Lee-Roy Chetty
Lee-Roy Chetty

How poor is poor?

Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor. — James A Baldwin

Poverty and hunger remain a global challenge. However fewer people live in extreme poverty in the 21st century compared to previous generations. According to the World Bank, between 1981 and 2008, the proportion of people in the developing world living on less than $1.25 a day fell from 52% to 22%, and nearly 650 million people were lifted out of poverty.

In addition, despite the 2008 financial crisis and food and fuel price increases, global poverty has continued to fall precipitously. Conversely however, progress has been uneven and more than a billion people around the world remain in dire need.

Poverty is exacerbated in regions of the world where poor health and lack of education deprive people of productive employment, where environmental resources have been depleted or spoiled and where corruption, conflict and bad governance waste public resources and discourage private investment.

As a result, poverty needs to be confronted on many fronts. These include creating more and better jobs, delivering quality public services and infrastructure, and by protecting vulnerable people such as women, children and the elderly. There is however no single solution, with the best strategies depending on the circumstances in each individual country.

Definitions of poverty also vary from country to country.

To measure poverty in the world as a whole, a common standard is required. Because market exchange rates tend to understate the real incomes of developing countries and overstate the extent of poverty. Purchasing Power Parities (PPPs) are used to compare income and consumption levels between countries. PPPs are calculated to compensate for differences in the price of goods and services between countries. The result is a conversion factor that can be used like an exchange rate to convert values in one currency into those of a reference currency (such as the US dollar). The World Bank’s original “$1 a day” international poverty line was based on the poverty lines in the world’s poorest countries. By focusing on the standards of the poorest countries, the $1 a day line gave the global poverty measure a salience in focusing on the world’s poorest. Using the new 2005 PPP rates, the international poverty line was revised to $1.25 a day, which is the average poverty line of the 10 to 20 poorest countries in the world.

To date, global success in reducing extreme poverty over the past three decades has disguised uneven progress across regions. The greatest drop occurred in East Asia and the Pacific, where the poverty rate fell from 84% in 1981 to 13% in 2008 and the number of people living on less than $1.25 a day fell by 662 million.

In South Asia, the poverty rate fell from 61% to 36% over the same period. However, due to rapid population growth, the number of extremely poor people in the region increased and only returned to the 1981 level by 2008.

Closer to home and within an African context, in sub-Saharan Africa the poverty rate rose from 52% in 1981 to 58% in 1999, as many countries suffered a long period of civil discord and slow economic growth. By 2005, the number of people living in extreme poverty in Africa had almost doubled. But the poverty rate fell to 48% in 2008, and the number of people living in extreme poverty fell to 386 million people.

Rising incomes have brought more countries into middle-income status, so that nearly three-quarters of the world’s poor people now live in middle-income countries. In many of these countries, a poverty line of $2 a day or higher is more representative of the extent of serious poverty. There are almost 2.5 billion people living on $2 a day or less, and progress in reducing their numbers has been slow. The number of people living on between $1.25 and $2 a day is expected to remain constant at about 1.2 billion for the next decade.

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  • 11 Responses to “How poor is poor?”

    1. Mr. Direct #

      “Poverty is exacerbated in regions of the world where poor health and lack of education deprive people of productive employment, where environmental resources have been depleted or spoiled and where corruption, conflict and bad governance waste public resources and discourage private investment.”

      Wecome to Africa, I hope you enjoy your stay…….

      August 13, 2013 at 3:58 pm
    2. Momma Cyndi #

      What is the PPP ratio to the unemployment rate?

      If you earn a salary of R6,000 a month, you are doing okay. If you are earning a salary of R10,000 a month and supporting 5 people, you are struggling your behind off.

      August 13, 2013 at 6:28 pm
    3. Llewellyn Kriel

      If there is one thing us poor people – earning less than R3,000.00 a month – hate more than the ceaseless grind of our circumstances is to be degraded, mashed down into mere gee-whiz-ag-shame-moving-on statistics. We are PEOPLE just like you. Some of the luckier among us get food hampers or RDP houses in exchange for our votes. The rest have to rely on a cold-as-steel welfare “system” and our families.

      Please try to treat us with respect. We might not deserve it in your worldview, but, hell, it sure would make our lives a tad more tolerable.

      August 14, 2013 at 8:45 am
    4. Well “researched” article, but at the end of the day it means nothing to the poor, who struggle daily to get something to eat. 650 million were lifted out of poverty? Where? Why do we still have so many poor people amongst us?

      August 14, 2013 at 11:39 am
    5. Yaj #

      @ Leeroy
      You bring up an important discussion.
      Firstly, poverty is always relative within countries and between countries. So the real measure of poverty is the level of inequality between and within countries (GINI co-efficient). This is the crucial issue captured in the book “The Spirit Level” and the research by Wilkinson and Pickett -the authors.
      Secondly, $1.25 in 1981 bought you a lot more than $1.25 in 2008.

      Finally, we have a debt-based money system of compound interest and fractional reserve banking which is systematically designed to siphon money and wealth from the lower centiles of the population up to the upper centile. This is borne out by research done by Prof Margrit kennedy in Germany which demonstrates that wealth is transferred from from those most indebted to those that have net-interest-bearing assets.

      see http://www.positvemoney.org.uk for more info

      August 14, 2013 at 1:07 pm
    6. Momma Cyndi #

      Yaj

      I’m always suspicious of the Gini.
      Bangladesh has a lovely coefficient because everyone is poorer than dirt. Equality isn’t always a good thing if it is the lowest common denominator. The fiddling with it by various institutions is also confusing.

      August 14, 2013 at 5:15 pm
    7. Yaj #

      @ Momma Cyndi
      you are right however high levels of inequality within a country can have a negative effect on social cohesion and solidarity with higher levels of discontent.As I said poverty is all relative between countries and within countries themselves. The Bangladeshis may be dirt poor compared to USA but is it possible that they may be happier nevertheless.
      The other issue is the frequently heard rhetorical call to eradicate poverty. In reality we can do a lot to alleviate poverty and narrow the gap between rich and poor and prevent this chasm from widening, but eradicating poverty is nonsensical. Of course we can end hunger and destitution but absolute equality seems impossible and also undesirable as well.

      August 15, 2013 at 5:43 pm
    8. Momma Cyndi #

      Yaj

      Happiness is a state of mind. You get one lot who are miserable and another lot (in exactly the same boat) who are happy. The people of Bangladesh a lot different to the people of Lao. Both countries are dirt poor but their reaction to their poverty is miles apart. It often seems to be the middle class who are unhappiest in most countries.

      I do agree that complete equality is undesirable. The striving to succeed and to make the lives of your offspring better than yours was, is the number one motivation for all creatures on the planet. It is one of the most basic instincts. Without that ability to improve one’s lot, there is no reason to get out of bed in the morning.

      Having said that, a world where parents didn’t sell their own children for a bowl of rice and where kids didn’t die of malnutrition or hypothermia … well that would be a much nicer world

      August 16, 2013 at 6:04 pm
    9. Enough Said #

      The fact that 300 of the richest people have the same amount of wealth as 3 billion of the poorest is one of the greatest failures of modern civilization. Well worth watching.

      http://www.youtube.com/watch?v=uWSxzjyMNpU&t=dXNlcmlkPTIwMzE3NzI0LGVtYWlsaWQ9MjIyMzQ=&utm_campaign=website&utm_source=sendgrid.com&utm_medium=email

      >

      August 18, 2013 at 6:55 am
    10. Jack Sparrow #

      Well spotted Mama! Yaj, my guess is that just about everyone in B/desh (and Africa) would move to the US if they had that ability. Doesn’t that tell you something?

      August 18, 2013 at 7:16 am

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