The conceptual links between exclusion and poverty

People who are socially excluded are generally also poor, particularly if poverty is defined in a multidimensional way. There are, however, several key differences between the concepts of poverty and social exclusion: (i) the majority of people in a society may be poor, (i.e. suffer from adverse incorporation) but it does not make sense to say that the majority are excluded; (ii) in most cases social exclusion implies inequality or relative deprivation, whereas poverty need not; (iii) social exclusion implies that there are processes of exclusion and institutional processes and actors responsible for excluding, whereas poverty does not. Some authors also connect state fragility to social exclusion.

Stewart, F., Saith, R, & Franco, S. (2007). Alternative Realities? Different Concepts of Poverty, their Empirical Consequences and Policy Implications. In Stewart, F., Saith, R. and Harriss-White, B., Defining Poverty in the Developing World (217-37). Palgrave Macmillan.
What are the implications of alternative definitions of poverty? Do different approaches identify different people as poor? This chapter considers the implications of four approaches to measuring poverty – monetary, capabilities, social exclusion and participatory methods – through a theoretical review and empirical research in India and Peru. There is a lack of overlap empirically between the people identified as poor according to the different approaches to poverty, and this means that policies targeted according to one type of poverty will not reach people affected by other types.
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Silver, H. (2007). The Process of Social Exclusion: The Dynamics of an Evolving Concept. CPRC Working Paper 95. Manchester: Chronic Poverty Research Centre
What is social exclusion and is it a more useful concept for tackling disadvantage than poverty? This paper documents some of the mechanisms of individuals’ downward spiral, with the accumulation of dimensions of exclusion. The study of social exclusion aims to transcend poverty’s narrow focus on monetary or material resource distribution. Exclusion as a process of progressive social rupture is a more comprehensive and complex conceptualisation of social disadvantage.
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Bird K. (2007). The Intergenerational Transmission of Poverty: An Overview (ODI Working Paper No. 286, CPRC Working Paper No. 99). London and Manchester: ODI and the Chronic Poverty Research Centre.
Poverty is not transferred as a ‘package’, but as a complex set of positive and negative factors that affect an individual’s chances of experiencing poverty, either in the present or at a future point in their life. The factors influencing an individual’s likelihood of being poor include both the ‘private’ transmission (or lack of transmission) of capital and the ‘public’ transfer (or lack of transfer) of resources from one generation to the next. These can be positive or negative. The livelihoods framework is used to explore how the vulnerability and policy context influences individual and household level asset holdings and how capabilities, agency, perception of risk and levels of vulnerability and resilience combine with contextual and structural factors to influence individual and household responses to shocks and opportunities during the life course.
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The following paper makes a case for the rescue of ‘exclusion’ from the poverty debate. In a discussion which focuses on the ways in which policymakers in India have attempted to include typically excluded ‘Scheduled’ castes and tribes, the author argues that such designations have actually served to distract from the context and nature of exclusion, as well as the many forms of discrimination that various groups suffer.

de Haan, A. (2011). Rescuing Exclusion from the Poverty Debate: Group Disparities and Social Transformation in India (Working Paper No. 517). The Hague: International Institute of Social Studies.
This paper examines how India’s Scheduled Castes and Scheduled Tribes categories are applied in poverty analysis and social policy, including in India’s targeted poverty programmes and BPL (Below Poverty Line) Census. It finds that, while Indian poverty debates highlight the severe inequalities between social groups, they pay insufficient attention to the nature of exclusion. In some respects, support to deprived groups has led to the opposite of what progressive legislators intended and has made social identities more deeply entrenched in political frameworks.
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See also:  Hickey, S. and du Toit, A. (2007). Adverse Incorporation, Social Exclusion and Chronic Poverty (Working Paper  81). Chronic Poverty Research Centre, University of Manchester

Du Toit, A. (2004). Social Exclusion Discourse and Chronic Poverty: A South African Case Study. Development and Change, 35(5), 987-1010.
The concept of social exclusion has become increasingly dominant in European and UK debates about poverty. This article questions the export of ‘social exclusion’ discourse to the field of development and poverty studies. It considers the results of research into chronic poverty in the Ceres district of South Africa and argues that the concept of social exclusion often fails to capture how poverty can be exacerbated by the production and accumulation of wealth. The notion of ‘adverse incorporation’ better contributes to the understanding of poverty in developing societies.
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Adato, M., Carter, M. & May, J. (2006). Exploring Poverty Traps and Social Exclusion in South Africa Using Qualitative and Quantitative Data. Journal of Development Studies, 42(2), 226-247
Are poverty traps inevitable in a polarised society such as South Africa? This article investigates social capital and blockages to upward mobility using quantitative and qualitative data from the 1990s. Large numbers of South Africans are indeed trapped in poverty. Social relationships are most helpful for non-poor households. For the poor, social capital at best helps to stabilise livelihoods at low levels and does little to promote upward mobility. Poverty alleviation therefore requires more proactive efforts to ensure that households have a minimum bundle of assets and access to the markets needed to increase them.
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For a synthesis of recent evidence on state fragility and its practical implications for aid, including for social exclusion, see the following GSDRC topic guide:

Mcloughlin, C. (2012). Topic Guide on Fragile States. Birmingham: GSDRC, University of Birmingham