Dynamics of Poverty in Rural Bangladesh: A Research Framework

Much has been written about the impact of various interventions, including microfinance, on poverty in rural Bangladesh, and yet many issues still remain poorly understood. The main analytical problem is that in order to appreciate the impact of interventions, it is first necessary to understand the nature of poverty dynamics i.e., the nature of trajectories along which the incomes of various groups of the poor (as well as the non-poor) are evolving over time; and the dynamics of poverty can only be discerned from longitudinal studies involving repeated surveys of the same sample of households at several points in time, but such studies are rare in Bangladesh. In order to fill this lacuna, the Institute of Microfinance intends to undertake a longitudinal study on poverty dynamics in rural Bangladesh, and the present paper lays out an approach towards such a study. The paper first develops an analytical framework for understanding the dynamics of poverty, and then presents a number of research questions that can be addressed through this framework. These research questions are derived from an analytical review of the existing literature focusing mainly on the few longitudinal poverty studies that exist but to some extent also on some cross-sectional studies that are relevant for the present purpose. The paper concludes by making some general remarks on the empirical methodology to be employed.