A new study (Imagine There's No Country, Poverty, Inequality and Growth in the Era of Globalization) released by the Institute for International Economics in Washington asserts that world poverty is declining at its fastest rate in history.
The author of the study is Surjit Bhalla, who heads an investment and economic research institute in India. His main conclusions are that from 1980 to 2000 poor countries grew faster than rich countries and that the number of people living in poverty actually fell.
Guy Pfefferman, chief economist at the World Bank's International Finance Corporation, agrees with the report's findings, noting that World Bank researchers have reached similar conclusions. Mr. Pfefferman said global poverty is down mainly because the world's two most populous countries have been doing particularly well. "The main reason for that is that China and India have had very rapid economic growth rates in the past 20 years," he said. "Even India has grown at five to six percent annually. And that, because of their size, has pulled hundreds of millions of people out of destitution."
Thus, because of the huge size of China and India the overall picture is somewhat different. Poverty rates, for example, are not declining in either Africa or Latin America. In most countries, said Mr. Pfefferman, poverty is not declining. "The continent on which nothing of this sort has happened is Africa. And in Latin America there has been some improvement but relatively modest. But when you look at it in global terms in terms of how many billion people live under a certain line there has been real progress, more so than there has ever been in the history of the world."
This is precisely the conclusion reached by Surjit Bhalla. The Indian researcher argues that globalization disproportionately benefits the poorest people in developing countries.
Mr. Pfefferman of the International Finance Corporation similarly argues that poverty is down most in countries that are promoting small business and competition, have effective governments with sound budgetary policies, and which actively combat corruption. He believes that private enterprise is the driving force behind economic growth.