Poverty

Published on: Last updated:

Bidonville du Cap
The level of poverty in China and India is lowering considerably, but elsewhere this is not the case. In Africa there is an increasing number of poor, and in other countries inequalities are deepening. Despite the strong commitments made as part of the of the United Nations’ millennium goals – the strategies to aid development and fight poverty – the results are still quite modest.

Definitions

Poverty is hard to define. It may relate to a lack of financial means, but it cannot be summed up as just that: access to health services, education and housing are also, for example, important factors. Moreover, what one understands by “poverty” varies considerably from one country, and from period in time, to another.

The notion can be defined in relative terms: for example, as a percentage of the median income of a population – this way it reflects the social inequalities of the country. It can also be defined in absolute terms, but this means establishing a list of basic needs or their monetary equivalent.

The first approach is used more often for studies on rich countries, the second for studies on poor countries. The different definitions of poverty are used by specialists as tools to comprehend the problem and propose solutions. They are often combined with development models and are thus connotated.

Thresholds

If it is difficult to define poverty, it follows that it is even harder to estimate the number of poor across the planet.

The most classic method consists in evaluating the number of people whose income is below a certain threshold. This carries with it an arbitrary component, which may even evolve with time. Thus, the international poverty threshold defined by the World Bank went from US$ 1/day to US$ 1.25 in 2005. It varies according to the country: US$ 1.25 in fact relates to the poorest countries; in “intermediary” countries the threshold is more like US$ 2/day.

Other thresholds exist: extreme poverty refers to people who have under US$ 0.70 disposable income per day.

Monetary indexes only reflect one aspect of the problem. They do not enable us, for instance, to adequately evaluate the situation of populations living in rural areas where the economy is not only monetary; where, for example, the principle of self-sufficiency is put into practice. Also, other international organisations have set up their own indexes. The United Nations Development Program (UNDP) thus developed two Human Poverty Indexes (HPI) that take life expectancy, education and exclusion into consideration.

Evolution

The World Bank published new figures on world poverty in 2008: 1.4 billion people lived with under US$1.25 per day in 2005, against 1.9 billion in 1981; that is, 500 million less. The number of poor has also decreased proportionally, going down from 52% of the world’s population in 1981 to 26% in 2005.

The bulk of this improvement concerns China and India: the rate of poverty has lowered spectacularly in Eastern Asia, from 80% in 1981 to only 18% in 2005.

Nevertheless, if we exclude China and India, demographic growth has meant that the number of poor has remained more or less constant in 25 years, at 1.2 billion people. And in Sub-Saharan Africa, the situation is getting more serious: the percentage of the population below the threshold remains about 50%, but as a result of the population increase on the continent, the number of poor has almost doubled going from 200 million in 1981 to 380 million in 2005.

Dispute over the Figures

The figures of the World Bank have been strongly contested. Firstly because they contained errors – which the authors recognized and corrected – underestimating poverty by about 400 million people.

Secondly, because the methodology used was questionable. In order to compare the standard of living in very different countries, the World Bank experts convert prices into US dollars, compensated by what is called “equivalent disposable income”; a method taking into account the different standards of living between countries. But these calculations are complex and rely upon fragile data and hypotheses. Some accuse the World Bank experts of favouring certain optimistic hypotheses in order to justify their institution’s policy of development aid.

Poverty and Social Inequalities

Furthermore, if the World Bank figures bear witness to the economic and social improvements in China and India, pockets of poverty continue to exist in the shanty towns and countryside of these countries – they are the forgotten ones of the development.

Indeed, if the standard of living on average has increased, the disparities between income have also increased, especially in these countries. The economic and social disparities between rich and poor have reached proportions unparalleled in History and they continue to grow (8). Today, 20% of the world’s population owns 80% of its wealth.

Poverty and Environment

Unsafe water, air and ground pollution, climatic changes: the poor are the first victims of environmental damage. The number of years of life expectancy in good health to be lost as a result of the environment is fifteen times higher in the countries of the South than in those of the North, per inhabitant.

Moreover, poverty and environmental damage form a vicious circle. Environmental problems make poverty worse (the deterioration of the ground hits small rural workers very hard, for example), and a lack of alternative pushes the poor to take from nature whatever they need in order to survive (illegal poaching and deforestation, for example). Also, increased pressure on environmental resources generate conflicts, of which the poor are the first to suffer (see Conflicts page).

Fighting Poverty

Fighting poverty in the South is generally linked to development aid. This can take a number of forms: economic cooperation, reducing or writing off of debt, public aid towards development (donations and preferential loans), international solidarity, etc. Nevertheless, this aid is insufficient to meet the needs estimated, and modest with regard the means of the West. According to the OECD, world aid towards development reached 106.5 billion US dollars in 2005, which represents only 0.25 of the GNP of the donating countries; by way of comparison, the Paulson plan to bail-out American banks in 2008 represents 700 billion US dollars.

Economically, other ideas and initiatives have been proposed. The Tobin tax, for example, aimed to put a tax of under 1%, on currency speculations, this tax would go towards helping poor countries. It has never been put into practice.

Micro-credit enables small projects to be financed and thus develop local economy. The system was developed at a greater scale by Muhammad Yunus, a Bangladeshi entrepreneur, founder of the Grameen Bank and Nobel Prize for Peace in 2006.

The effectiveness of all these methods is still under debate. The fact is that the countries that have progressed most markedly – China and India – are not the countries that have benefitted the most from development aid.

Millenium Development Goals

In 2000, the member states of the United Nations undertook an ambitious program to be reached by 2015, called the Millenium Development Goals (MDG). The first and most important of these goals is to reduce by half the number of people living in conditions of extreme poverty. The other objectives concern primary education for all, equality of the sexes, the reduction of infancy death rates, the improvement of birthcare, the reduction of AIDS and other sicknesses, conservation of the environment and the setting up of a global partnership for development.

In concrete terms, developing countries establish their own national strategies for the eradication of poverty, according to their specific needs and priorities. In theory, in exchange, they get the support of the international community.

Half-way through, these goals are far from being met. Yet, according to some experts they were objectives that could easily be met in 25 years. In looking at the difficulties posed in meeting the MDGs, all the strategies of development aid are brought into play.

« Global Poverty Reassessed : a Reply to Reddy » by Martin Ravaillon, International Poverty Centre, numéro 66 de septembre 2008

« Un dollar par jour. Que savons-nous de la pauvreté dans le Monde ? » 21 avril 2008, Centre d’Actualités de l’ONU, bulletin du 27 août 2008

Les pays en développement sont plus pauvres qu’on le croyait, mais le combat qu’ils mènent contre la pauvreté porte ses fruits, Rapport publié, le 26 août, par la Banque mondiale, et intitulé

La Banque mondiale découvre d’un coup 400 millions de pauvres en plus, par Damien Millet et Eric Toussaint du Comité pour l’annulation de la dette du tiers-monde

Lester Brown. Le Plan B Pour un pacte économique mondial. Editions Calmann Levy 2006 – p134

Idem

L’Atlas de l’Environnement du Monde Diplomatique, page 60 chapitre intitulé « Du Nord au Sud, malades de l’environnement »

The MDG project in crisis – Midpoint Review and Prospects for the Future, Jens Martins et Tobias Debiel. Global Policy Forum – 2008

Media Query: