Grim Facts on Global Poverty




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Facts on global poverty NYT 2003





August 7, 2003

ECONOMIC SCENE

Grim Facts on Global Poverty


By JEFF MADRICK



T HE fierce arguments over whether income inequality and poverty rates in the world have risen or fallen somewhat in recent decades dominate international economic policy discussions. But for many poor nations, they are almost beside the point.

Even if the optimists are right, a little less inequality and modest poverty reduction hardly matter in a world where 1.2 billion people live on less than what $1 a day will buy in America. And 2.8 billion live on less than $2.

Now comes more bad news. While some nations made considerable progress in the last decade or so — and there is no gainsaying that globalization was often a help — matters are actually worse for many nations and have more or less stagnated for a great swath of them.

For many countries, the 1990's were years of despair, the recently released Human Development Report 2003 of the United Nations Development Program concludes. The report's value is that the United Nations agency takes a broader perspective than do other international groups, like the World Bank and the International Monetary Fund.

Its finest achievement has been the Human Development Index, which has steered analysis of a nation's standard of living away from sole reliance on per capita gross domestic product to include measures of education and health. The agency has added other formal indexes to measure gender equality, gender empowerment and poverty.

The latest report emphasizes goals established by the United Nations in its Millennium Declaration of 2000, which ideally are to be met by 2015. They include halving poverty and hunger rates and reducing child mortality by two-thirds.

It's easy to scoff at this seeming idealism. But many similar goals have been met in the past, like eliminating smallpox and polio and immunizing most infants against major diseases.

So how has the world done since 1990?

Fifty-four countries are poorer, as measured by per capita G.D.P. Sub-Saharan Africa is worst off, with per-capita G.D.P. falling in 20 nations. It fell in 17 nations in Eastern Europe, 6 in Latin America, and 6 in East Asia and the Pacific.

The rate of hunger has increased in 21 nations. The proportion of children who die under the age of 5 has risen in 14 nations. The development index itself, which almost always rises over time, fell in 21 nations. In the 1980's, it declined in only four nations.

Still, some countries, even poor ones, have done well by many measures. China and India stand out, of course. Ghana reduced its hunger rates greatly in the 1990's, and Vietnam's index rose significantly.

And some take solace in the fact that only 23 percent of the global population lives on less than $1 a day, compared with 30 percent in 1990. But most of this improvement has to do with the stunning economic progress in China, a nation that conspicuously did not follow Western economic policies. In absolute numbers, more people are now extremely poor than in 1990 if China is excluded.

Even in countries that have made significant progress on average, including China, the report notes that there are often large pockets of deprivation, especially in inland or rural areas. For example, only three nations with adequate statistics narrowed the gap in child mortality between the rich and the poor in the 1990's.

The bottom line is that at this rate, some crucial goals set for 2015 will not be met by many regions for several decades, and in some cases not until the next century.

What has gone wrong? Aside from generally slow growth, the spread of AIDS has been a tragic setback, reducing longevity significantly in many African nations. The collapse of Soviet-style economies is still extracting a heavy price. In general, more open markets and deregulation did not turn out to be cure-alls.

But much aid also seems to have gone to waste. In recent years, critics assert that good governance among recipients has been neglected too often. Corruption, lack of follow-through and cookie-cutter policies afflicted development projects. But surely the call for good governance is no panacea, either. For example, did dictatorial China have good governance and dictatorial Russia poor governance? How can one tell before the fact? How do you enforce good governance even if you can define it?

More important, in my view, the West is beginning to recognize, if slowly, that it too bears some responsibility for the inferior performance of poor nations. For one thing, trade barriers keep out exports of agricultural goods, processed foods and beverages, apparel and textiles from poor nations trying to climb higher.

But what is becoming increasingly clear is that advanced nations with highly educated populations and sophisticated technologies have an inherent advantage because they can exploit still more educated workers and newer technologies in ways that poorer nations cannot. And the gap between rich and poor keeps widening.

This gives advanced nations some responsibility in helping developing nations that are trapped because they cannot afford the public investment in transportation, education, health and agricultural techniques that would enable them to benefit from new capital, technologies and skilled labor. Spending what is needed on public investment by these governments often runs the risk of undermining market incentives for business with high taxes and inflationary deficit spending.

In fact, the story of the West's own development is one of significant public investment in health, transportation and education. Fortunately, Western leaders are now promising more money. President Bush announced an increase in annual aid to 0.15 percent of national income by 2006. Belgium pledged 0.4 percent a year by 2010, France 0.5 percent by 2007 and Sweden 1 percent by 2006.



As the money available increases, none of the other lessons about international aid should be lost. Money is never the only solution. But if Western nations find the will, odds are much higher they will find the way.


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