Multidimensional Poverty Index 2023: How relevant is it for Bangladesh?
Although the MPI analysed overall poverty indicators measured between 2011 and 2022, it has updates for the years 2021 and 2022 only from five countries, which exclude Bangladesh
The United Nations Development Programme's Multidimensional Poverty Index (MPI) 2023 has brought some good news for many countries.
At least 25 countries among 110 having poor populations halved their global MPI value well within 15 years. The progress shows that the Sustainable Development Goal target 1.2 (reduce poverty by half by 2030) is attainable for them.
Although Bangladesh is not on the 25-country list, the South Asian country has significantly reduced its poor people's deprivations in terms of nutrition, child mortality, school attendance, accessibility to drinking water, sanitation, housing, cooking fuel, electricity and assets. The progress was measured by comparing the data from the Demographic and Health Survey 2014 and the multiple indicator cluster survey 2019.
Keep updated, follow The Business Standard's Google news channel
MPI identifies acute deprivations in health, education and standard of living by looking into the indicators mentioned above. One is 'MPI poor' if they are deprived in three or more weighted indicators.
During 2015-2019, around 19 million people in Bangladesh moved out of poverty, according to the latest MPI.
However, all the good news, particularly for Bangladesh, is invalid at least for now, some economists have said, as the latest MPI does not carry the information or consider the 'real' situation of post-Covid-19 Bangladesh.
According to MPI 2023, there are 1.1 billion poor out of 6.1 billion people across 110 countries. Although the MPI analysed overall poverty indicators measured between 2011 and 2022, it has updates for the years 2021 and 2022 only from Cambodia, Madagascar, Mexico, Nigeria and Peru.
Some Bangladeshi economists believe that the economic shock of the pandemic impacted Bangladesh badly, similar to numerous least-developed and developing countries where recovery was slow, pushing a huge number of their citizens into poverty. Moreover, unabated inflation in Bangladesh still has negative impacts on different groups of people including the middle and low-income people.
Zahid Hussain, former lead economist at World Bank's Dhaka office, seems sceptical about the "numbers" used in the latest MPI to define poverty in Bangladesh when data from multiple indicator cluster surveys remain "questionable".
He, rather, shows us a "puzzle" in Bangladesh's economy while comparing two Household Income and Expenditure Surveys (HIES) in 2016 and 2022.
The Household Income and Expenditure Survey 2022 says 18.7% of people lived under the poverty line when the percentage was more than 24 in the previous (2016) survey. The extreme poverty rate dropped to 5.6% from 12.9% in the said period.
"According to the HIES, Bangladesh reduced poverty even though it had witnessed the Covid-19 pandemic. In reality, income inequality is rising in the country. This is a puzzle," Zahid said.
The final report of the HIES 2022 let us know that the top 10% of the Bangladesh population now holds a substantial 41% share of the nation's total income, while the poorest 10% claims 1.31%.
An analysis of the HIES 2022 reveals that income inequality is higher in urban areas than the rural areas. In other words, it can be said that poverty reduction is higher in rural areas than the urban areas.
Zahid suggested studying the Labour Survey 2022 which reports a decreasing number of employment in the industrial sector, especially the employment of women, while the agricultural sector offered more employment.
The interesting thing is that the contribution of agriculture to GDP falls in terms of production, while the industrial sector contributes to the economy more. The agricultural sector accommodates more workers than the industrial sector. This could be translated like this: the increased number of workers in agriculture are earning less while the industrial sector — offering lower employment — earns more profits following higher productivity. This is one of the proven factors that widen income inequality.
Why did Zahid emphasise on income inequality while discussing a poverty index? Theoretically, as well as practically, "Widening income inequality increases poverty or reduces the pace of poverty reduction in a society. But the surveys say otherwise," he said, suggesting further research to find out the reasons.
Selim Raihan, executive director of South Asian Network on Economic Modeling (SANEM), also a professor at the Department of Economics, University of Dhaka, demands "readjustment" of the survey data.
"Consideration of the MPI 2023 is irrelevant when there is no update on the post-Covid-19 situation in Bangladesh. Even if it counts the HIES 2022, I would term it backdated because the findings [for example 18.7% of people have fallen under the poverty level] are 'unrealistic'," Selim said.
In January 2021, SANEM published a survey, saying that the upper poverty rate in Bangladesh increased to 42% in 2020 from 21.6% in 2018 while the extreme poverty rate went up to 28.5% in 2020 from 9.4% in 2018.
Selim also refused to consider the MPI 2023 data that says 18.2% of Bangladesh's population is vulnerable to multidimensional poverty. "The number would likely be higher if the MPI measured the indicators in the 2021-2022 period," he said.
The MPI 2023 states that multidimensional poverty exacerbates or is exacerbated by other challenges such as conflict, environmental threats, governance challenges and economic uncertainties. "Yet the hope is that the global MPI data will be used by many actors — across institutions, world regions, disciplines and sectors — to design high-impact, cost-efficient and evidence-based policies for poverty reduction."
Zahid believes that the pace of Bangladesh's economic growth is now slower compared to how the country advanced earlier. To recover the economy, he thinks, the latest MPI will be a food-for-thought for the policymakers.
The HIES of BBS is unidimensional as it measures only the consumption of food and non-food essential services. But the MPI sheds light on other indicators which also define people's life standards.
"Analysing consumption poverty is important. To bring the poor out of the poverty level, the government should focus on widening income opportunities. Two factors are important to increase income: more employment and increased wage. To increase wage, enhanced productivity is a must, and only skilled manpower can do that. Here, education and health are two crucial components for a society to increase productivity," Zahid concluded.
