The Duke of Wellington on the aid bureaucracy

July 27, 2011

Maasai v investors in Ngorongoro, Tanzania: guest post by Jane Lonsdale

July 27, 2011

By 2015 Nigeria will have more poor people than India or China

July 27, 2011
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The remarkably upbeat Brookings report on global poverty that Charles Kenny discussed in his recent post has some striking stats.

“Between 2005 and 2010, the total number of poor people around the world fell by nearly half a billion people, from over 1.3 billion in Poverty 2005 v 2015 bar chart2005 to under 900 million in 2010. Looking ahead to 2015, extreme poverty could fall to under 600 million people—less than half the number regularly cited in describing the number of poor people in the world today. Poverty reduction of this magnitude is unparalleled in history: never before have so many people been lifted out of poverty over such a brief period of time.”

Methodology: “we take the most recent household survey data for each country, and generate poverty estimates for the years 2005 to 2015 using historical and forecast estimates of per capita consumption growth, making the simplifying assumption that the income distribution in each country remains unchanged.”

Most of the poverty reduction is down to the growth leaps of India and China – by 2015, Brookings reckon that Nigeria will have more poor people than either of the big two. Poverty will be ‘An African problem with fewer big targets.’ (see table and bubble diagram – double click to expand them)

And here’s some more on the $66bn figure I mentioned on Monday: “Providing every person in the world with a minimum income of $1.25/day—in other words guaranteeing the right not to live in absolute poverty—is Poverty 2005 v 2015 tablerapidly becoming feasible. In 2005, supplementing the income of each poor person in the world to bring their daily income up to $1.25 would have cost $96 billion, or 80 percent of the total volume of foreign aid disbursed that year. In 2010, with poverty less widespread and larger global aid volumes, the cost of such a global safety net would be just $66 billion, or slightly more than half of all official aid.

While the logistics of distributing cash to poor populations would not be without challenges, recent advances in biometric identification technologies—such as fingerprint and iris scanning—have greatly expanded the promise of implementing large-scale welfare programs in poor countries. Given the success of many cash transfer programs, significantly scaling up their use to provide a minimum income for all individuals living in poverty might be a fruitful new direction for donors to pursue.” [or governments could use for windfall from high commodity prices, as in Alaska]

The euphoric conclusion: “The new estimates of global poverty presented in this brief serve as a reminder of just how powerful high growth can be in freeing people from poverty. In the span of a decade, the share of the world’s population living in poverty could be cut by two-thirds, the number of countries where more than 1 in 6 people live in poverty could drop from 60 to 35, and 19 countries are poised to eliminate poverty altogether…… The “dream of a world free of poverty,” the oft-ridiculed motto emblazoned at the entrance of the World Bank, is, year by year, coming closer to reality.’

Next task, making sure the environmental impact of all that growth doesn’t undo all the good work…..

Poverty 2005 v 2015

2 comments

  1. Hmm. Between 1985 and 1996, Nigeria’s GNI at constant prices increased by 16%. The assumptions in the Brookings paper would have poor people’s incomes going up accordingly. But actually poverty got worse – the poverty headcount according to the national poverty line went from 43% to 65%. [Figures from World Bank database]

  2. The Brookings report is mistaken in that it inherits, without questioning, the problems built into the World Bank’s methodology for global poverty counts. Most importantly, the Bank’s method of calculating purchasing power parity is insensitive to the fact that poor people concentrate their expenditure on a small subset of the goods consumed in the entire economy. If the price of rice goes up and the price of flat screens goes down, the PPP conversion may remain unchanged even though the lowest economic groups will be much harmed by the former price change and not at all benefitted by the ladder. This critique is now well known (socialanalysis.org) but the Bank’s method is unquestioned in the Brookings report.

    Two further problems with the Bank’s method deserve mention here. 1. 1.25 PPP US 2005 is not grounded in any conception of what it takes to meet basic needs. It is simply an arbitrary average of the poorest country lines. Kenny’s recommendation to target those below 1.25 therefore assumes that being above this figure is of some normative significance. 2. If one looks at global poverty trends using the higher 2.50 PPP US 2005 line which the Bank also calculates, the trend (and distribution) of global poverty is entirely different. In fact, the absolute number of poor people between 1990 and 2005 remains unchanged, around 3 billion people.

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