There has been considerable progress in global poverty reduction, although the extent of that progress is widely debated. MDG Goal 1 extreme poverty target was met early with global poverty rates halved, and about one billion people rising out of extreme poverty between 1990 and 2015. (The global proportion of people living on less than USD 1.90 a day fell from 37.1 per cent in 1990 to 12.7 per cent in 2012. For those living in the developing world it fell from 44.4 per cent to 14.9 per cent. World Bank, 2016, p. 4.) Poverty reduction has been rapid, particularly in East Asia and the Pacific and South Asia (mostly in China and India) (World Bank, 2016). However, an estimated 900 million people globally still lived under the updated international poverty line of USD 1.90 a day in 2012, and a projected 700 million in 2015 (World Bank, 2016). Poverty has become concentrated in sub-Saharan Africa and South Asia (World Bank, 2016) but has fallen in many countries, and overall. (World Bank data from 2012 puts the poverty headcount ratio measured at USD 1.90 a day (per cent of population) for East Asia & Pacific at 7.2 per cent (down from 60.6 per cent in 1990); Europe & Central Asia at 2.1 per cent (1.0 per cent in 1990); Latin America & Caribbean at 5.6 per cent (17.8 per cent in 1990); Middle East & North Africa: no data; South Asia at 18.8 per cent (50.6 per cent in 1990); and Sub-Saharan Africa at 42.7 per cent (56.8 per cent in 1990). The poverty ratio for fragile and conflict affected situations is 39.9 per cent.)
Despite substantial economic growth in many countries and considerable improvements in some poor people’s welfare, the poorest countries and the very poorest people within them, measured in terms of income poverty, have tended to be left behind (von Braun et al., 2009; World Bank, 2016). In addition, increasing numbers of absolutely and multidimensionally poor people now live in middle-income countries, especially China, India, Indonesia and Nigeria: countries containing large numbers of absolutely poor people have reached middle-income status (Poverty Analysis Discussion Group, 2012; Edward and Sumner, 2013; Alkire et al., 2013; World Bank, 2016). Lower-middle-income countries are home to about half of the global extreme poor – see the figure below (World Bank, 2016). Three-quarters of multidimensionally poor people live in middle-income countries (Alkire et al., 2016).
Source: World Bank, 2016, p. 35
Research estimates that while absolute poverty, measured at below USD 1.90 a day, continues to decline in low-income countries, growing numbers of people are living in relative poverty which rises with the mean, measured at a gradient of 1:2 above UDS 1.25 a day (Chen and Ravallion, 2012). The total number of relatively poor rose by about 360 million over 1981-2008 (while the corresponding number of absolutely poor fell by almost 650 million) (Chen and Ravallion, 2012). Economic growth has helped reduce absolute poverty, but economic growth has less of an impact on reducing relative poverty than tackling inequalities (Chen and Ravallion, 2012).
The extent of progress on poverty reduction depends on which poverty measures are used and there is debate on how relevant this is across different regions. The 2014 Asian Development Bank report, for example, argues that the former USD 1.25 poverty line measure has resulted in a false picture of the extent of poverty reduction in Asia (ADB, 2014). They argued that a poverty line of USD 1.51 a day (reconciled for the 2005 PPP) better reflected the higher cost of living in Asia and that poverty measures need to take into account the impact of food insecurity and vulnerability to risks such as natural disasters, climate change, illness, and economic crises (ADB, 2014). Using an Asia specific poverty line increased the number of extreme poor in Asia in 2010 by 1,017.36 million more people than was estimated using the USD 1.25 a day line. Similar arguments could be made for other regions which could potentially change the picture of progress. In addition, measuring multidimensional poverty produces different figures (see below).
There are 1.6 billion people living in multidimensional poverty, 53 per cent of whom live in South Asia and 32 per cent in Sub-Saharan Africa (Alkire et al., 2016). Nearly half of all MPI poor people (736 million) live with such extreme deprivations (e.g. severe malnutrition or no more than one year of education in the household) that they should be considered destitute (Alkire et al., 2016). In 2013 it was found that three-quarters of the multidimensionally poor and two-thirds of the severely multidimensionally poor lived in middle-income countries, compared to four-fifth of the USD 1.25 a day poor and about three-quarters of the USD 2 a day poor who lived in middle-income countries at the time (Alkire et al., 2013). In some of these countries poverty was becoming about issues around national inequality than a lack of resources (Alkire et al., 2013). For information on how multidimensional poverty has changed over time in a selection of countries, see the Human Development Report website.
Alongside growing numbers of relatively poor people, there are increasing numbers of people living in chronic poverty, as countries reduce absolute poverty, more of the remaining poverty is chronic (Shepherd, 2011). In 2005, between 336 and 472 million people were estimated to be trapped in chronic poverty, poverty which lasts for many years and which may be passed onto the next generation (CPRC, 2009; Shepherd, 2011). The poorest of the poor have benefited least from poverty reduction efforts (von Braun et al., 2009). They are often found within marginalised groups who also face great inequalities (see Section 3.1 and 3.2).
As the world has become more urbanised, more poor people (in numbers and proportion) now live in urban areas (Satterthwaite & Mitlin, 2014; von Braun et al., 2009). Depending on how poverty is measured and taking into account the higher costs in urban areas, between 30 and 50 per cent of the urban population have been found to live in poverty (Satterthwaite & Mitlin, 2014). The increasing amounts of poverty in middle income countries and the increasing numbers of urban poor requires a change in policies as these issue have been neglected (Satterthwaite & Mitlin, 2014; von Braun et al., 2009).
Poor people have also faced shifting vulnerabilities in the last decade (Poverty Analysis Discussion Group, 2012). Rapid shifts in the price of food and the increasing incidence of natural disasters due to climate change pose growing risks to the livelihoods of the world’s poorest and most vulnerable people (Poverty Analysis Discussion Group, 2012; Shepherd, 2011; Shepherd et al., 2013; von Braun et al., 2009). This threatens to derail international efforts to eradicate poverty by 2030.
- Alkire, S., Jindra, C., Robles Aguilar, G., Seth, S., & Vaz, A. (2016). Global multidimensional poverty index 2016. Oxford Poverty & Human Development Initiative.
- Alkire, S., Roche, J. M., & Sumner, A. (2013). Where do the world’s multidimensionally poor people live? (Working Paper No. 61). Oxford Poverty & Human Development Initiative.
- Chen, S., & Ravallion, M. (2012). More relatively-poor people in a less absolutely-poor world (Policy Research Working Paper 6114). Washington, DC: World Bank.
- Chronic Poverty Research Centre. (2009). The chronic poverty report 2008-09: Escaping poverty traps. Manchester: Chronic Poverty Research Centre.
- Asian Development Bank. (2014). Key indicators for Asia and the Pacific 2014. Mandaluyong City, Philippines: Asian Development Bank.
- Edward, P., & Sumner, A. (2013). The future of global poverty in a multi-speed world: New estimates of scale and location, 2010–2030 (Working Paper 327). Center for Global Development.
- Poverty Analysis Discussion Group. (2012). Understanding poverty and wellbeing – A note with implications for research and policy. London: DFID.
- Satterthwaite, D., & Mitlin, D. (2014). Reducing urban poverty in the global south. Abingdon, UK: Routledge.
- Shepherd, A., Mitchell, T., Lewis, K., Lenhardt, A., Jones, L., Scott, L., & Muir-Wood, R. (2013). The geography of poverty, disasters and climate extremes in 2030. London: ODI.
- Shepherd, A. (2011). Tackling chronic poverty: The policy implications of research on chronic poverty and poverty dynamics. Chronic Poverty Research Centre.
- Von Braun, J., Vargas Hill, R., & Pandya-Lorch, R. (Eds.). (2009). The poorest and hungry: assessments, analyses and action: An IFPRI 2020 book. Washington, DC: International Food Policy Research Institute.
- World Bank. (2016). Global monitoring report 2015/2016: Development goals in an era of demographic change. Washington, DC: World Bank.
