Ending $1.25 per day PPP poverty by 2030

The Brookings Institute has a study on getting poverty below 3% of population by 2030. The range of poverty outcomes for 2030 is large, implying that the future trajectory of global poverty is highly uncertain. Getting to the “zero zone”, defined here as a poverty rate of under 3 percent, by 2030 is unlikely to occur through stronger than expected consumption growth or an improving distribution alone. Both factors are needed simultaneously.

There is no magic ingredient for eliminating poverty. Rather it hinges on a complex recipe: better than expected consumption growth and distributional trends in favor of the poor; country-by-country progress in transitioning fragile and conflict-affected states onto a stable path; strengthening the resilience of vulnerable households and economies to other kinds of shocks; the incorporation of isolated or excluded sub-national populations into the orbit of their economies; more deliberate and efficient targeting of the poor, including the poorest of the poor, at a country and sub-national level.

While the future trajectory of global poverty is impossible to predict, our understanding of what it will take to eliminate poverty is growing. The challenge for the global community is to seize this knowledge so that the dream of achieving a poverty-free world becomes a reality

The 40-year period from 1990 to 2030 resembles a relay race in which responsibility for leading the charge on global poverty reduction passes between these three giants.

China’s relay leg is the most striking. It undergoes a dramatic transformation in which its population, which is initially predominantly poor, disperses over a range of consumption levels beyond the poverty line, driven by rapid, though often inequitable, consumption growth.

If India does not Screw up totally Good progress should be made at $1.25 per day poverty. sub-Saharan Africa needs work and help

With China’s poverty rate now down in the single digits, the baton has been passed to India. Large numbers of its population are on the precipice of escaping poverty, and others are not far behind, meaning that India has the capacity to deliver sustained progress on global poverty reduction over the next decade based on modest assumptions of equitable growth.

Once India’s poverty is largely exhausted, it will be up to sub-Saharan Africa to run the final relay leg and bring the baton home.

Diminishing Return Problem

Underlying the slowdown in the rate of poverty reduction in our scenarios is the property of diminishing returns. Diminishing returns are observed at two levels.

First, the rate of poverty reduction within each country is expected to slow as it approaches zero. We observe this slowdown in our scenarios for both China and India, which explains why they cede responsibility for leading global poverty reduction efforts before their poverty is eliminated.

Second, as global poverty approaches zero, it becomes increasingly concentrated in countries where the record of and prospects for poverty reduction are weakest. Today, a third of the world’s poor live in fragile states but this share is set to rise to half in 2018 and nearly two-thirds in 2030 according to our baseline scenario.

Eliminating poverty requires, among other things, the incorporation of isolated or excluded sub-national populations into the orbit of their economies; more deliberate and efficient targeting of the poor, including the poorest of the poor, at a country and sub-national level; and country-by-country progress in transitioning fragile and conflict-affected states onto a stable path.

Baseline, Worst Case and Best Case

The future could follow various paths as illustrated by the three divergent scenarios. However, in both the baseline and best case scenarios, the height of the curve at the poverty line diminishes precipitously, meaning that the number of people just below the $1.25 threshold falls. Sustaining the trend rate of poverty reduction requires that each year a new set of individuals is primed to cross the poverty line. Our analysis suggests that this will become increasingly difficult as some of the poorest of the poor struggle to make enough progress to be in a position to escape poverty over the next twenty years.

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