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Fact Sheet: Halving Global Poverty by 2015 -- A Stocktaking

The world as a whole will meet MDG 1 of halving poverty.

  • The population share of extreme poor in developing countries is projected to fall from 29% in 1990 to 12% in 2015. By 2004 the number of people living on less than a dollar a day had fallen to 985 million, equivalent to 18% of the population of the developing world. An estimated 135 million people were pulled out of extreme poverty in low-income countries between 1999 and 2004.
  • The Middle East and North Africa (MENA) region is on track to reach the MDG poverty target of halving, by 2015, the number of people living on less than $1 a day. South Asia (SAR) is also expected to meet the target before 2015, although high population growth has meant that the number of extremely poor people in SAR has not greatly changed. East Asia and the Pacific (EAP) has already met the target. Latin America and the Caribbean (LAC) and Europe and Central Asia (ECA) are in danger of not meeting the target. Sub-Saharan Africa (SSA) is still way off track and unlikely to meet its target.
  • Progress in Africa has been better since the late 1990s with the share of the region’s people living in extreme poverty dropping 4.7 percentage points over five years to 41% in 2004. At the same time high population growth left the same absolute number of poor in 2004 as in 1999, at nearly 300 million. Globally SSA now accounts for 30 percent of the world’s extreme poor, compared with 19 percent in 1990 and only 11 percent in 1981.
  • ECA saw 42 million people move out of $2-a-day poverty—a measure more widely accepted to assess poverty in that cold climate—between 1999 and 2004, a near halving of the total. However, the number of people still in $2-a-day poverty is more than in 1990, prior to the collapse of many of those transition economies. Less than 1 percent of ECA’s population was living on under $1 a day in 2004, equivalent to 4.4 million people.
  • East and South Asia drove global growth and poverty reduction over the past 10 years and the trend continues. The extreme poverty rate for EAP (including China) was 9 percent in 2004, while the rate for SAR was 32 percent.

Rapid global growth in 2006 provides grounds for optimism about progress in advancing the Millennium Development Goals.

  • For low income countries, real per capita income growth in SSA and SAR has been stronger in the period since 2000 than any time since the 1960s, and stronger in ECA countries than any time since transition. Average GDP per capita growth rates for low-income countries in 2006 was estimated to be 5.9 percent, following a pick up trend that started in the 1990s.
  • Middle income countries continued to grow at high rates—estimated at 6.2 percent in 2006—with China and ECA countries at even higher rates—9.1 and 10 percent respectively.
  • One factor behind this performance is strong macroeconomic policies, as evidenced through continued moderate inflation rates and improved fiscal policies in some low income countries. Reduced indebtedness relative to GDP, owing in part to debt forgiveness from donors, has also helped improve fiscal outlooks.

In low-income countries, preliminary estimates suggest that, on average, growth has clearly resulted in lower poverty incidence: for a sample of 19 low-income countries, 1 percent of GDP per capita growth was associated with a 1.3 percent fall in the rate of extreme poverty and a 0.9 percent fall in the $2-a-day poverty rate.

  • Defining wealth as including natural assets in addition to physical and human capital leads to concerns that current rates of depletion and degradation of natural resources may be undermining the sustainability of higher growth, particularly in developing countries. In SSA, for example, the net creation of wealth has been effectively zero over the last three decades, a period in which total population more than doubled.

Extreme poverty is increasingly concentrated in fragile states, defined as those with particularly weak institutions and poor policies. These states and territories1  are home to 9 percent of the population living in developing countries, but nearly 27 percent of the extreme poor. Addressing the problems specific to them is thus critical to achieving the MDGs.

  • Moreover, the problems of fragile states face spill over to neighboring countries through conflict, refugee flows, organized crime, spread of epidemic disease, and barriers to trade and investment.
  • Conflicts are a major reason why countries slide into fragility, and they extract high costs in terms of lives and physical damage, but also reduce growth and increase poverty. While the number of conflicts in low-income countries has decreased, conflicts have become shorter and more intense than before, with an average negative impact on GDP growth of around a 12 percent decline per year of conflict.
  • State fragility has proven to be a persistent condition. Of the 34 states judged as fragile in 1980, 21 were still viewed as such in 2005, although of these, 6 had left and later resumed fragile status.

Nevertheless there are models of success: Vietnam, Mozambique, and Uganda all experienced severe violent conflict but managed a cessation of hostilities, and, subsequently, enjoyed economic growth by the introduction of programs of managed, market-oriented reform.

  • Aid is particularly important in fragile states because it constitutes the main source of development finance. However, multilateral institutions account for only around 8 percent of total flows from developed countries, the rest coming from bilateral sources.

1  The list of states and territories considered “fragile” by World Bank definition changes frequently. The 35 states and territories included in that category as of 2005 were: Afghanistan, Angola, Burundi, Cambodia, Central African Republic, Chad, Comoros, Democratic Republic of Congo, Republic of Congo, Cote d'Ivoire, Djibouti, Eritrea, The Gambia, Guinea, Guinea-Bissau, Haiti, Kosovo, Lao PDR, Liberia, Mauritania, Myanmar, Nigeria, Papua New Guinea, Sao Tome & Principe, Sierra Leone, Solomon Islands, Somalia, Sudan, Timor-Leste, Togo, Tonga, Uzbekistan, Vanuatu, West Bank and Gaza, and Zimbabwe.

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