[Excerpt] Throughout the world, there are fundamentally two, and only two, ways that people can escape from poverty. One is by earning their way out of poverty. The other is by receiving socially-provided goods and services that lift them out of poverty. Even with multilateral and bilateral assistance, low-income countries are too poor to be able to make a significant dent in poverty by the social services route alone. This means that creating more and better earning opportunities for the poor is the only other option available.
In policy discussions, two mistakes are often made. One is to assume that policy interventions need to be made in the sectors of the economy where the poor are. Such interventions would raise the earnings of the poor in the low-earning sectors. The other mistake is to assume that the most appropriate interventions are in the parts of the economy where the poor are not, so that more of them can be drawn into the higher-earning parts of the economy. Neither is correct. What is required is a careful comparison of the benefits and costs associated with each approach to policy.