How did the global poverty rate halve in 20 years?

Wednesday, June 5, 2013

POVERTY is easy to spot but hard to define. America sets its poverty line at $11,490 of income per year for a one-person household, or just over $30 a day. Any income below that amount is judged inadequate for the provision of fundamental wants. Other rich countries set their poverty lines in relative terms, so an increase in the incomes of top earners results in more poverty if everything else is held constant. The threshold for dire poverty in developing countries is set much lower, at $1.25 a day of consumption (rather than income). This figure is arrived at by averaging the poverty lines in the 15 poorest countries, not because $1.26 spells comfort. This is the yardstick by which poverty reduction in poor countries is measured. Remarkably, this poverty rate has halved worldwide, from 43% in 1990 to 21% in 2010.

How did this happen? Presidents and prime ministers in the West have made grandiloquent speeches about making poverty history for fifty years. In 2000 the United Nations announced a series of eight Millenium Development Goals to reduce poverty, improve health and so on. The impact of such initiatives has been marginal at best.

Source: The Economist (link opens in a new window)

Entrepreneurship, Impact Assessment
Base of the Pyramid, impact investing, poverty, social impact