Eliane Antunes participates in the Bolsa Familia program, or the "Family Grant" program, in Complexo da Mare, a favela in the north zone of Rio de Janeiro, Brazil, on Friday, Nov. 1, 2013. The program helps afford Antunes to feed her three grandchildren after her drug-addicted daughter left them. The program, which provides social aid to poor Brazilian families, celebrates its tenth anniversary today.Lianne Milton/The Globe and Mail
The number of people living in extreme poverty has fallen below 10 per cent of the global population for the first time ever, the World Bank announced Sunday, the continuation of a 35-year trend in declining numbers of poor people.
The number of people living in extreme poverty fell from 902 million people in 2012 – or 12.8 per cent of global population – to 702 million, 9.6 per cent, this year, bank president Jim Yong Kim told reporters.
The bulk of that improvement came from India, he said, where millions of people have moved out of statistical poverty in the past decade. The shift has been driven by growth in emerging market economies, spurred by high commodity prices, and by increased spending on health and education by governments in developing nations.
But the rate of decline in poverty will likely now start to slow.
"Much of the low-hanging fruit has been picked," Mr. Kim said. Economic growth in emerging economies has slowed, youth unemployment is high, there is volatility in financial markets. And by 2020, half of those living in poverty will be in "fragile states" – countries affected by conflict or by climate change, or both. And those problems may prove harder to address with the traditional array of anti-poverty interventions.
"We have to get better at working in fragile and conflict-affected states and see if economic development can improve situations, maybe even help to prevent conflict," Mr. Kim said. "We have not been creative enough, not collaborated enough in tackling these situations."
The bank may not be funded enough, either. "This agenda will cost trillions, not billions," Mr. Kim said. "How will we find the money?"
Global poverty as measured by the bank has fallen dramatically in the past three decades – from 1.9 billion people in poverty in 1990, to 1.2 billion in 2010, and now 702 million, using the projections for 2015. Some critics dispute the figures, saying the bank's poverty line is too low, and kept there to make its policies appear successful.
The Bank is now revising its global poverty line to define the poor as those who live on $1.90 or less per day – up from $1.25 per day. The figure reflects revised purchasing power parity in local currencies in the 15 poorest countries, chief economist Kaushik Basu said, in order to try to maintain an accurate picture given inflation, rises in consumer price indexes and other changes. The last poverty line was set in 2008 and reflected 2005 purchasing-power data; this one uses 2011 data.
"If the poverty line was left at $1.25, with the price changes that have taken place, that would have been a vast lowering of the poverty line," said Mr. Basu.
Martin Ravallion, a professor of economics at Georgetown University in Washington who used to work for the Bank, and lead the calculation of the $1.25 poverty line, said the new figure is probably as accurate as can be hoped, but misses a significant aspect of calculating poverty.
"There are rising concerns about relative poverty in developing countries – where the real standard of living is rising in the developing world, the idea of poverty is going to change," he said. "The absolute line is becoming irrelevant to people's perceptions of poverty in those countries."
The Bank's number is still useful to keep track of the absolute number over time, but it is not sufficient, he said. "You have to supplement it with an idea of poverty evolving over time consistent with public perceptions. Focusing solely on absolute poverty is going to make the bank and the international development community less and less relevant."
While some economists have suggested that a poverty line of $3 or even $5 a day would be more realistic, Justin Sandefur, a development economist with the Centre for Global Development in Washington said this figures keeps the focus on sub-Saharan Africa and South Asia and their development challenges. Latin America has more poor people with the new line, but still a far smaller share of the global total. Mr. Kim repeatedly stressed the success of bank-backed programs, such as cash grants for the poor, in moving huge numbers of Latin Americans into the middle class.
Prof. Ravallion argues that focusing on the poverty line, and those below it, is to risk overlooking the "large bulge of people just above this line" – who may no longer statistically be "poor" but whose living conditions are deeply precarious.
This is certainly the case in India, which contributed the largest share of people moved out of poverty in the drop now being heralded by the bank. Another story not told by these figures is just how many Indians not only did not move out of poverty, but did not experience any tangible benefit at all from the years of high economic growth.
The World Bank will hold its annual meeting in Lima, Peru, beginning Oct. 5.