Trickle up

How pro-poor investments drive economic development

The current predominant neo-liberal approach favours the higher segments of society through investments and lower taxes, assuming that this also benefits the poor, the so-called Trickle down principle. However, the Trickle down effect manifests itself as a collateral benefit rather than having a robust impact. Also, the focus is very much on the formal sector and has limited impact on the informal sector, being the biggest sector in many countries. Moreover, there is limited evidence that this approach works. Therefore Partos and The Spindle decided to explore and elaborate a complementary approach in which the poorest and most vulnerable groups are considered to be the main target groups. The so-called Trickle up approach.

Trickle down policies favour (large) companies and rich people through tax facilities and investments, assuming that the positive effects will also ‘seep down’ to the poor at the bottom of the pyramid. Trickle up counters the dominant and questionable economic approach Trickle down. Trickle up is an approach in which we primarily invest in the poorest and most vulnerable groups, rather than the upper or middle classes, which will benefit wide economic development.

Ample meta-evaluations and findings by the Dutch knowledge platform INCLUDE and other sources, provide a growing body of evidence on the shortcomings of Trickle down, as well as the importance and benefits of Trickle up. However, this evidence appears to be too fragmented to form the basis of a solid discourse on the pros and cons of these approaches. For this reason, The broker was commissioned to conduct an evidence-based synthesis of the merits and shortcomings of Trickle down and Trickle up approaches. This resulted in a clear, convincing and concise overview that is provided in this publication. Besides, 10 principles for pro-poor driven economic development were developed. These principles are meant to guide our programmatic interventions and lobby efforts in pursuit of fair, and sustainable economic development, in which everybody counts and no one is left behind.

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Publication date: April 2019
Related news item: Leave No One Behind: the Exclusion of the Extreme Poor in Development Interventions, Guide on Inclusive Business and Trickle-up

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