An end to poverty? WB’s new strategy unveiling at 2013 Fall Meetings : Page 2 of 4
Posted on 9 October 2013
of the 15 poorest countries and uses purchasing power parities (PPP) dollar. A PPP dollar theoretically buys the same quantity of goods and services in any country. Aside from the narrow basis (15 countries) for an international standard, critics also question the use of PPP dollar as its calculation is based on international baskets of goods that do not reflect the consumption behavior of poor households.
Illustrative of the contentious nature of the Bank’s poverty measurement, critics cite the “Black Monday” of poverty reduction—26 August 2008—when 430 million more people were suddenly plunged into poverty not because of a catastrophe but because the WB changed its poverty line from $1.08 to $1.25 due to rising criticism. Indeed, current money-based measurements of poverty show the tendency to underestimate global poverty. Several other indicators point to the breadth and depth of deprivation in the world today—some 3 billion people use wood, charcoal, coal and dung for cooking and heating; over 1.3 billion people are without electricity; about 2.5 billion do not have safe sanitation; and 783 million people have no safe drinking water.
Optimism from MDG 1
According to the WB, the first MDG on reducing global poverty was achieved in 2010, five years ahead of schedule, with 21% of people in developing countries who lived at or below $1.25 a day (down from 43% in 1990 and 52% in 1981).
But such declaration was based on rough estimates from few data sets available and largely due to China. Almost all the decline since 1981 is from China, which pulled 680 million people from the quagmire of poverty, reducing extreme poverty from 84% in 1980 to just 10% at present.
Meanwhile, the number of people living below $1.25 a day outside China such as Sub-Saharan Africa even increased during the period. In 2008, 386 million people were living in absolute poverty in Sub-Saharan Africa—96 million more compared with 1990 figures.
To reach the 2030 target of reducing the extreme poverty rate to 3%, the world will have to witness a decline in poverty by about one percentage point per year, or about the same average annual reduction since 1980, according to the WB. This implies maintaining a growth rate of per capita household income in developing countries at least as high as levels recorded since 1999.
The Bank anticipates the tough challenge ahead citing the prevailing high rates of extreme poverty in many countries, impacts of climate change, fragile and conflict-affected situations, among others, to highlight that the goal is a difficult ambition. Indeed, it will be harder to produce the numbers in the next 15 years without a repeat of China’s feat.
Critics also point out that the same goal of eliminating extreme poverty was set 40 years ago by then WB president Robert McNamara and the target date was year 2000. It seems that this is a moving goalpost for the WB and the historic opportunity it is proclaiming now also appears to have already occurred several times. For instance, in