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Over the weekend, Angus Deaton won the Nobel Prize in economics. The previous weekend, the World Bank announced that the global poverty rate dipped below 10 percent in 2015, for the first time in history. These two announcements have an interesting connection.
In 2004, Michael Clemens, Todd Moss, and I wrote a paper on the Millennium Development Goals. It made a lot of forecasts about development trends, aid flows, and political fallout from the goal-setting exercise over the next 11 years.
Last week USAID, the world’s largest aid agency, released its Vision for Ending Extreme Poverty. That’s right, USAID (an agency not usually known for its foresight and strategic acumen) has already put forth its plan on how it intends to reorient the Agency to meet the call to end extreme poverty.
There have been numerous estimates of future poverty to 2030 based on projections of growth and inequality that rely on informed assumptions and guess work. With that method, no matter how carefully done, you’re almost certain to get it wrong. So Peter Edward and I decided to do something different: look back at growth and its distribution since 1990 and see what it would have taken to have ended global poverty by now based on the actual data.
We are delighted to see that Nora Lustig, a CGD non-resident fellow and head of the Tulane University Commitment to Equity Institute is one of eight distinguished economists appointed to the core group of a new Global Poverty Commission announced this week by World Bank Chief Economist Kaushik Basu.
Ending extreme poverty is likely to be one of the UN Sustainable Development Goals for 2030. So it is a good idea to figure out what that entails. And it turns out that it’s become more complex in the last year or so. That’s because new price data, 2011 Purchasing Power Parity (PPP) estimates, were released in 2014 and the World Bank’s global poverty database, PovcalNet, also had a substantial update.
This is the latest in a series of CGD blogs suggesting improvements to the SDG targets.
The first target of the first goal of the Sustainable Development Goals is to “eradicate extreme poverty for all people everywhere” by 2030. The second target is to “reduce at least by half the proportion of…. [people] living in poverty…..according to national definitions.”
The purchasing-power rates (PPPs) from the 2011 International Comparison Program (ICP) suggest lower inequality and poverty in the world than was thought based on prior ICP data. However, there are some continuing and (as yet) poorly resolved concerns about the data revisions implied by the 2011 ICP.
You may find the answer surprising, but the most recent data show that the world as a whole is becoming more equal, driven by fast growth rates of China and India and slower growth rates in rich countries. A decrease in the US mean income from 2008 to 2011, for instance, makes global convergence of people’s incomes a lot easier to achieve.