Ending Extreme Poverty by 2030 requires a reduction in inequality

Global Development

Key Points

  • Extreme Poverty will not be eliminated by 2030 unless there is a historically unprecedented reduction in inequality.
  • The continuation of recent high economic growth rates for the next 15 years will not be enough to reach a 3% global extreme poverty rate by 2030.
  • For extreme poverty to be eliminated, the incomes of the bottom 40% of the income distribution (the poorest people) must grow an extra two percentage points higher than the average economic growth rate for the next 15 years.

Background

The latest estimates from the World Bank show that eliminating extreme poverty by 2030 is beyond humanity’s grasp, unless unparalleled steps are taken to reduce inequality. This is an important finding given that world leaders are set to commit to ‘Zero Poverty’ by 2030 as part of the United Nations Sustainable Development Goals (SDGs) Agenda. Reducing poverty and the SDGs are clearly about more than increasing incomes through economic growth. They are about broader issues such as health, education, gender equality, environmental sustainability, employment etc. However at the heart of SDGs is the notion of eliminating extreme poverty (defined as 3% or less of the world’s population living below $1.25 a day).

The continuation of recent high economic growth rates throughout most parts of the developing world will not be enough to reduce extreme poverty. Figure 1 shows how the global poverty rate is likely to change based upon historical growth patterns. Even in the best-case scenario, extreme poverty is likely to remain above 5% of the world’s population by 2030. While if growth rates are lower than they have recently been, like they were in the 1980s, then the global extreme poverty rate could be as high in 2030 as it is today.

Figure 1 – Changes in Extreme Poverty based upon different growth rates

Figure 1

The above predictions hold inequality constant. However if inequality was also reduced, along with these patterns of economic growth, extreme poverty could be eliminated. Figure 2 shows that if the incomes of those in the bottom 40% of the income distribution grow by an extra two percentage points faster than the average growth rate the target of a 3% global extreme poverty rate can be reached. This relies on growth rates continuing to be as high as they were in the 2000s and that the poorest people benefit the most from economic growth.

Figure 2 – Changes in Extreme Poverty based upon Growth for the Bottom 40%

Figure 2

Reducing inequality alongside growth appears to be a key factor in eliminating poverty. However achieving this will require significant changes to see the poor benefit the most from economic growth. These changes are essential if world leaders are serious about Zero Poverty being reached by 2030.

Source:

World Bank 2014 <http://www.worldbank.org/en/topic/measuringpoverty/publication/a-measured-approach-to-ending-poverty-and-boosting-shared-prosperity>

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Millennium Development Goals Scorecard

Global Development

This month world leaders are set to discuss the next Millennium Development Goals (MDGs), but it is also important to reflect on progress towards the current goals. The MDGs expire in less than 500 days and it is likely that more than half of the goals will not be met. The table below provides a simplified ‘traffic light’ breakdown of how the world has performed (green meaning the goal has been met, orange meaning some sub-goals have been met and red highlighting significant progress is still required).

MDG Scorecard Table

While there is much to celebrate in terms of the progress that has been made towards the MDGs, it is important not to lose track of just how much still needs to be done. For example, there has been limited progress towards Goal 5: Improving Maternal Health. The chance of a women dying during childbirth has fallen from 430 per 100,000 live births in 1990, to 230 per 100,000 live births in 2013. However, this is still far from the goal to reduce maternal mortality by three-quarters by 2015 (down to 108 per 100,000 live births). World leaders must not ignore the MDGs that are still to be met, such as improving maternal health, when planning for the future.

To find out more about progress towards the Millennium Development Goals, check out the 2014 Report, available here.

The Beginning of the End of Extreme Poverty

Global Development

Key Points

  • In 1820, almost everyone in the world lived in extreme poverty. Since this time, incomes in the developed world have increased more than 12 fold, eradicating extreme poverty in these countries. In the UK, income per person was equivalent to Africa today in 1820 and to Latin America today in 1950. While in China income per person was equivalent to Africa today twenty-five years ago and is now similar to Latin America.
  • Income per person only tells part of the story of how living standards have changed over time. For example, due to improvements in medicine, child mortality in Africa is around one quarter of the rate of the UK in the early 1800s, even though they had similar income per person.
  • The eradication of extreme poverty in less than two centuries in some countries provides hope that extreme poverty can be eliminated from all countries.

Background

For most of human history, extreme poverty was the norm. This only began to change in the last couple of centuries as some countries (largely in Western Europe and North America) experienced prolonged periods of economic growth.

The chart below shows the steady increase in income per person over the last two hundred years in the UK. In 1820, income per person was equivalent to Africa today, while by 1950 incomes were similar to Latin America today.

Income per person overtime

Rapid economic growth in China led to the same increase in income per person, which took the UK 130 years, in just 25 years. This has led to hundreds of millions of people escaping from extreme poverty.

To get a more holistic understanding of how living standards have changed over time, it is important to go beyond the income per person measure. Advances in medicine have allowed for higher levels of development for a given income level than what today’s developed countries experienced in the 1800s. For example, in the UK in the early 1800s, every second child died before the age of five. While around one in seven children die before five in Africa today.

Next month, World Leaders will discuss the next Millennium Development Goals and whether to include a timeframe to end extreme poverty by 2030. This is a truly historic moment in human history as it was really only a couple of centuries ago that extreme poverty began to be permanently reduced.

Sources:

World Economics 2014 <http://www.worldeconomics.com/Data/MadisonHistoricalGDP/Madison%20Historical%20GDP%20Data.efp>

Copenhagan Consesus Center 2011 <http://www.copenhagenconsensus.com/sites/default/files/health.pdf>

 

Mind the Gap

Global Development

Mind the Gap

Have you ever wondered how large the gap in living standards is between countries? Or how this has changed over time?

An excellent resource to allow you to look at the evidence in a visually engaging and user friendly way is http://www.gapminder.org/

For example, to explore how the Wealth and Health of Nations has changed over time click on the picture below to open Gapminder’s interactive display.

Gap Minder picture

Gapminder also has a series of brief and informative YouTube clips, such as the following video that shows how 200 countries have developed over the last 200 years in just 4 minutes.

The Next Millennium Development Goals?

Global Development

One year ago, a panel of world leaders (including David Cameron, the UK Prime Minister) released a report about the next Millennium Development Goals (MDGs). The purpose of the report was to suggest goals to be achieved by 2030, which can follow on from the MDGs (due to expire in 2015). This September these goals will be voted upon by world leaders and are shown below:

The Next MDGs?

Among policy makers these goals have grown in popularity, however civil society groups are yet to heavily promote them. The exception to this is the first goal, which is to End Poverty by 2030. Organizations such as the Global Poverty Project have mobilized large numbers of people in support of this goal.

Please consider sharing these goals with your friends and colleagues. If you want them to be changed, contact your local politicians and join civil society groups that are trying to influence them. After all, decisions about what the world should be aiming for by 2030 are far too important to be left to policy makers alone.

Read the full report here: http://www.post2015hlp.org/the-report/