by Neeraj Kaushal; Economic Times, India, April 27, 2004
The World Bank’s estimates released last week show that the number of people living in extreme poverty has declined by 350 million in the last two decades. In 1981, 1.45 billion people were in extreme poverty. By 2001, the number had declined to 1.1 billion.
Tempting though it is to conclude that we are a quarter of our way into winning the battle against poverty, the reality is more complex and dismal. Excluding China, global poverty in 2001 remained as grim as it was in 1981. In fact, the scenario has turned a bit more dismal. In 1981, 845 million people lived on less than $1 a day (World Bank’s benchmark for extreme poverty). Two decades later, the number rose to 888 million. In South Asia, where more than a third of the poor live, the number of poor has been almost stagnant for the last two decades.
Counting the number of poor is a controversial business. Most people believe in the poverty rates. Rates also tell a more promising story than numbers. Global poverty declined by half from 40% in 1981 to 21% in 2001, according to the World Bank. So have we conquered half the battle?
Again, the answer depends on your geographic location. As with numbers, the aggregate rate too hides more than it reveals. The poverty rate in China fell from 61% in 1981 to 18% in 2001; in east Asia and the Pacific, poverty declined from 56% to 16%. Global poverty, outside of China, declined from 32% to 23%. In south Asia, poverty has been declining by one percentage point a year, it fell from 51% in 1981 to 31% in 2001. In India we have experienced a slow decline in poverty (about one percentage point a year) with almost no change in the number of poor.
Policymakers and researchers quarrel over these numbers. Some say that the World Bank estimates exaggerate poverty, others claim that these numbers are under-estimates. Yet whatever measure we use, the trend has been more or less the same. What is disconcerting about the trend is that most of the progress towards poverty reduction was achieved during the eighties. Since 1996, there has been no change in the proportion of the global population in extreme poverty. And, there are no major success stories outside of east Asia and China.
What do we conclude from these trends? One, countries that experienced high economic growth during the eighties were able to make huge strides into reducing poverty. Two, half-hearted economic liberalisation, globalisation and economic reforms have not made single dent on poverty. Three, global commitment towards eradicating poverty, always very low, appears to have further diminished during the nineties. Although net aid flows to developing and transition economies increased to $70 billion in 2002 from $54 in 1997, most of the aid was strategic that went to middle-income countries. According to the World Bank, 50% of the aid in 2002 went to middle-income countries including China, Serbia, Montenegro, and Israel. Only a quarter of the aid went to the countries of sub-Saharan Africa. Yet another indicator of lack of commitment towards poverty eradication and economic growth is world military expenditure. At $794 billion in 2002, world military expenditure was more than 11 times net aid, according to world development indicators.
Finally, World Bank estimates on poverty also suggest that the massive growth of local NGOs in developing countries has not been effective in taming poverty. During the nineties, the number of local NGOs in India increased to one million — there is one local NGO for every thousand people. Unfortunately, this massive mushrooming of NGOs, economic liberalisation and reform have failed to make much dent on poverty — poverty declined by approximately one percentage point during the nineties as it did during the eighties in the absence of NGOs or economic liberalisation. This is not to say economic liberalisation cannot reduce poverty, but to emphasise that the version of liberalisation India adopted has not led to poverty eradication.
Perhaps we need to go beyond the conventional measures of poverty to understand the contribution of NGO-led development. The UNDP has been arguing that poverty measured by income (or consumption) captures just one aspect of human wellbeing. Other aspects of wellbeing such as health, availability of clean drinking water and access to primary health care are after all as important as income or consumption. In most conventional computations of poverty, family is the unit of observation. These measures, therefore, fail to capture inequality within the family. If the NGO-led development in India has reduced gender inequality, conventional measures of poverty will not capture the changing power dynamics in Indian society, which affects the well-being of the poor.
April 27, 2004
Economic Times India
http://economictimes.indiatimes.com/articleshow/641157.cms
Originally published May 21, 2004