Abhatoo - Centre Nationale de Documentation

High downside risk to income and livelihoods is part of life in developing countries.Climatic risks, economic fluctuations, and a large number of individual-specificshocks leave these households vulnerable to severe hardship. The paper explores thelinks between risk, vulnerability and poverty, taking a micro-level perspective. Riskdoes not just result in variability in living standards. There is increasing evidence thatthe lack of means to cope with risk and vulnerability is in itself a cause of persistentpoverty and poverty traps. Risk results in strategies that avoid taking advantage ofprofitable but risky opportunities. Shocks destroy human, physical and social capitallimiting opportunities further. The result is that risk is an important constraint onbroad-based growth in living standards in many developing countries. It is arelatively ignored part when designing anti-poverty policies and efforts to attain theMillennium Development Goals. The paper discusses conceptual issues, the evidenceand the policy implications.