The International Comparison Programme (ICP) of the World Bank has just released a report on the new poverty estimates in the developing world. Entitled as “The developing world is poorer than we thought, but no less successful in the fight against poverty”, the report revealed once again that the number of people living in extreme conditions of poverty has increased dramatically in the recent years.
The report further noted that Sub-Saharan Africa is the worst of all in the fight against poverty worldwide.
New Poverty Line but Still the Dark Picture
Being the first major effort to update data based on 2005 measures of purchasing power parity, the new report updated the 2004 estimates on poverty line which was based on then best available cost of living data from 1993.
“The new estimates are a major advance in poverty measurement because they are based on far better price data for assuring that the poverty lines are comparable across the countries. Data from household surveys have also improved in terms of country coverage, data access and timeliness”, stated Martin Ravallion, Director of the Development Research Group at World Bank.
The new estimates, according to the World Bank, offer a more accurate picture of cost of living in the developing countries and set a new poverty line of US$ 1.25 a day. This new poverty line is the average national poverty line of the poorest 10-20 countries.
The ICP report has shown that the number of people living on less than US$ 1.25 a day in developing countries has reached to 1.4 billion. This is an increase of 400 million people as compared to the 2004 estimates.
Despite all the neoliberal dreams, the persistence of the extreme poverty in many developing countries is interpreted by the critical voices as a clear sign of the failure of Neoliberalism.
Regional Disparity across the Globe
The report also revealed the fact that the neoliberal globalization has deepened the regional disparities across the globe. While the East Asia appears as the major ‘success story’ in terms of the leveling-off the poverty conditions, the Sub-Saharan Africa remains as the key loser from what has been going on.
The report underlined that once the world’s poorest region, East Asia, has managed to reduce the poverty from nearly 80 percent of the population living on less than US$ 1.25 a day in 1981 to 18 percent in 2005. This paramount improvement, according to the report, largely owes to the dramatic progress in poverty reduction in China.
However, the report admits that even this improvement has been insufficient to create a dramatic reduction in the number of poor people, which is currently about 600 million in the region.
The Sub-Saharan Africa, the report specified, has been the worst of all in the efforts to reduce the poverty levels. While in 1981 about 200 million people were living under extreme conditions of poverty, the number was about 400 million in 2005 estimates.
Evaluating the problem of extreme poverty in Africa, Justin Lin, the Chief Economist and Senior Vice President at the World Bank stated: “The new data confirm that the world will likely reach the first Millennium Development Goal of halving the 1990 level of poverty by 2015 and that poverty has fallen by about 1 percentage point a year since 1981. However, the sobering news that poverty is more pervasive than we though means we must redouble our efforts, especially in Sub-Saharan Africa.”
As for the other regions of the world, the report utilizes the median poverty line - US$ 2 a day in 2005 prices. By this standard, the report argues that the poverty rate has fallen since 1981 in Latin America, Middle East and North Africa. However, the report acknowledges that such progress has been insufficient to create a dramatic decrease in the total number of the poor.
Lastly, the report notes that the US$ 2 a day poverty rate has risen in Eastern Europe and Central Asia since 1981 while some progress have been experienced beginning from late 1990s.
August 29, 2008
Caglar Dolek, ISRO African Studies
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