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Poverty

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At A Glance

  • The developing world has likely attained the first Millennium Development Goal (MDG) target of halving the 1990 poverty rate by 2015. The 1990 poverty rate at the $1.25 a day poverty line in 2005 prices was nearly halved in 2008, and preliminary estimates for 2010 indicate that this MDG target was already achieved before the 2015 deadline. The international line of $1.25 a day is the average of the national poverty lines in the poorest 10-20 countries.
  • The share of the developing world living on less than $1.25 a day was 22 percent in 2008, down from 43 percent in 1990 and 52 percent in 1981. In terms of the number of poor, 1.29 billion people lived on less than $1.25 a day in 2008, as compared to 1.91 billion in 1990 and 1.94 billion in 1981. However, even at the current rate of progress, about one billion people will still live in extreme poverty in 2015.
  • Progress is less encouraging at higher poverty lines. Only a modest drop in the number of people living below $2 per day—the average poverty line for developing countries—occurred between 1981 and 2008, from 2.59 to 2.47 billion. With 1.18 billion people living on $1.25 to $2 per day in 2008, a great many people remain vulnerable and poor by standards of middle-income developing countries.

Poverty: Recent Estimates and Outlook

In every region of the developing world, both the percentage and number of people living on less than $1.25 a day declined between 2005 and 2008. This across-the-board reduction over a three-year monitoring cycle marks a first since the Bank began monitoring extreme poverty.

In 2008, 1.29 billion people lived below $1.25 a day, equivalent to 22 percent of the population in the developing world. Nearly three quarters of this total resided in South Asia (571 million) and Sub-Saharan Africa (396 million). Another 284 million lived in East Asia, and less than 50 million in Latin America and the Caribbean, Middle East and North Africa, and Eastern Europe and Central Asia combined. By contrast, in 1981, 1.94 billion people (52 percent of the population) were living in extreme poverty.

While poverty has declined in all regions, progress has been uneven. East Asia exhibited the most dramatic reduction, slashing its $1.25 a day poverty rate from 77 percent in 1981 to 14 percent in 2008. In South Asia, the proportion of the population living in extreme poverty is now the lowest it has been since 1981, falling from 61 to 36 percent between 1981 and 2008. Sub-Saharan Africa reduced the $1.25 a day poverty rate to 47 percent in 2008--the first time it has dipped below 50 percent. Also, the number of the extreme poor in the region declined since 2005, reversing the long-run increase from about 200 million in 1981 to almost 400 million in 2005.

Although China alone accounted for 663 million fewer people living on less than $1.25 a day in 2008 than 1981, around the time the country’s reform period began, the $1.25 a day poverty rate for the rest of the developing world (without China) still fell from 41 to 25 percent between 1981 and 2008. On the other hand, due to population growth the total poverty count (without China) was around 1.1 billion people in both 1981 and 2008, although the number had risen and fallen in between these years.

Other poverty lines show similar trends. A higher standard like the $2 per day poverty line is more appropriate for more developed regions. Over the period as a whole, the $2 a day poverty rate declined from 70 to 43 percent, but the number of people living below this line only dropped from 2.59 to 2.47 billion. The number has risen and then fallen substantially since 1999, when 2.94 billion lived below $2 a day.

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How the World Bank is Fighting Poverty

At the heart of the Bank’s work is its focus on poverty reduction and improving opportunities for the poor. In addition to causing hunger and malnutrition, poverty makes people vulnerable to shocks, such as the global economic crisis, climate change and natural disasters. The World Bank seeks to reduce poverty by supporting the design and implementation of country poverty-reduction strategies through a variety of analytical and lending instruments. It aims to expand growth opportunities, reduce vulnerability to shocks, and improve poor people’s access to basic services.

Despite the global economic crisis and other shocks, preliminary estimates for 2010 indicate that poverty continued to fall and that the first MDG goal was met. However, it remains that 1.2 billion people still live in extreme poverty, as judged by the $1.25 a day line, and nearly two and half billion people live on less than $2 a day. Clearly, the Bank has more to do in its fight against poverty. With global growth prospects recently downgraded and downside risks still on the horizon, challenges loom for developing countries. In light of these challenges and implications for poverty, the Bank is focused on creating more and better jobs, delivering better educational and health services and basic infrastructure, and protecting vulnerable groups.

Country-Led Development Strategies

Many developing countries have prepared national strategies to boost their effort to combat poverty. They define clear national plans and priorities for achieving fighting poverty, linking policy agendas to medium-term fiscal frameworks. As of February 2012, 67 low and lower-middle income countries prepared Poverty Reduction Strategy Papers (PRSPs) and 37 of them already produced the second or third generation of PRSPs. Also, many middle income countries set poverty reduction as targets or included different dimensions of poverty in their development objectives. The Bank aligns its activities to these national strategies through its Country Assistance Strategies or Country Partnership Strategies, which serve as a basis for harmonization with other development partners.

For more information on poverty, see: www.worldbank.org/poverty.
For poverty data, see: http://povertydata.worldbank.org and http://econ.worldbank.org/povcalnet.
For the latest World Bank poverty research, see: http://econ.worldbank.org/programs/poverty

Contacts:
Alejandra Viveros and Merrell Tuck
(202) 473-4306 and (202) 473-9516
aviveros@worldbank.org and mtuckprimdahl@worldbank.org

Updated March 2012




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