Most of the world’s poor do not live in poor countries. New research says nearly 80 percent are actually in middle-income countries. Two billion poor people – those who live on $2 a day or less – live in middle-income countries. That compares to 500 million in low-income countries.
The study was led by Andy Sumner, research fellow at the Institute of Development Studies at the University of Sussex.
“Many countries over the last decade, in particular, have gotten much better off in average income. But poverty hasn’t fallen as much as one might expect or hope. All of this speaks to a lot of the current debates about the rising importance of inequality around the world and whether debates around the U.N. poverty goals that are due for renewal of some kind in 2015 – whether issues about inequality – ought to have much higher focus,” he said.
One of the Millennium Development Goals calls for eradicating extreme poverty and hunger by 2015. The U.N. has said the global economic crisis of recent years has slowed progress. Since the crisis, it said, “more workers find themselves and their families living in extreme poverty.”
Sumner said even if a country has economic growth of five to six percent it can have little effect on those earning only a dollar or two a day.
“The poor may well be living in remote areas or low income areas well away from the capital or large cities. They may also be in social groups that are discriminated against or there may be internal regulations or substantial costs of migrating across the country,” he said.
Sumner said half of the world’s poor live in India and China; one quarter live in heavily populated middle-income countries, such as Nigeria, Pakistan and Indonesia. The rest are in low-income countries.
“If you look over the last 20 years, although at a global level the proportion of the world’s population in poverty has fallen a lot, it’s actually about the same in absolute numbers, partly because of population growth, when one excludes China,” he said.
But where will the world’s poor live in 2020 or 2030? Sumner said that half of the world’s poor could still be in middle-income countries. He warns that figure could rise if the gap between the haves and have-nots continues to widen.
He estimated the cost of eliminating extreme poverty to be about 60 to 80 billion dollars a year. That’s about 0.3 percent of the world’s GDP, or gross domestic product, which is the value of final goods and services produced in countries.
Sumner said that with the “distribution of global poverty away from the poorest countries to middle-income countries, a new approach to understanding and tackling extreme poverty is required.” He added that this includes a more equitable distribution of the “benefits of economic growth and public spending… on the chronic, long-term poor wherever they live.”