[EQ] Poverty, Disconnected

Poverty, Disconnected

Ravi Kanbur is a Professor of Economics at Cornell University

IMF Finance & Development - December 2009

Available online at: http://www.imf.org/external/pubs/ft/fandd/2009/12/pdf/kanbur.pdf

‘……..Economists have long sought to improve on gross domestic product as a measure of growth and wellbeing. What is needed, many say, is a new way to gauge economic, environmental, and social sustainability. For those at the bottom of the income pyramid, living on a dollar a day or less, such musings may seem both irrelevant and farfetched. But work by the Commission on the Measurement of Economic Performance and Social Progress—set up by the French government under the leadership of economists Joseph Stiglitz and Amartya Sen—represents the culmination of many years of effort to reduce reliance on per capita income growth or consumption.

 

Distributional indicators, such as poverty statistics constructed from household income and expenditure surveys, help spotlight the plight of the poor. In some countries, such as India, the announcement of official poverty figures is a major event with significant political and policy implications. And in the past two decades many countries have begun to conduct household surveys aimed at chronicling poverty, with the result that poverty statistics are more widely available across the globe.

 

What have we learned from the new data? Setting aside the effects of the crises of the late 2000s and looking back two decades from the mid-2000s, the broad facts can be classified into the following stylized patterns (Kanbur, forthcoming). Where there has been no economic growth, poverty has risen. This is true of many African and some Latin American countries. In a large number of countries, including the biggest ones, such as India and China, and even in some African countries, such as Ghana, there has been fast growth by historical standards, and poverty—the percentage of the population below the poverty line—has fallen, as measured by official data.

 

What is interesting, however, is the disconnect between the optimistic picture painted by these official data on poverty and the more pessimistic view of grassroots activists, civil society, and policymakers more generally……..”

 

 

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