Global Poverty Rate Falling

Fascinating article on the Vox blog with the very un-fascinating title of Parametric Estimation of the World Distribution of Income.  In case you couldn't guess, Vox is a site for and by economists. 

The chart below is from the article and shows the dramatic decline in the global baseline poverty rate, which is defined as those living on less than $1 per day.

    

While South East Asia has done the best job at reducing poverty, poverty reduction happened all over the world during this time frame.  According to the article:

"From 1970 to 2006, poverty fell by 86% in South Asia, 73% in Latin America, 39% in the Middle East, and 20% in Africa."

The article also reports that the global Ginni Coefficient, a measure of world income inequality, fell substantially during this time frame (meaning global incomes became more equal).

Obviously there is still a lot to do on the global poverty front.  But this is still good news. 

A long term driver of change we follow closely is economic decentralization.  A major component of this trend is the growing economic power of the developing world. 

Led by China, India and others in South East Asia, the developing world's share of global GDP has consistently increased over the last few decades.  Many believe their share of global GDP will exceed that of the developed world by 2030.  This shift is driving a wide range of economic and social changes across the globe. 

This data nicely illustrates one part of this trend and helps explain why we believe the next decade will see substantial increases in global trade and small business globalization. 

Comments

[Sociology Research Paper]

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[steve]

D Warren: Good set of points in your comment. Poverty is clearly still a huge global issue and even if someone is living on $2.00 a day, I think that is still pretty grim.

But at the same time I am excited about the progress the world's made in lowering poverty rates and I'm optimistic these trends will continue as the global economy improves.

Steve

[D Warren]

Unfortunately, the World Bank had to adjust the poverty line to $1.25 in 2008, given increasing real food costs in developing countries. When this increase is taken into account, the number of people in abject poverty rises to 1.4 billion (according to the World Bank). Considering, further, that the current global recession is actually reversing some of the earlier gains, the above report (as of 2006) is less sanguine. Real, sustainable solutions to poverty remain a critical issue to the global community, with as many as 11 million children under age 5 dying every year from the consequences of poverty. The global death toll from poverty in the 1990s was approx. 270 million, mostly women and children -- a figure that was equal to the entire population of the United States at that time. Things truly aren't much better now.

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