Monday, April 16, 2007

Hopelessness and World Poverty

I have noticed over the years that one of the most common excuses that people (both our political leadership and everyday donors) have about not contributing to assist the world's poor is a sense of hopelessness. There seems to be a notion that our efforts to reduce poverty will not be effective.

Yet, the data is to the contrary. The number of people living in extreme poverty is still too high, but both in terms of absolute numbers and as a percentage of the world's population, extreme poverty is going down. Today, the World Bank released its annual World Development Indicators. The press release about the release announced the latest extreme poverty numbers:

The proportion of people living on less than $1 a day fell to 18.4 percent in 2004, leaving an estimated 985 million people living in extreme poverty. By comparison, the total number of extreme poor was 1.25 billion in 1990. Two-dollar-a-day poverty rates are falling too, but an estimated 2.6 billion people, almost half the population of the developing world, were still living below that level in 2004.

Developing countries have averaged a solid 3.9 percent annual growth in GDP per capita a year since 2000, which contributed to rapidly falling poverty rates in all developing regions over the past few years. Another key reason dollar-a-day poverty fell by over 260 million between 1990 and 2004 was China's massive poverty reduction over that period. Indeed, East Asia's extreme poverty rate dropped to 9 percent in 2004.

In the rest of the developing world, good economic performance and a lower poverty incidence in most regions have offset a rise in the sheer numbers of poor people that might have otherwise accompanied population growth. In Sub-Saharan Africa, 298 million people were living in extreme poverty in 2004, practically the same number as in 1999, whereas the number of poor had increased continuously in the previous two decades.

The report finds that, in the past decade, poverty reduction was not always or everywhere commensurate with income growth. In some countries and regions, inequality worsened, as poor people did not reap the fruits of economic expansion, because of a lack of job opportunities, limited education or bad health.

"Growth is essential to reducing poverty, but it isn't the only factor. The World Development Indicators go beyond growth and poverty rates to ask how income is distributed, whether health care and education are improving, and to assess the business environment. These factors all affect the quality of people's lives," said Fran├žois Bourguignon, World Bank Chief Economist and Senior Vice President for Development Economics.

The Millennium Development Goals are built around concrete evidence that extreme poverty can be eliminated if we are willing to make a modest (0.7% GDP) investment in specific, well chosen investment areas. the World Bank data lends support to the fact that this goal can be achieved--as long as we do not give up hope.

Go here to learn how you can help to make extreme poverty a thing of the past.

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