Worldwide extreme poverty reduction has mostly been the economic rise of China. Further reduction in extreme poverty will mostly be about success in India and then Africa. Americans have not only not been aware of the success against extreme poverty but mainly believe the opposite that poverty has increased and do not believe that poverty will be reduced in the future.
The World Bank reported on Oct. 9 that the share of the world population living in extreme poverty had fallen to 15% in 2011 from 36% in 1990. Earlier this year, the International Labor Office reported that the number of workers in the world earning less than $1.25 a day has fallen to 375 million 2013 from 811 million in 1991.
There are some other statistics on poverty that count all people and not just workers. In 1990, 43% of the population of developing countries lived in extreme poverty (then defined as subsisting on $1 a day); the absolute number was 1.9 billion people. By 2000 the proportion was down to a third. By 2010 it was 21% (or 1.2 billion; the poverty line was then $1.25, the average of the 15 poorest countries’ own poverty lines in 2005 prices, adjusted for differences in purchasing power). The global poverty rate had been cut in half in 20 years. Over 660 million of the people lifted out of poverty were in China. China’s faster than expected economic success has been the reason for the faster than expected worldwide move out of extreme poverty. A large part of the remaining success has been other countries in Southern Asia (India, Indonesia, Thailand etc…)
China has owed its economic rise to cheap coal energy and becoming the global factory for manufactured goods.
The progress that has been made gives the illusion that smooth progress is possible. The height of the curve at the poverty line is diminishing precipitously, meaning that the number of immediate poor is continuing to fall. In our baseline scenario, the number of people living between $1.20 and $1.25 a day drops to 56 million in 2020—the year when our baseline falls behind the historical trajectory of poverty reduction—and 28 million in 2030. Despite assumptions of slightly stronger consumption growth per person between now and 2030 (averaging 3.4 percent), and growth being equitable, it is not possible to maintain the trend rate of poverty reduction with so many fewer individuals ready to cross the line.
After India then the world will need to lift up the people in the poorest parts of Africa who are further away from the $1.25 per day line. Instead of $1.10-1.24 per day they are at 0.50 to 0.80 per day.
India is well placed to take up the reigns from China and drive global poverty reduction over the coming decade. But soon after, sustaining the rate of global progress will become increasingly hard. Further reductions in global poverty will no longer be accounted for by individuals who today are nearest the poverty line in countries enjoying growing prosperity, but by those who currently stand furthest from the line in environments where the prospects for sustained improvements in living standards are most tenuous.
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.
84% of Americans are unaware global poverty has reduced so drastically. More than two-thirds (67%) say they thought global poverty was on the rise over the past three decades.
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 could rise to half in 2018 and nearly two-thirds in 2030.
The World Bank has recently set a goal to reduce extreme poverty around the world to under 3 percent by 2030. It is unlikely that this goal can be achieved by stronger than expected growth across the developing world, or greater income equality within each developing country, alone. Both factors are needed simultaneously.
SOURCES – Brookings Institute, World Bank, American Enterprise Institute, BARNA