1 billion cut in global poverty ‘possible’ by 2025

The number of people in the world living on less than $1.25 a day could be cut by 1 billion by as early as 2025, according to a research paper produced by the World Bank.

The paper's author looks at both 'optimistic' and 'pessimistic' scenarios for the future of global poverty in the coming decades, and estimates the length of time needed to reach key Millennium Development Goals agreed in 2000.

Key points

  • The developing world outside China saw slow progress in reducing poverty until around the turn of the century, but it has done much better since then. The acceleration in growth since 2000 casts doubt on the idea (still common in the development economics literature) that the typical less developed economy is in some form of 'poverty trap'.
  • Under an 'optimistic' scenario, where the progress against poverty since 2000 is maintained, 1 billion people could be lifted out of extreme poverty by around 2025–2030.
  • Under a 'pessimistic' scenario, the developing world outside China returns to the pace of growth and poverty reduction of the 1980s and 1990s, though with China maintaining its recent progress. In that case it might take another 50 years or more to lift one billion people out of poverty.
  • Although overall inequality in the developing world has been fairly stable since the 1990s, there have been signs of a recent rise. If this continues, higher economic growth rates than those seen since 2000 will be needed to reach the proposed poverty reduction target.

Source: Martin Ravallion, How Long Will it Take to Lift One Billion People out of Poverty?, Policy Research Working Paper 6325, World Bank
LinkPaper

Category: