current economic theories are especially timely for this crisis.
And there they were, in the box: Mariana Mazzucato, Stefhanie Kelton, Kate Raworth and Esther Duflo. The latter is the second woman to receive the 2019 Nobel Prize in Economics (Elinor Ostrom won in 2009), who has been dedicated to experimental research to alleviate poverty since 2003, the award also went to Abhijit Banerjee and Michael Kremer.
Banerjee and Duflo in their book Rethinking Poverty (2011) expose the results of several years dedicated to microeconomics applying a scientific method with randomized controlled trials (RCTs) to evaluate social policies and from these results obtain knowledge about what works and what works. others don’t.
Among the book’s interesting conclusions about their experience, mainly in India, they point out that poor countries are not doomed to failure because they are poor or because they have had an unfortunate history, and they close by inviting us to join hands in search of many ideas, great And small.
Duflo’s experiments challenge conventional economic wisdom regarding poverty and show us that scientific tools can be applied to improve the decision-making process.
In Bolivia, poverty and socioeconomic inequalities have been and are present in its history, avoided, maintained or deepened by different models, and by single or combined events such as the Covid-19 pandemic and political crises. Between 2019 and 2020 in the region, the world and, why not, also in the country, some people who have high net worth (rich, super-rich or billionaires) increased their assets and rights, while the conditions of a large part of the population and the most vulnerable groups have deteriorated.
However, if in 2002 the results of the Gini index placed Bolivia as the most unequal country in the Latin American region, with a value of 0.61 (values ​​from 0 to 1, where 0 = no inequality and 1 = maximum inequality ); In the following years, the gap was considerably reduced to 0.46 in 2017 and 0.42 in 2021 (preliminary data published by the Ministry of Economy and Public Finance), the lowest in recent years, reversing its decline in 2020 (0.45).
Likewise, the percentage of people living in poverty was reduced, according to the latest projections of the Economic Commission for Latin America in its report Repercussions in Latin America and the Caribbean of the war in Ukraine: how to face this new crisis? (June 2022), among the few countries where poverty will be reduced is ours, from 31.2% in 2021 to 30.3% in 2022, even in the scenario of 2.0 percentage points of inflation above the base scenario.
The application of a series of public policies within the framework of a new economic approach, a new model that points to and has outlined as one of its main missions the attention to social problems such as inequality and poverty, has had results and is cushioning the impact of the international crisis.

FORUM

Juanita Patricia Jimenez Soto
Economist
[email protected]

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Toolbox: Rethinking Poverty