Understanding Poverty


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Understanding Poverty

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"Poverty", as defined by the SDC, is not confined to a lack of economic resources, but also to an absence of the wider means to live in dignity. Being poor is thus multidimensional (see capability dimensions above), encompassing vulnerability and discrimination, and is as relevant in situations of humanitarian crisis and economic transition as it is in more general development discourse.

                • Globally, one in nine people suffer from hunger and are not able to consume sufficient food to conduct an active and healthy life.

                • 617 million youth worldwide lack basic mathematics and literacy skills.

                • Globally, women’s participation in single or lower houses of national parliaments stood at 24.2 per cent in 2019.                        

                • In 2019​, about 648 ​million people lived in extreme poverty (less than 2.15​ $/PPP/day).

The Poverty Brief  explains SDC's understanding of poverty and introduces the main concepts around this theme. The paper summarises different ways of understanding and measuring poverty ranging from absolute, income-based definitions to multi-dimensional ones. It highlights that no single correct definition of poverty exists, but that we need to include particular social, cultural and historical contexts. Therefore, policy implications differ according to how poverty is defined. Finally, effective poverty reduction measures integrate the views of people living in poverty.


Further Information

​​Key Definitions


Pronounced deprivation in well-being​


Income or Consumption Poverty  
​Refers to lack of monetary resources to meet needs


​Absolute/Extreme Poverty ​
Poverty below a set line of what is required to access minimum needs for survival


​Relative Poverty    ​
Set in relation to others


​Multidimensional Poverty  
Recognises the many different ways in which people can be deprived


Transiently Poor   
​People who move in and out of poverty


Chronically Poor ​
People who are poor for years at a time, or even their whole lives



Source: Poverty and Inequality, GSDRC Topic Guide, June 2016

​​Poverty Data

The SDC understands poverty as a multidimensional concept.



Globally, 821 million people are undernourished. This means that one in nine people suffer from hunger and are not able to consume sufficient food to conduct an active and healthy life. (Source: SDG 2)

3 in 10 people around the globe lacked access to safely managed drinking water services and 2.4 billion people lacked access to improved sanitation with about 892 million people defacating in the open. (Source: SDG 6)



617 million youth worldwide lack basic mathematics and literacy skills. 750 million adults still remain illiterate, of which two thirds are women. (Source: SDG 4)



Around 4 billion people do not use the Internet and 90 per cent of them are from the developing world. (Source: SDG 17) 

Globally, women's participation in single or lower houses of national parliaments stood at 24.2 per cent on average as at January 2019. Source: SDG 5)



  • In 2012, over 900 million people lived in extreme poverty (1.90$/PPP/day).
  • Between 1990 and 2015, about one billion people escaped extreme poverty.
  • In 2008, 360 million more people lived in relative poverty than in 1981.

Hence, while extreme poverty is reducing, relative poverty (see SDG 1.2 and SDG 10) is increasing globally.

To access the World Bank Data base on poverty, click here.

​​The SDC: The Common Understanding

Poverty means discrimination, obstacles, and exclusion in satisfying the basic necessities of life; in the use and development of an individual’s physical and human potential, capacities, and creativity; in seizing the opportunities and choices for fashioning a fulfilling and dignified life; in the realisation of one’s aspirations; from participating in the formulation and decision-making stages of the social, political, and economic transformation processes.

Wellbeing implies being able to ensure one’s own subsistence in dignified conditions, with the ability to ensure one’s livelihood thanks to one’s own work; being an equal-footed and responsible member in the social, political, economic, and cultural dimensions of society; having equal access to resources, information, services, institutions, and decision-making structures; being protected from violence and arbitrariness; being able to count on assistance, security nets, and solidarity in the event of crises and disasters; enjoying a positive outlook towards the future for oneself and for the coming generations.

Creating the Prospect of Living a Life in Dignity: Principles guiding the SDC in its commitment to fighting poverty
Barbara del Pozo, SDC, 2004
The most recent SDC guidelines setting the framework for the agency’s approach to fighting poverty were published in 2004. They remain pertinent to this day.

Creating the Prospect of Living a Life in Dignity (PDF, 205 KB)

​​People-Centered Approach to Poverty Reduction

This understanding of poverty is based on concrete experience and is a basis for a people-centered approach to poverty reduction. It integrates the main issues of concern in the different departments of the SDC, notably:

• Social inclusion in Eastern countries in political and economic transition
• Protection and reconstruction for vulnerable women, men and children as part of humanitarian aid
• Globalisation that favours sustainable development, poverty reduction and social equity
• Poverty reduction in south cooperation

​​The SDC: The 10 Sub-Objectives of the Dispatch on Switzerland's Strategy for International Cooperation 2021–2024


   The following are the 10 sub-objectives of the Strategy for International Cooperation:

  • Strengthening framework conditions for market access and creating economic opportunities 
  • Promoting innovative private sector initiatives to facilitate the creation of decent jobs
  • Addressing climate change and its effects
  • Ensuring the sustainable management of natural resources
  • Providing emergency aid and ensuring the protection of civilians
  • Preventing disasters and ensuring reconstruction and rehabilitation
  • Strengthening equitable access to quality basic services
  • Preventing conflicts, promoting peace and respect for international law
  • Strengthening and promoting human rights and gender equality
  • Promoting good governance and the rule of law and strengthening civil society


​​OECD: The Development Assistance Committee's (DAC) Definition of Poverty

The SDC understands poverty as a multifaceted phenomenon that touches all aspects of life, undermining human dignity and well-being. As a member of the Development Assistance Committee (DAC) of the Organization for Economic Cooperation and Development (OECD), the SDC subscribes to the DAC definition of poverty encompassing five inter-linking dimensions, with gender as a transversal issue since globally, women are more likely to experience poverty than men. The five dimensions of poverty are: economic, human, political, socio-cultural and protective – as shown in DAC's multidimensional poverty framework below.

What is Poverty?
The widening meaning of poverty. The concept of poverty includes different dimensions of deprivation. In general, it is the inability of people to meet economic, social and other standards of well-being. The multidimensionality of poverty is now widely accepted. It is based solidly on research that includes major participatory studies of what poor people mean by poverty.

Defining Poverty: The Core Dimensions
An adequate concept of poverty should include all the most important areas in which people of either gender are deprived and perceived as incapacitated in different societies and local contexts. It should encompass the causal links between the core dimensions of poverty and the central importance of gender and environmentally sustainable development.
• Economic capabilities mean the ability to earn an income, to consume and to have assets, access to productive resources: land, animals, forests and decent employment.
• Human capabilities are based on health, education, nutrition, clean water and shelter.
• Political capabilities include human rights, a voice and some influence over public policies and political priorities. Powerlessness aggravates other dimensions of poverty.
• Socio-cultural capabilities concern the ability to participate as a valued member of a community. They refer to social status, dignity and other conditions for belonging to a society which are highly valued by the poor themselves. Social isolation is the main meaning of poverty for people in many societies.
• Protective capabilities enable people to withstand economic and external shocks. Insecurity and vulnerability are crucial dimensions of poverty with strong links to all other dimensions. To a large extent, poverty is experienced intermittently in response to seasonal variations and external shocks – natural disasters, economic crises and violent conflicts. Dynamic concepts are needed because people move in and out of poverty.

​​DAC's Multidimensional Poverty Framework 

"An adequate concept of poverty should include all the most important areas in which
people of either gender are deprived and perceived as incapacitated in different societies
and local contexts. It should encompass the causal links between the core dimensions of
poverty and the central importance of gender and environmentally sustainable development"
(DAC Guidelines: Poverty Reduction, p. 38).

Source: DAC Guidelines: Poverty Reduction


​​Hidden Dimensions of Poverty: International Participatory Research

ATD Fourth World and the University of Oxford, 2019

To learn more about the nine hidden dimensions of poverty, take a closer l​ook here.

​​United Nations' Definition of Poverty

Fundamentally, poverty is a denial of choices and opportunities, a violation of human dignity. It means lack of basic capacity to participate effectively in society. It means not having enough to feed and clothe a family, not having a school or clinic to go to, not having the land on which to grow one’s food or a job to earn one’s living, not having access to credit. It means insecurity, powerlessness and exclusion of individuals, households and communities. It means susceptibility to violence, and it often implies living on marginal or fragile environments, without access to clean water or sanitation.

Statement of commitment for action to eradicate poverty adopted by administrative committee on coordination

United Nations Economic and Social Council (ECOSOC), May 20, 1998

​​United Nations Development Programme: 2019 Global Multidimensional Poverty Index (MPI) 

The 2019 Global Multidimensional Poverty Index (MPI) data and publication 'Illuminating Inequalities' released on 11 July 2019 shed light on the number of people experiencing poverty at regional, national and subnational levels, and reveal inequalities across countries and among the poor themselves.

Jointly developed by the United Nations Development Programme (UNDP) and the Oxford Poverty and Human Development Initiative (OPHI) at the University of Oxford, the 2019 global MPI offers data for 101 countries, covering 76 percent of the global population.

The MPI provides a comprehensive and in-depth picture of global poverty – in all its dimensions – and monitors progress towards Sustainable Development Goal (SDG) 1 – to end poverty in all its forms. It also provides policymakers with the data to respond to the call of Target 1.2, which is to ‘reduce at least by half the proportion of men, women, and children of all ages living in poverty in all its dimensions according to national definition'.

The publication 'Illuminating Inequalities' previews ongoing research into trends over time for a group of countries including Bangladesh, Democratic Republic of Congo, Ethiopia, Haiti, India, Nigeria, Pakistan, and Peru. SDG target 10.1 calls for tracking the progress of the bottom 40 percent of the population compared with that of the total population – the publication includes case studies and a detailed analysis of the growth of those furthest behind – the ‘bottom 40%’.

​​The World Bank's Policy on Poverty Reduction 

The Bank's mission is sustainable poverty reduction. Poverty encompasses lack of opportunities (including capabilities), lack of voice and representation, and vulnerability to shocks. The Bank's support for poverty reduction is focused on actions, consistent with its mandate, to increase opportunity, enhance empowerment, and strengthen security. Within this broad framework, a critical priority is promoting broad based growth, given its proven importance in reducing poverty. For more information, click here»




 Key Documents