CHOOSING POLICY INSTRUMENTS TO REDUCE POVERTY AND HUNGER: Is It Possible to Overcome the Feasibility Dilemma?

So far in this first decade of the 21st century, more than 1 billion people are subsisting on less than US$1 per day, and more than 800 million people are suffering from hunger. Many countries, most notably in Asia, have made spectacular success in reducing their overall rates of poverty and hunger, but these countries still have regions where poverty remains widespread. And despite its high rates of poverty reduction, South Asia still has the greatest prevalence of underweight children in the world. In Africa, the number of poor people increased during the past two decades as poverty reduction failed to keep pace with population growth. Poverty and hunger persist throughout the world, even though their eradication has held prominence on the international agenda for more than half a century. The Food and Agriculture Organization of the United Nations was one of the first global institutions created at the end of World War II, because the international community recognized the need to ensure adequate food for all as a precondition for security and peace. Political declarations have continued voicing the goal of reducing poverty and hunger, most notably in the Millennium Development Declaration adopted by more than 190 nations. Given the billions of dollars invested and the commitment of the international community, why has overall progress in eradicating poverty and hunger been inadequate? Policy instruments that could be useful in reducing poverty and hunger are not in short supply. They include public investments aimed at promoting pro-poor growth, redistributive policies, and social safety nets. Thinking and practice on the appropriateness of various policy instruments have changed over time; some instruments have reappeared in different forms, such as communityoriented development, and new ones have been invented, like microcredit. Choosing the appropriate mix of policy instruments to reduce poverty and hunger is at the heart of nearly every country’s effort to define its development strategy. In view of trade-offs and the need for value judgments, the choice of policy instruments is inherently political, and views on the right mix of growthpromoting, redistributive, and environmentally sensitive instruments differ across the political spectrum, especially between the right and the left. The analytical techniques to assess the combinations of policy instruments have evolved in past decades—for example, by using computable general equilibrium models. Yet analysts often ignore the reality that every option for reducing poverty comes with at least one of three major challenges: political feasibility, administrative feasibility, and fiscal feasibility. The challenge of political feasibility implies that a policy instrument is politically contested and provokes political opposition. Instruments that face this challenge, such as land reform, are either not adopted at all or are implemented half-heartedly. The challenge of administrative feasibility points to the need for a wellfunctioning and effective public administration to implement the respective policy instruments. Policy instruments that are technically complex or create scope for corruption, like large-scale infrastructure projects, are particularly vulnerable to this challenge. The fiscal feasibility challenge especially affects policy instruments that require a constant flow of financial resources and are difficult to maintain over time, especially after donor funding ends; agricultural advisory services fall into this category. Likewise, policy instruments that require high investments, such as large-scale infrastructure, face fiscal feasibility issues. The fiscal feasibility challenge can lead to political challenges: if the poor lack political voice, the financial resources needed to provide services or infrastructure are either not invested or not directed toward the poor.