Where the world’s poor live

If you think the majority of the world’s poor live in the world’s poorest nations, you’re wrong.

The Institute of Development Studies notes that the majority of the world’s poor – in this case defined as people in moderate poverty living on less than $US2 a day – live in middle income nation’s, with China and India home to half of these folk.

Citing World Bank figures, IDS says in an August policy briefing that another quarter live in populous middle income nations (MICs), such as Pakistan, Nigeria and Indonesia, while the remainder live in low income nations (LICs).

What’s more, 74 per cent of the world’s $US1.25 poor – what the World Bank describes as extreme poverty – live in middle income nations.

The numbers stand in stark contrast to the opportunity businesses see in China and India in particular, but The Economistnoted in July that the situation derives from the remarkable economic growth of MICs.

“This growth has lifted the countries themselves into middle-income status but left a minority of their populations mired in proverty,” The Economist says.

“The fact has significant policy implications, since if poor people live mostly in countries that could afford to help them, the foreign aid is probably irrelevant (or, at least, secondary) and the best way to raise people out of poverty would be through changing domestic policy.”

The Economist also notes a divergence in views as to how the poverty equation will shape up over the next 10 to 20 years. It cites the Brookings Institution and British Overseas Development Institute as arguing that by 2025 most people living in absolute poverty – people living on less than $US2 – will reside in LICs.

The IDS argues otherwise.

“Some argue that economic growth is likely to bring an end to middle-income poverty in the near future. Yet growth may not be enough if the poor in MICs are disconnected from a country’s economic prosperity due to spatial inequality or remoteness; live in fragile provinces of otherwise stable countries; remain relatively voiceless in domestic governance structures or are discriminated against in public services,” the IDS says.

“The data suggests that the remaining $US1.25 and $US2 poverty in countries that are currently MICs will still equate to about half of all world poverty in 2020 and 2030.

“Furthermore, the fact that some LICs will move into the MIC category by 2020 or 2030 suggests the structure of world poverty will remain split between LICs and MICs for some time yet. It is possible that only a third of the world’s poor will live in the remaining LICs in 2030. If inequality rises these projections may understate the proportion of world poverty in MICs in 2020 and 2030.”

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