Growing the Wealth of the Poor - World Resources Institute

BOX 1.3 THE RURAL POVERTY IMPERATIVE20REDUCING POVERTY REMAINS A MORAL AND ECONOMICimperative for most nations. While there has been progress overthe last two decades in reducing the number of poor families,poverty persists on a massive scale, with nearly half of thepopulation of the developing world living on less than $2 perday. In addition to the lack of income associated with poverty,the poor experience a range of other deficits in nutrition,health, education, and opportunity, emphasizing poverty’smultidimensional nature. Social exclusion and political powerlessnessadd to the burden.For these reasons, poverty continues to be one of the mostformidable development challenges that nations face. To helpmeet this challenge, the Millennium Development Goals(MDGs)—adopted by the international community in 2000—establish quantitative and time-bound targets to reachdevelopment milestones in income, education, health, andempowerment. At the top of the list of MDGs is the goal to cutin half the number of people living in extreme poverty by 2015(starting from 1990 levels).THE DIMENSIONS OF WELL-BEINGPoverty translates into the lack of some or all of the aspects of humanwell-being. These aspects begin with sufficient income to obtainadequate food and shelter. But other dimensions of well-being are importantas well. These include good health, security, social acceptance,access to opportunity, and freedom of choice.ELEMENTS OF WELL-BEINGPhysical and Financial NecessitiesHealthSecurityGood Social RelationsFreedom of Choice and ActionSource: MA 2005:vi■ Adequate Livelihood■ Sufficient Nutritious Food■ Shelter■ Access to Goods■ Strength and Fitness for Activity■ Feeling Well■ Access to Clean Air and Water■ Personal Safety■ Secure Resource Access■ Security from Disasters■ Social Cohesion■ Mutual Respect■ Ability to Help Others■ Opportunity to AchieveWhat an Individual ValuesRecent Poverty TrendsWorldwide, the number of people living on less than $1 perday—the international standard for extreme poverty—hasdropped from 1.25 billion in 1990 to 986 million in 2004 (thelatest year for which data are available). This represents significantprogress, given the population growth that occurredduring this period. In 1990, 29 percent of the global populationlived below the $1 per day level; in 2004, that figure haddropped to 18 percent. The number of people living on lessthan $2 per day—another recognized poverty marker—has alsodropped; nonetheless, some 2.6 billion people still struggle tomake do at this marginal income level (World Bank 2007a:63,Table 2.6a).Although the global drop in poverty has been significant, amore detailed breakdown of poverty trends shows that povertyreduction has been highly uneven across regions. Much of therecent progress on poverty comes from China’s extraordinarysuccess in the last several decades in lowering its poverty rate.In 1981, 63 percent of China’s population—more than 600million people—lived on less than $1 per day; by 2004, some500 million fewer Chinese suffered $1 per day poverty(adjusted for inflation) and the nation’s rate of extreme povertyhad fallen to just below 10 percent, aided by years of doubledigiteconomic growth (World Bank 2007a:63, Table 2.6a;World Bank 2007b:40–41). (See Figure on page 19.)In contrast, other regions have seen more modest progress. Insub-Saharan Africa, where nearly a third of all poor people live,recent economic growth has helped reduce the share of people inextreme poverty by 4 percent from 1999 to 2004. Nonetheless,population growth has suppressed these gains and kept thenumber of people suffering $1 per day poverty at nearly 300million—more than 40 percent of the region’s population.Similarly, extreme poverty fell 4 percent in South Asia from 1999to 2004, but the number of people living on less than $1 per daystill exceeds 460 million—32 percent of the region’s population(World Bank 2007a:63, Table 2.6a; World Bank 2007b:40–41).Given these trends, the prognosis is mixed for meeting theMillennium Development Goal of halving the incidence ofextreme poverty from 1990 levels by 2015. At the global level,this goal is still within reach: extreme poverty is expected tocontinue declining to around 12 percent of the global populationin 2015. But many countries will not come close to meetingthe MDG goal, particularly in Africa. One worrying trend is thatsevere and persistent poverty is increasingly concentrated in socalledfragile states—countries that suffer from poor governanceand weak institutions, are often enmeshed in civil conflict, andhave little capacity to address poverty. In these states, povertylevels may actually increase to over 50 percent by 2015, as their