While the world’s rich countries have been wallowing in stagnation and growing inequality over the past few years, the good news is that the poor countries have been experiencing economic growth – and making incredibly rapid progress in the fight against absolute poverty. A new report by a World Bank economist projects that another billion people can be raised out of absolute poverty over the next 12 to 17 years – in effect almost wiping out absolute poverty by 2030.
That’s great news for the world’s poorest people. But but ensuring that these projections become reality should be a priority for the rich world’s policy makers.
The planet’s ‘absolute poverty line’ is $1.25 a day. That’s around one-tenth of the value of the poverty line in the United States. People in absolute poverty spend the considerable majority of that income on buying the calories necessary just to stay alive. Everything else – including shelter, clothing, medicines, education, communication and transport – gets a budget of maybe 30 or 40 cents a day. Not surprisingly, the absolute poor die younger, are less likely to be literate or numerate, and more likely to be victims of violence and crime than richer people in the same country or across the world. And every day presents agonizing choices – buy pills to treat a child’s sickness or a bus ticket to look for work, shell out for a school textbook or buy a few fresh vegetables.
So it is wonderful news for humanity that the number of people living on less than $1.25 a day has been plummeting worldwide. According to a recent paper by Martin Ravallion, former director of the World Bank’s research department, 43 per cent of the population of the developing world lived in absolute poverty in 1990. By 2010 that had dropped to 21 per cent – it had more than halved. Behind that performance is the historically unprecedented growth performance of China over the past two decades, but also rapid economic growth across the rest of Asia, African and Latin America. Over the last decade, GDP growth rates in the developing world as a whole have averaged 6 per cent. Thanks to more rapid progress against poverty in developing countries other than China since 2000, 280 million more people have been lifted above the absolute poverty line.
Still, as many as 1.2 billion people worldwide lived on less than $1.25 a day in 2010. And how fast that number drops depends on continuing economic growth across the developing world. Assuming China continues to see robust GDP per capita performance over the next twenty years, there will be close to zero absolutely poor in that country. Mr. Ravallion estimates that if the rest of the developing world continues to perform as well as it has in the first decade of the new millennium, as many as one billion people will be lifted out of absolute poverty worldwide by 2027. The global proportion of people in complete deprivation would be 3 per cent in that year. If economic performance lagged in the developing world outside China, Mr. Ravallion estimates the global absolute poverty rate would remain as high as 12 per cent by 2030.
Mr. Ravallion’s numbers jibe with forecasts in a 2012 paper that I wrote with Andy Sumner and Jonathan Karver, colleagues at the Center for Global Development. Using a different forecasting approach, we suggested that on a pessimistic scenario, 8 per cent of the world’s population would live on less than $1.25 a day in 2030, and under an optimistic scenario that proportion would drop to 2.8 per cent. Both Mr. Ravallion’s and our estimates suggest the world could be within striking distance of wiping out absolute deprivation by 2030.
So what can the rich countries of the world to help ensure we do actually lift a billion or more out of absolute poverty by 2030? Aid can play a role. The Bolsa Familia program in Brazil targets poor families with cash transfers, conditional on parents sending their kids to school and getting them vaccinated. Such programs target poverty directly, but also help ensure the next generation has the health and education to keep themselves above the poverty line. Aid already supports similar programs in other countries – but they could be dramatically scaled up.
Beyond aid there’s a far larger agenda – not least reducing barriers on imports from poor countries, encouraging Canadian companies to invest in Africa, increasing the proportion of immigrants that the country admits each year that come from low-income countries and supporting the development of new technologies – from malaria vaccines to cheap solar cells – that could benefit poor people worldwide. Together, these pro-poor policies could have a huge impact on sustaining the global fight against absolute deprivation.
The battle against global poverty still won’t be won if we wipe out absolute deprivation by 2030. People on an income of $1.25 have far too little income to afford a good quality of life. People on four or five times that amount earn an income that would be unacceptable in the West. But it would be a start. And for all we in North America are mired in stagnation, we should play our part making sure it happens.
Charles Kenny is a Senior Fellow at the Center for Global Development and author of Getting Better: Why Global Development is Succeeding and How We Can Improve the World Even More.