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Making a lot of progress on poverty



Jonathan Power
TFF Associate since 1991

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December 20, 2006

LONDON - The horror of Sudan was on the front page three times last week. The extraordinary economic progress made by Africa, and many other parts of the Third World, as recorded and analysed in a new World Bank report released last Thursday, was mentioned a bare once in a shortish item on the business page.

This paper was no different from all the others. This is how news editors are trained to work - don’t report the trains that arrive on time, and feign ignorance about those that arrive early. Only the ones that are late or, better still, crash, are worthy of note.

According to the Bank, the developing countries are now in “the driving seat” of the world economy, with GNP growth reaching an average of 7% this year. (Average means, unless we forget, that if the statistical standard variation is normal half are above the mean.) Although the developing countries remain poor many are closing the gap with the developed countries. “The implications of sustained growth for reducing poverty around the world are nothing short of astounding,” concluded the report.  

If you want to do something useful write a letter to the editor of this newspaper and ask him to print on the front page the annex from the World Bank report that shows the growth rate for every Africa county both for this year and the estimates for the next two. Maybe a few readers will write e-mails and say, “why are you printing fiction?” But it wouldn’t be. Africa too is seriously on the move.

This should not be news, that much is true. It has been underway for some time. And indeed, if one looks at other indicators besides GNP there has been a good story going on for well over two decades now.

Since the mid 1970s almost all regions of the developing world have been increasing what the United Nations Development Programme calls the Human Development Index. This is a measure of progress that factors in longevity, educational levels and the standard of living. It gives a better snapshot of the progress of a society than does simple GNP statistics. As the late Mahbub ul Haq, the creator of the report and former Pakistani finance minister, once wrote, “the basic objective of development is not so much GNP levels, important though that is, but to create an enabling environment in which people can enjoy long, healthy and creative lives.”

Over the last three decades developing countries as a group have been converging on developed countries in life expectancy. (The exception is Africa where because of HIV/Aids life expectancy has reversed.)

Child mortality rates have also fallen dramatically. There are worldwide over 2 million fewer deaths than there were in 1990. But it is true that the pace of reduction has slowed. In India, for example, although its economy is booming the trend rate for reducing child mortality has slowed from 2.9% a year in the 1980s to 2.2% since 1990. In marked contrast its poorer neighbor, Bangladesh, with a much lower growth rate, has reduced child death rates by a significant 3.9% a year every year since 1990.

This goes to underline a general point - that increases in income are not always equivalent to improvements in human development. Countries such as Malaysia, Barbados, Botswana, South Korea, Cyprus and Taiwan lowered their infant mortality rates dramatically well before their GNP’s caught fire - indeed their early emphasis on basic health services and education helped them catch fire.

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Educational progress has also leapt ahead. There are 100 million fewer illiterates than there were in 1990. The share of the world’s people living on less than a $1 a day has fallen from 28% to 20%. And the world is on track to achieving the Millennium goal target of halving extreme poverty by 2015.

A good story, yes. But not enough. What slows the rate of progress is not so much lagging economic growth, (that, as the World Bank’s new report makes clear, is yesterday’s story), it is the worsening income distribution in many Third World countries. In Kenya, for example, if it could double the share of the poor in its future income growth it could halve its poverty rate by 2013. Brazil, in contrast, which has had the worst income distribution in Latin America, is now well advanced, thanks to recent reforms, in cutting its poverty rate substantially. Vinod Thomas, until recently the World Bank’s representative in Brazil, tells me that many studies of the Brazilian economy have convinced him that its poor income distribution actually slowed its growth rate.

Where do we go from here? Probably onward and up, despite all the wars, revolutions, tsunamis and other mayhem - if we listen carefully to what Thomas and Haq have to tell us.



Copyright © 2006 Jonathan Power


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