How did the global poverty rate halve in 20 years? Jun 2nd 2013, 23:50 by J.P.P. POVERTY is easy to spot but hard to define. America sets its poverty line at $11,490 of income per year for a one-person household, or just over $30 a day. Any income below that amount is judged inadequate for the provision of fundamental wants. Other rich countries set their poverty lines in relative terms, so an increase in the incomes of top earners results in more poverty if everything else is held constant. The threshold for dire poverty in developing countries is set much lower, at $1.25 a day of consumption (rather than income). This figure is arrived at by averaging the poverty lines in the 15 poorest countries, not because $1.26 spells comfort. This is the yardstick by which poverty reduction in poor countries is measured. Remarkably, this poverty rate has halved worldwide, from 43% in 1990 to 21% in 2010. How did this happen? Presidents and prime ministers in the West have made grandiloquent speeches about making poverty history for fifty years. In 2000 the United Nations announced a series of eight Millenium Development Goals to reduce poverty, improve health and so on. The impact of such initiatives has been marginal at best. Almost all of the fall in the poverty rate should be attributed to economic growth. Fast-growing economies in the developing world have done most of the work. Between 1981 and 2001 China lifted 680m people out of poverty. Since 2000, the acceleration of growth in developing countries has cut the numbers in extreme poverty outside China by 280m. How that growth is distributed matters too. In a country where income inequality is high, each percentage point of GDP growth will do less work than the same growth would in a more equal place. This is great news. Unfortunately, taking the remaining billion people above the threshold will be harder. The next country that should move millions of people across the line will be India, whose economy has slowed. Then it will be the turn of sub-Saharan Africa. By 2030 two-thirds of the poorest will be in fragile states like Congo and Somalia, where they will be hard for domestic governments or foreign agencies to help. Still, shifting people above the threshold that marks dire poverty has begun to look achievable within a generation.... The Economist
Posted on: Thu, 06 Jun 2013 10:46:42 +0000
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