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The Significance of Capital Assets in Moving Out of Poverty

Author

Listed:
  • Chandika Gunasinghe

    (Chandika Gunasinghe is Lecturer in Economics at the Department of Economics, University of Ruhuna, Matara, Sri Lanka. Email: gunasinghe@econ.ruh.ac.lk)

Abstract

This article investigates the importance of capital assets in moving out of poverty by reviewing the Samurdhi (Prosperity) Development Programme (SDP) implemented to eradicate poverty of Sri Lanka in 1995. One hundred and seventy beneficiaries from a randomly selected sample of the Ratnapura district were categorized into five poverty levels: extreme poor, poor, vulnerable non-poor, viable and sustainable households based on subjective range of income differences around two official poverty lines of the district for 1995 and 2009. A transition matrix estimated to examine households’ possible movements between these five poverty levels during 1995–2009 confirmed that the net impact of the poverty reduction initiatives of the SDP is highly questionable. However, the results of two multinomial logistic regressions estimated to investigate the relationship between a household’s ability to move out of poverty and the growth of its capital assets confirmed that there is a higher probability for a household to get out of poverty when its assets base is developed. A main policy message is that it is imperative for the SDP to reassessing and reformulating its policy strategies to strengthen assets base of beneficiaries of the programme in order to alleviate poverty.

Suggested Citation

  • Chandika Gunasinghe, 2010. "The Significance of Capital Assets in Moving Out of Poverty," South Asia Economic Journal, Institute of Policy Studies of Sri Lanka, vol. 11(2), pages 245-285, September.
    • Handle: RePEc:sae:soueco:v:11:y:2010:i:2:p:245-285
    DOI: 10.1177/139156141001100205
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    References listed on IDEAS

    as
    1. World Bank, 2002. "Sri Lanka : Poverty Assessment," World Bank Publications - Reports 15387, The World Bank Group.
    2. Clive Corder, 1997. "The Reconstruction and Development Programme: Success Or Failure?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 41(1), pages 183-203, July.
    3. Cramer,J. S., 2011. "Logit Models from Economics and Other Fields," Cambridge Books, Cambridge University Press, number 9780521188036.
    4. Okrasa,Wlodzimierz, 1999. "The dynamics of poverty and the effectiveness of Poland's safety net (1993-96)," Policy Research Working Paper Series 2221, The World Bank.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Poverty levels; assets base; transition matrix; multinomial logistic regressions; Sri Lanka; JEL: C00; JEL: C25; JEL: I32; JEL: I38;
    All these keywords.

    JEL classification:

    • C00 - Mathematical and Quantitative Methods - - General - - - General
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • I32 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Measurement and Analysis of Poverty
    • I38 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - Government Programs; Provision and Effects of Welfare Programs

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