Hello, this is Eve. The title and new post by Jomo explains how, despite what appears to be an overall rise in living standards in most parts of the world, the poor are falling further behind. At a macro level, it is true that the rich are getting richer and the poor are getting poorer. As the concentration of income and wealth increases at the very top, there is more decline at the bottom.
Jomo Kwame Sundaram, former United Nations Under-Secretary-General for Economic Development. Originally published in Jomo’s website
Many low-income countries (LICs) continue to fall further behind the rest of the world, while the number of people living in extreme poverty is rising again after decades of decline.
fall further behind
Global output has more than doubled from $36 trillion in 1990 to $87 trillion (in US dollar terms) in 2021, but this growth has not been evenly distributed, causing most low-income countries to fall further behind.
Many of the world’s poorest economies have grown only marginally since the 1960s, and as most developing countries have made progress, income inequality between countries has narrowed.
The stagnation of the global economy has adversely affected most countries and people, especially developing countries that depend on the demand and prices of goods. As many countries in the world have grown, most low-income countries have fallen further behind.
In many post-colonial countries, per capita income has barely changed, leaving hundreds of millions of people in extreme poverty. World Bank paper They argue that the poor are particularly badly off.
Many poor countries have been unable to catch up, let alone diversify, their colonial economies, while many remain mired in conflict and deepening stagnation.
Lack of progress due to population growth led to increased poverty. World Bank The report finds that lower growth correlates with conflict-related deaths and weak institutions. Not surprisingly, these countries often have the highest poverty rates in the world.
To make matters worse, global warming is disproportionately affecting poor tropical countries and their inhabitants. Climate change is estimated to cause more than 100 million deaths. Extreme poverty By 2030.
left behind
Paper co-author Paul Collier The report defines the “bottom billion” as 58 countries across Africa, Asia and Latin America, with a population of around 1.4 billion in 2021. Collier argues that most countries still face challenges and have not been able to make progress since then.
These countries have long suffered from poverty, low growth and failure to develop, exacerbated by civil war, geographical constraints and, in many cases, an inability to harness natural resources to drive economic development.
Since the 1980s (not the 1960s or 1970s as the World Bank report claims), the poorest billion countries have failed to grow and have fallen behind. In contrast, the few former low-income countries that have sustained high growth rates now enjoy per capita output that is at least three times higher than the other poorest billion countries.
With these notable exceptions, most of the poorest 58 countries remain low-income or lower-middle-income countries. Only six have achieved upper-middle-income status in the past decade, largely due to rapid oil- and gas-fueled growth.
The bottom billion countries are found in all regions, but about two-thirds of them (38 of 58) are in SSA. These countries account for 77% of the bottom billion’s population. More than half of the countries are rich in natural resources, but most of them do not utilize their mineral resources to sustain their economic development.
In 2012, IMF Thirty-four of the 58 poorest countries are classified as “resource rich” – non-renewable resource exports and revenues often exceed 20 percent of total exports and government revenues, respectively – but most are experiencing slow or no growth.
Since 1990, annual per capita income growth in Sub-Saharan Africa (SSA) has averaged just 0.8 percent, while regions such as East Asia have experienced annual per capita income growth of over 6 percent, doubling the global growth rate.
Slow growth meant that average incomes in African countries and other low-growth countries fell further behind the rest of the world. According to the World Bank’s Global Poverty Line, the number of poor Africans increased by tens of millions.
If current trends in growth and poverty continue, many low-income countries, particularly in Africa, where growth is slow or stagnant, will not be able to catch up with the rest of the world, let alone eliminate extreme poverty.
The worst
Traditional Growth Model This means that countries that are lagging behind should grow faster than those that are already advanced. The industrialization of East Asia is thought to have mimicked the growth of early Europe, supporting this idea.
Many low-income countries have seen growth slow this century, and the paper says “the bottom billion have fared worst”, with per capita output growing little.
The poorest billion people did not experience convergence by catching up with others. Although some studies suggest overall income convergence, the world’s poorest people remain at a relative disadvantage.
Now, the bottom billion are being “left behind” and the number of people living in extreme poverty may be rising again. The world’s poorest countries and people’s incomes are showing some convergence across countries, but they are likely to be left behind, even in relative terms.
The situation has only worsened since 2022. The collapse in commodity prices since 2015, plus the COVID-19 pandemic, the wars in Ukraine and Gaza, and unilateral geopolitical sanctions, have ensured a prolonged period of stagnation.
The poorest billion countries lack the policies and fiscal space to deal with, let alone respond to, a looming debt crisis, a situation made worse by tight credit conditions fuelled by high interest rates set by the US Federal Reserve.
The World Bank has recognized the characteristics of low-income countries for decades, yet has yet to develop strategies, policies and tools to overcome poverty in these countries. It is unclear why the World Bank approved the designation of the bottom billion, even though it does not result in a better understanding of poverty.
