Asset-based Approaches to Poverty Reduction in a Globalized Context; An Introduction to Asset Accumulation Policy and Summary of Workshop Findings

Asset-based approaches rooted in the international poverty alleviation/reduction debate of the early 1990s have been heavily influenced by Amartya Sen’s work on famines and entitlements. This paper provides an introduction to asset-based approaches to poverty reduction in a globalized context. It shows the added value that asset-based approaches can provide in aiding understanding and thus in developing more appropriate long-term poverty reduction strategies. The author structures the paper around a series of pertinent questions in order to evaluate what new insights an asset-based accumulation framework can contribute to poverty reduction and poverty diagnosis.

To answer such questions the paper draws on a longitudinal research project on inter-generational asset accumulation and poverty reduction from 1978 to 2004 in Indio Guayas – a slum community in Guayaquil, Ecuador. It also draws on background papers and on discussions at a Brookings Institution/Ford Foundation workshop on asset-based accumulation in June 2006. The paper discusses what an asset is and, specifically, what an asset-based approach is, and the links between asset accumulation and poverty reduction. The research in Guayaquil shows relative success with regard to long-term asset accumulation and poverty reduction, and therefore supports a proposal that looking at assets is essential to understanding upward mobility and transitions out of poverty.

The type of asset-based accumulation promoted by this paper shifts research emphasis from income poverty (1960s–70s) and consumption (1990–2000) to the production of individuals, household enterprises, labour market participation and poverty reduction. In response to a final question about how an asset accumulation approach informs practice in different contexts or sectors, five contexts are identified. These examples of opportunities for asset accumulation illustrate how to identify a “continuum” of assets accumulated by households moving out of poverty. Some assets such as housing and human capital (for example health) can be protective against poverty; financial, educational and political capital can be promotional assets; while social capital acts as the glue that enables communities to gain all the other assets. The conclusion highlights nine main priority themes that are relevant for future research and policy agendas, such as the constantly changing value of assets and therefore the need to re-evaluate policies, or the sequence of asset accumulation: from human capital to physical capital to financial assets.