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Defining the exact meaning of poverty is a challenging task, since it varies across place and time; individual countries and international agencies have different definitions and measurements due to their different value systems, cultural norms and economic realities.

In an attempt to expand the conceptual definition beyond mere economic reasoning or material fulfilment, among others, Sen (2001) provides a fresh position regarding materiality and material need. He points out that material is just a tool, not an end, to fulfil human needs (Sen, 2001: 14), and emphasises the terms ‘functioning’ and ‘capabilities’ rather than mere availability (Sen, 1985; 2001: 74-76). ‘Functioning’ might refer to simple meaning, for instance the function of a product/service for a person, or the benefits of a commodity for a person (Sen, 1985: 10). However, it might have a more complex interpretation, such as what a person could contribute to a community, or having self-respect; these values could differ from one society to another (Sen, 1985; 2001: 10). Meanwhile, capability refers to “…the alternative combination of functioning that is feasible for her to achieve…is thus a kind of freedom” to achieve ‘functioning’ and to choose on how to fulfil their needs (Sen, 2001: 75, 90). In addition, he states that wellbeing means freedom of choice and refers to a person’s ability to control his/her own life, ‘the ability to survive’, and the ability to achieve ‘quality of life’; thus, his perspective emphasises that humanist aspects cannot be separated from the physical/material side (Sen, 2001: 24). Sen’s theory has been taken up by other researchers and organisations: the UN has indeed adopted his concept in developing the Human Development Index (Todaro, 2009: 19).

As a worldwide organisation, the United Nations (UN) has also paid serious attention to poverty and the relevant strategies to alleviate poverty. In the perspective of human development, the UN, by adopting a comprehensive policy, defines poverty as “… the denial of opportunities and choices most basic to human development - to lead a long, healthy, creative life and to enjoy a decent standard of living, freedom, dignity, self- esteem and the respect of others” (UNDP, 1997: 5). Therefore, the UN views poverty from a human development perspective, that is “a process of widening people’s choices as well as raising the level of well-being achieved” (UNDP, 1997: 15). This description, which can be considered a micro foundational definition of economic development, demonstrates the comprehensive nature of the problem in terms of being beyond ‘material need’.

Thus, it can be concluded that poverty is a condition where there is not only a lack of material, with people struggling to fulfill their basic needs (food, housing, other physical assets, income, and natural resources), but also a lack of access to health, education, decision-making, financing, role in society and political participation. Poverty must therefore be viewed as a complex and multidimensional problem in the economic, social and political senses, meaning that the relevant strategies must also address the multidimensionality in order to have a positive impact.

At this point, it is necessary to look at the relationship between poverty reduction and economic development. Allen (2000: 10) emphasises the importance of involving poverty alleviation in economic development. In the study of economic development, poverty is considered one of the important areas besides the issues of unemployment and inequality (Elkan, 1995: 7). In addition, in essentialising the nature and the scope of economic development, Todaro (2003: 196) states that the core of the development problem is poverty. Besides, the World Development Report of 1990, a report focusing on poverty, also states that “Reducing poverty is the fundamental objective of economic development” (WorldBank, 1990: 24). Therefore, it is obvious that poverty reduction and economic development are interrelated. This raises the existential question of what development actually is.

The word development can be defined as “…not only ‘good change’, but also all encompassing change which builds on itself, occurs at both societal and individual levels, and may be destructive as well as creative” (Allen, 2000: 48). In providing a process- oriented perspective, Elkan (1995: 6) defines it as “a process which makes people in general better off by increasing their command over goods and services and by increasing the choices open to them”.

Todaro (2003:17) identifies the importance of conceptual change in a broader perspective by defining development as “… a multidimensional process involving major changes in social structures, popular attitudes, and national institutions, as well as the acceleration of economic growth, the reduction of inequality, and the eradication of poverty”. If economic development is mainly about efforts to improve the quality of human life, how important is economic development to poverty reduction?

Before embarking on further discussion of the importance of economic development to poverty reduction in the next section, it is important to examine changes in the concept of economic development as it has evolved over the years. The pre-1970 era explored and defined economic development mainly from the economic, functional and macro economic view, using such macro economic indicators as change or development assessment. However, Zaman and Asutay (2009: 89) argue that a paradigm shift has occurred gradually since then, as economic development, and hence poverty, is now perceived as a multidimensional issue at the heart of which lies ‘micro (economic) dynamics’. Therefore, in the current times economic development and poverty are perceived as part of the micro dynamics of society, and changes in these can only be possible with the ‘development of the individual’, whereby the importance of human development and capacity-building is emphasised (Zaman and Asutay, 2009: 89).