Revisiting global poverty

The ‘one dollar a day’ poverty line was popularized by the World Bank in estimating the incidence and evolution of extreme poverty across the world. Today, this international poverty line has become US$ 1.90 a day below which a person is considered to be poor.

How has the world fared in terms of the battle against extreme poverty? The recently released ‘Global Monitoring Report’ (GMR), jointly authored by the IMF and the World Bank, has offered an upbeat estimate.[1] Given that the GMR is primarily intended to be a report card on the Millennium Development Goals (MDGs) which formally expired at the end of 2015 and became the ‘Sustainable Development Goals’ (SDGs) from 2016 onwards, the World Bank assesses trends in extreme poverty between 1990 (the initial year of the MDGs) and 2015 (the terminal year of the MDGs).

GMR argues that

‘…the world has made rapid strides in poverty reduction since 1990…The proportion of global population living on less than $1.90 a day was about a third of what it was in 1990. This finding confirms that the first (MDG) – cutting extreme poverty to half of its 1990 level – was met well before its 2015 target date.’

Based on ‘tentative projections’, GMR notes that by 2015 global poverty ‘…may have reached 700 million’ or a poverty rate of 9.6 per cent. At this rate of progress, extreme poverty would be negligible by 2030 – the terminal year of the SDGs – thus enabling the World Bank to argue that we will reach a ‘world free of poverty’.

But … will we? What is true for the world at large is not necessarily true for parts of the world. One of the world’s poorest regions, Sub-Saharan Africa, has not really attained the first of the MDGs. According to statistics reported in GMR, extreme poverty in Sub Saharan Africa was 56.8 per cent and was projected to decline to 35.2 per cent by 2015. This is certainly a commendable achievement, but does not mirror the rate of poverty reduction at the global level. This reflects the well-known feature that global trends in extreme poverty have been influenced by rather rapid progress in Asia – home to some of the world’s most populous nations.

There is another aspect to global poverty that induces one to adopt a more circumspect perspective. The international poverty line measures income poverty but ignores its non-income dimensions – such as lack of access to health, nutrition, education, employment, housing and so forth. Of course, both income and non-dimensions are significantly correlated, but there can be marked divergences. One estimate of a generic ‘multidimensional poverty index’ or MPI (which is now available for 101 countries) suggests that in 2015 1.6 billion people or 30 per cent of the population in 101 countries were ‘multidimensionally’ poor.[2] This is more than twice the incidence of income poverty at the global level. Another example of the discrepancy between income poverty and MPI can be captured by country-specific cases. Thus, in Chad and Ethiopia, the incidence of MPI is about 87% whereas for income poverty based on the international poverty line it is only 37%.

It is perhaps not surprising that a principal goal of the SDGs is ‘ending poverty in all of its forms everywhere’. That is indeed a long way off and by 2030 we may not inhabit a ‘world free of poverty’.

 

[1] http://www.worldbank.org/en/publication/global-monitoring-report

 

[2] http://www.ophi.org.uk/multidimensional-poverty-index/mpi-2015/

 

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