Uddin, Tanvir (2009). "A Capability Approach to Microcredit Programs in Bangladesh: Why Legal Empowerment of the Poor is Important for Long-Term Poverty Reduction" Paper presented at the 6th annual conference of the HDCA, 10-12 September 2009, Lima, Peru.

Microcredit has facilitated an alternative and innovative attempt at poverty reduction in many developing countries. However, it cannot singularly achieve long-term development of fragile and unstable communities. In countries such as Bangladesh, recurrent severe flooding and external economic shocks such as food price rises exacerbate the poor’s vulnerability. These forces can undermine the achievements and benefits of microcredit programs. A more severe and underlying problem is institutional weakness in the social, economic and political structures of society and the rule of law. More than economic gains, the poor often value legal empowerment as part of an expanding capability set to address long-term problems related to legal identity, political participation and access to basic human rights. The capability approach to development focuses on the ‘capabilities’ of an individual which covers their potential well-being and human development through enhanced functioning in society through economic, political and social means collectively. Thus, a capability approach to microcredit can assist in analysing the situation of the poor in terms of their economic, political and social capability needs and to develop appropriate policies to expand capability sets. This is particularly important for women, for whom neither the acquisition of credit nor constitutionalising and legislating rights can address underlying societal and environmental factors. Microcredit needs to be reconceptualised to incorporate notions of capabilities. Hence, a holistic and long-term oriented development program can be initiated to address the challenges of poverty alleviation in politically and socially unstable environments.