Extreme poverty dips in developing nations

By Satur C. Ocampo
At Ground Level | The Philippine Star

As governments, economists and investors fret and wonder when the current global recession will end — with its record levels of unemployment and impoverishment in the US and Europe — the World Bank has issued a report with a curiously surprising finding: extreme poverty in every developing region declined in 2005-2008.

More curious is that, “contrary to economists’ expectations,” preliminary WB survey data from 2010 indicate that the recession, which began in 2008, hasn’t altered that trend.

Not only that. The United Nations announced that the world had met the UN Millennium Development Goal target to reduce extreme poverty by 50 percent — five years ahead of the 2015 deadline. Between 1990 and 2010, the UN also reported, more than two billion people gained access to improved drinking water. That raised the proportion of people having such a resource from 76 percent to 89 percent.

“This is very good news. There has been broad-based progress in fighting poverty and accelerating progress,” remarked Jeffrey Sachs, UN special adviser on the MDG. “There’s a lot to be happy about.”

(People in extreme poverty are those who live on less than $1.25, or P53.59, a day.)

Here’s a concise but partial picture, as reported by the International Herald Tribune, citing statistics contained in the report (the title of which was not mentioned):

1. For the first time since the WB began compiling statistics in 1981, extreme poverty fell in every developing region of the world in 2005-2008. From more than 50 percent of the developing world’s population in 1981, those living in extreme poverty dropped to less than 25 percent in 2008.

2. In China, 700 million were lifted from poverty between 1981 and 2008. The proportion of the extremely poor to total population declined thus: from 84 percent in 1981 to 64 percent in the early 1990s, then to 17 percent in 2005, and 13 percent in 2008.

3. In sub-Saharan Africa, extreme poverty worsened throughout the 1990s, but declined from 55.7 percent in 2002 to 47.5 percent in 2008 — the first time it fell below 50 percent. (The WB website, however, shows these data for Africa: above 80 percent in three countries, above 60 percent in 5, and above 50 percent in 3 others.)

4. In the Middle East, the drop for the same period was from 4.2 percent to 2.7 percent.

No statistics were cited in the IHT report for the rest of Asia and Latin America.

These findings show the reverse of what the WB had predicted in its 2008 year-end report, which stated:

“Unemployment is on the rise in industrial countries and poverty is set to increase across low- and middle-income countries, bringing with it a substantial deterioration in conditions for the world’s most vulnerable.”

What can explain the reverse finding? The IHT report mentions these factors:

1. The strong economic growth in countries like Brazil, India, and especially China helped lift economies in Africa and South America. High commodity prices also helped the exports of developing nations.

2. Changed market conditions favored the developing nations. With the US and European economies stagnating, global investors were induced to put their money into the “emerging markets” among the developing nations (mainly in China, Brazil, India).

Charles Kenny, a Center for Global Development fellow in Washington, observed:

“In the past, economic crises in the rich world had a big and immediate impact on the developing world. But this time, the impact was much smaller, and we did not see developing countries follow the US and Europe into long recessions and slow recoveries.” Jeffrey Sachs concurred: “Long-term changes are really starting to take hold.” For instance, he cited the impact of policies tackling public health problems and information technology changes, such as the use of cellphones and internet connections even in remote rural areas.

“Looking at the balance of data, this is a very promising time for fighting poverty,” he opined, even as he factored in the effects of climate change (with attendant floods and droughts), high birth rates among the very poor, and the threat of armed conflicts in many developing and poor nations.

Most probably the World Bank report will be subjected to critical review and analysis by most economists who hold a dim view of the impact on the poor nations of the prolonged recession in the industrial states. Of course, if the reduced-poverty finding were validated it would truly be good news.

But how has the Philippines managed poverty alleviation? The data cited by Christian Monsod at the recent mining forum and by IBON Foundation in its 2011 year-end briefing weren’t encouraging at all. Look at them:

— Some 24 million Filipinos, who live on less than P46 a day [not P53.59], are deemed “poor”; 9.4 million, who have even less, P36 a day, are “food poor” (they can’t meet the daily minimum requirement of 2,000 calories).

— Over 28 years, the Philippines’ real per capita income increased only by 20 percent, compared with Malaysia’s 400 percent, Thailand’s 500 percent, and China’s 1,100 percent.

— Since EDSA I (26 years ago), income inequality has stayed the same: the top 1 percent of families’ (185,000 people) income equals that of the bottom 30 percent (5.5 million).

How shall we change this condition?

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E-mail: satur.ocampo@gmail.com
March 10, 2012

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