How Long Will It Take to Lift One Billion People Out of Poverty?
In a 2013 paper published in the World Bank Research Observer, Martin Ravallion hypothesizes two possibilities in answer to the question, “How Long Will It Take to Lift One Billion People Out of Poverty?” In a pessimistic scenario, only factoring the developing world outside of China, he estimates that it would take 50 more years to achieve the task of lifting a billion relying on less than $1.25 per day. In a more optimistic scenario, he estimates that poverty reduction for a billion people could be achieved by 2025-30. At present, there are about 1.2 billion people globally subsisting on $1.25 per day.
Ravallion reasons that the optimistic scenario is possible if we continue with “staying-on-the-path” as seen in the 20 years between 1990 and 2010 in which the developing world halved its poverty rate. At this pace, it could be halved again in ten more years. This is not only because of China and India’s growth. Since 2000, gross domestic product (GDP) in the developing world has grown by 6% a year. The highest rates of GDP growth over the past decade have been in East Asia (8%), South Asia (7%), and Sub-Saharan Africa (5%) — “the three regions which account for the bulk of absolute poverty” globally. Ravallion’s findings defy the theory that developing countries are stuck in a poverty trap.
Ravallion points out that there are multiple solutions for lifting a billion people out of poverty such as fostering rapid economic growth, avoiding major financial and agro-climatic crises, and assuring that poor people are able to participate fully in that growth through access to schooling, health care, employment, and financial resources. The most sustainable solution for poverty reduction will vary from country to country and hence strategies to combat poverty should be derived at the country level.
But of course, why wait until 2025? If each country were given a boost in resources from foreign aid, each could expedite their poverty reduction efforts. Currently, the U.S. only contributes less than one percent of its federal budget to foreign aid.
– Maria Caluag
Source: World Bank
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