Multidimensional poverty in Lao PDR

The gap between monetary and multidimensional measurement of poverty

• New poverty measure shows that income does not tell full story
• Income is a poor proxy for people’s overall well-being
• Despite Laos’ high economic growth, between-group disparities have persisted or even risen
• Improved poverty measures enable better allocation of resources

Background​

This PhD project explores the contested, but under-researched relationship between development, economic growth, and disparities. Recent development strategies have promoted economic growth and market integration as ways of curing poverty, and equated rising incomes with empowerment. The remarkable reduction of poverty in Laos appears to support such conclusions. But poverty is more than just dollars and cents.

Methods

We have developed a multidimensional poverty measure for Lao PDR based on Alkire and Foster’s methodology. It analyses how the benefits of economic growth are distributed across different geographic regions and population segments. Rather than focusing solely on income, we measure the sumultaneous deprivations people face in terms of health, education, and living standards. As Lao PDR exhibits both high economic growth rates and sustained or rising inequalities, achieving a better understanding of how risks are distributed is crucial for more equitable development.

Results

The new multidimensional poverty measure points to higher levels of poverty in Lao PDR. Moreover, the intensity of poverty is unequally distributed between population groups. Ethnic minorities experience more kinds of deprivation. Many households identified as multidimensionally poor are not considered income poor, and vice versa. In this way, multidimensional poverty measures can enable more efficient allocation of scarce resources.