Wednesday, January 26, 2011

Brookings: number of people in poverty drops below one billion

A new report from the Brookings Institution gives us some very good news that has gone largely unreported in the press. The rise of India and China's economies over the past decade has made a major impact of the number of people living in poverty. The huge populations within the two countries accounted for a huge drop in the number of poor people. India and China alone dropped the world's poverty population by two thirds. According to the Bookings Institution there are now 878 million people living in poverty, compared to over one billion in 2005.

From a Washington Post op-ed piece announcing the report, Laurence Chandy and Geoffrey Gertz summarize the conclusions. A download of the full report is available here.

Yet on one issue our understanding remains impervious to this new reality: the state of global poverty. Our sense of this topic remains firmly rooted in the year 2005 - the last year for which the World Bank has produced data on the number of people living on less than $1.25 a day. Thus we are routinely told that "today," 1.37 billion people around the world are poor, including 456 million in India and 208 million in China, but such figures are six years out of date.

A lot has changed in the past six years. The economies of the developing world have expanded 50 percent in real terms, despite the Great Recession. Moreover, growth has been particularly high in countries with large numbers of poor people. India and China, of course, but also Bangladesh, Tanzania, Ethiopia, Vietnam, Uganda, Mozambique and Uzbekistan - nine countries that were collectively home to nearly two-thirds of the world's poor in 2005 - are all experiencing phenomenal economic advances.

In the new Brookings Institution report "Poverty in Numbers: The Changing State of Global Poverty from 2005 to 2015," we updated the World Bank's official $1.25-a-day figures to reveal how the global poverty landscape has changed with the emergence of developing countries. We estimate that between 2005 and 2010, nearly half a billion people escaped extreme hardship, as the total number of the world's poor fell to 878 million people. Never before in history have so many people been lifted out of poverty in such a short period. The U.N. Millennium Development Goals established the target of halving the rate of global poverty between 1990 and 2015; this was probably achieved by 2008, some seven years ahead of schedule. Moreover, using forecasts of per capita consumption growth, we predict that by 2015, fewer than 600 million people will remain poor. At that point, the 1990 poverty rate will have been halved and then halved again.

The decline in poverty is happening in all the world's regions and most of its countries, though at varying speeds. The emerging markets of Asia are recording the greatest successes; the two regional giants, China and India, are likely to account for three-quarters of the global reduction between 2005 and 2015. Over this period, Asia's share of the world's poor is anticipated to fall from two-thirds to one-third, while Africa's share is expected to rise to nearly 60 percent. Yet Africa, too, is making advances; we estimate that in 2008 its poverty rate dropped below the 50 percent mark for the first time. By 2015, African poverty is projected to fall below 40 percent, a feat China did not achieve until the mid-1990s.

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