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Dramatic Decline In Global Poverty, But Progress Uneven

April  23, 2004 - Poverty has declined significantly in developing countries over the past twenty years, but progress has been uneven, according to World Development Indicators 2004 (WDI), the World Bank's annual statistical report.

The proportion of people living in extreme poverty on less than $1 a day dropped by almost half between 1981 and 2001, from 40 percent to 21 percent of the global population.  In absolute terms, this means that the number people living in poverty fell from 1.5 billion in 1981 to 1.1 billion in 2001.

Gross domestic product (GDP) per capita in all developing countries rose by 30 percent during the same time period. 

Dramatic Progress in East Asia

East Asia was the poorest region in the world twenty years ago. Today, it is leading the developing world in economic growth and poverty reduction.

Dramatic economic growth in the region has pulled more than 500 million people out of poverty, and the GDP per capita tripled.  The proportion of people living in extreme poverty fell from 58 to 16 percent.

China alone lifted about 400 million of people out of absolute poverty. GDP per capita increased five times since 1981. The number of extremely poor people fell from over 600 million to slightly more that 200 million, or from 64 percent to 17 percent. 

This progress was fueled by economic reforms, openness to markets and competition, focus on private initiative and market mechanisms. 

"It is possible with these kinds of policies to achieve good performance on the growth front, and many other countries in the world are applying the same policies," said François Bourguignon, the World Bank's Chief Economist. Given the global recovery, we may expect that they will be able to benefit from that favorable evolution."

Close to Half the Population in Sub-Saharan Africa Lives in Poverty

Huge regional disparities remain, especially in Sub-Saharan Africa, where the number of poor people has increased significantly during the same time period and is projected to continue rising.

In 1980, one out of every 10 poor people lived in Sub-Saharan Africa. In 2000, the figure rose to one out of every three. Future projections predict that one out of every two poor people will live in Sub-Saharan Africa.

Between 1981 and 2001, the number of poor in Sub-Saharan Africa rose from 41 percent to 46 percent. In absolute numbers, this means that the number of poor jumped from 164 million to 314 million. The GDP per capita income fell some 14 percent. 

The depth of poverty in Sub-Saharan Africa is increasing, said Bourguignon.  HIV/AIDS has had a devastating impact on the continent, reducing the life expectancy from 50 years in 1990 to 46 years of life expectancy in 2002.

" It is possible that this evolution is putting many of those countries into some kind of trap,"  Bourguignon.

Even though many countries are undertaking very ambitious and courageous reforms, it's not clear that these reforms will be sufficient to get them out of the trap and lift them out of poverty, Bourguignon said. He emphasized these countries will need the help of the international community and rich countries.

He repeated the Bank's call for increasing international assistance as well as removing trade barriers and agricultural subsidies that hurt the world's poor. Seventy percent of the poor in the world in draw their earnings from agriculture, according to the WDI, and many of them would benefit if agricultural subsidies for rich-country farmers were removed.

Growth Has Been Slower in Other Regions

Growth has remained constant at a lower level in Latin America over the past two decades, and consequently, the proportion of poor in the population has been almost unchanged since 1981, with about 10 percent living on one dollar a day, while another 25 percent living on $2 a day. 

In the Middle East and North Africa, extreme poverty fell by about half since 1981.

The number of poor people Eastern Europe and Central Asia has been rising, particularly during the 1990s. Very few people live below one dollar a day, but the number of people living below $2 a day around in 2001 has risen to around 20 percent.

In South Asia, the number of poor also decreased, although the numbers have not been as high due a rapid population growth. The absolute number of people living on less than $1 a day dropped by just 34 million since 1990, to 428 million in 2001.

Reaching the Millennium Development Goals (MDGs)

This uneven progress raises concerns that the eight Millennium Development Goals (MDGs) approved by 189 nations in 2000, the first of which is to reduce the 1990 poverty rate by half by 2015, may be beyond reach for some countries. "Economic growth in China and India has delivered a dramatic reduction in the number of poor," said François Bourguignon, the Bank's Chief Economist. "But other regions have not enjoyed sustained growth and, in too many cases, the number of poor has actually increased. Although we are likely to reach the first Millennium Development Goal of reducing poverty by half worldwide by 2015, much more aid, much more openness to trade, and more widespread policy reforms are needed to achieve all the MDGs in all countries."

For more information on the World Development Indicators,