13
Chapter II
Poverty: the official numbers
Monitoring and reporting on the levels, patterns and trends of poverty have
become a standard part of anti-poverty programme design and assessment.
With the steady internationalization of the poverty agenda, development organizations, both multilateral and bilateral, have demanded a template for
regular reporting, and new concepts, definitions, data sets and instruments
have been generated to meet this demand. Every major development organization produces its own report card, often ranking countries in terms of their
performance. Special interest usually attaches to the annual Human Development Reports of the United Nations Development Programme (UNDP) and,
of late, the Millennium Development Goals progress reports; however, it is
perhaps the reports of the World Bank on the incidence of poverty based on
the dollar-a-day criterion that generate the greatest interest and commentary
in the development community. Statistics have an awesome power, and these
global accounting exercises present statistical data to journalists, researchers,
practitioners and activists as irrefutable facts. What, then, are those ostensible
facts? The present chapter provides a summary of the currently most influential versions, largely associated with the World Bank’s dollar-a-day poverty
estimates.
Global poverty trends: 1981-2005
1
Poverty is most often measured in monetary terms, captured by levels of income or consumption per capita or per household. The commitment made in
the Millennium Development Goals to eradicate absolute poverty by halving
the number of people living on less than US$ 1.25 dollar a day represents the
most publicized example of an income-focused approach to poverty.
Based on this measure, the last 20 years have seen significant reductions in
the depth and severity of extreme poverty in the developing world.
2
In absolute
terms, extreme income poverty has fallen substantially, with the number of
1 The present chapter uses the revised series of country-level poverty data issued by the
World Bank in August 2008 following the findings of the 2005 International Comparison
Program. These data are available on PovcalNet, a web-based interactive research tool
which can be used to replicate Bank poverty estimates and test alternative assumptions
regarding, inter alia, the poverty line or country groupings. Despite many criticisms, the
Bank’s approach remains highly influential, and provides the prevailing benchmark for
discussions of the extent and trends of poverty globally, including in the United Nations
system. Hence, what we think we know continues to rely heavily on the accuracy of the
poverty estimates generated by the Bank.
2 For definitions of terms, see annex II.1.
14 Rethinking Poverty
people living on less than $1.25 a day having declined from a high of 1.9 billion in 1981 to a low of 1.4 billion in 2005. In relative terms, the proportion
of people living in extreme poverty dropped from 52.0 to 25.7 per cent during
this period (Chen and Ravallion, 2008).
3
Notwithstanding the continued growth in the world’s population, the
absolute number of people living in extreme poverty has fallen, regardless of
whether the poverty-line income threshold is set at $1.25 or raised to $2 or
$2.50 per day (figure II.1). This has occurred in the midst of an expanding
global economy, which has resulted, on average, in higher per capita incomes
in both developed and developing countries (Sachs, 2008; United Nations,
2005a). Since the 1960s, gross domestic product (GDP) in low-income countries has grown at an average of 4.1 per cent per annum, while GDP in middle-
3 For many developing countries, the estimation of current and past poverty levels is a
complex task given the general lack of reliable data. In these countries, information on the
depth, severity and duration of poverty may be limited, and available information may
be unreliable. To address some of these data gaps, the research programme of the World
Bank Poverty and Inequality Group has been engaged in improving current data as well as
methods and tools for poverty and inequality analysis through, inter alia, producing new
household-level data (notably through the Group’s Living Standards Measurement Study),
monitoring poverty and inequality using household-level data, developing more reliable
“poverty maps”, and rolling out computational tools such as ADePT and PovCalNet (see
http://go.worldbank.org/NT2A1XUWP0).
Figure II.1
World population and number of people living in poverty, 1981-2005
Sources: United Nations, Department of Economic and Social Affairs, Population Division; and World
Bank, Development Research Group (2009).
2005 1996 1990 1984 1981
1,000
2,000
3,000
4,000
5,000
6,000
7,000
Population living on less than $2.00 a day Population of less developed regions
Population living on less than $1.25 a day
Population living on less than $2.50 a day World population
Population (millions)
Poverty: the official numbers 15
and high-income countries has grown at an average of 4.2 and 3.2 per cent per
annum, respectively (Soubbotina, 2004).
By 2050, the world’s population is projected to surpass 9 billion, with
developing countries accounting for most of the 2.3 billion increase. The population of the developing world is expected to rise from 5.6 billion in 2009 to
7.9 billion in 2050. In contrast, the population of the developed regions is
expected to increase slightly, from 1.23 billion to 1.28 billion (United Nations,
Department of Economics and Social Affairs, Population Division, 2009). The
continued rapid increase in the population of developing countries highlights
the importance of having appropriate policies designed to promote the sustained economic growth and structural transformation of their economies
so as to ensure durable poverty reduction. Although the income-based (per
capita) conventional poverty measure is sensitive to population growth, careful
analysis does not provide any support for the Malthusian claim that poverty
can be attributed to population growth in excess of output growth, especially
food production. Instead, the demographic transitions experienced by a wide
variety of societies suggest that family sizes tend to decline with higher incomes and greater economic security. Conversely, poor families tend to have
more children in the hope of increasing contributions to household income as
well as of ensuring continued economic security as parents age (Leibenstein,
1957; Mamdani, 1972; Robbins, 1999).
As can be seen from figure II.2.A, faster rates of decline in the number of
people living on less than $1.25 a day occurred between 1999 and 2005. A significant proportion of this decline can be largely attributed to the rise in living
standards in East Asia and the Pacific which accompanied explosive economic
growth, particularly in China. Other regions of the world also experienced
a decline in the incidence of poverty, with the exception of Eastern Europe
and Central Asia, where the proportion of people living on less than $1.25 a
day increased from 1.7 to 3.7 per cent between 1981 and 2005 (figure II.2.B).
While this declining trend in poverty levels is welcome, it is also important to
point out that poverty rates remain unacceptably high in sub-Saharan Africa
and South Asia.
Figure II.3 presents global poverty trends with and without some major
countries and regions, thereby illustrating the role that these countries and
regions play in shaping the global trends. The absolute global poverty level in
2005 was about 1.4 billion; however when China is excluded from the analysis,
poverty increased from 1.1 billion in 1981 to about 1.3 billion in 1999, before
declining to about 1.2 billion in 2005 (figure II.3.A). However, if sub-Saharan
Africa is left out, the number of people living on less than $1.25 a day falls
precipitously, from 1.7 billion in 1981 to 986 million in 2005. Without the
rapidly growing developing economies of Brazil, the Russian Federation, India
and China, the absolute number of people living in extreme poverty actually
went up, from 619 million in 1981 to about 699 million in 2005. However,
in terms of incidence, poverty levels declined across all regions (figure II.3.B).