Globalization has resulted in unprecedented progress in poverty reduction
Stunning worldwide poverty goal slipped by three or so years ago, and no one even noticed. According to a study by the Brookings Institute, a Washington think-tank, the proportion of people living in poverty – on income of less than $1.25 a day – is less than half what it was in 1990, surpassing a UN goal that was targeted to happen in 2015.
The authors of the study “Poverty in Numbers: The Changing State of Global Poverty from 2005 to 2015,” say the rise of globalization and spread of capitalism are two main reasons for the unprecedented progress in poverty reduction. Laurence Chandy and Geoffrey Gertz found the accelerated progress throughout the 2000s held steady even throughout the global financial meltdown.
According to the authors, who looked at the most recent country data of household consumption and the latest figures on private consumption growth, there are approximately 820 million people in the world living on less than $1.25 a day. In 2005, the latest year for official estimates by the World Bank, there were 1.37 billion people living below the poverty line.
“Whereas it took 25 years to reduce poverty by half a billion people up to 2005, the same feat was likely achieved in the six years between then and now. Never before have so many people been lifted out of poverty over such a brief period of time,” the authors wrote in the Yale Global Online Magazine
Just as stunning is the fact that this progress has been universally unacknowledged. In 1990, the global poverty rate was 41.6%, prompting a key UN Millennium Goal to halve the rate by 2015. According to Chandy and Gertz, that goal was likely reached in 2008.
And not just China is leading the change. Poverty is falling rapidly across all regions and most countries, the authors write. “Even sub-Saharan Africa is sharing in this progress.”t
They list the probable reasons for the accelerated improvement: spread of new technologies, especially cellphones, increased investment in infrastructure, the commodities boom and emerging markets’ diversification into novel exports, from cut flowers to call centers.
The authors say these factors are all part of a broader trend – the spread of capitalism, the rise of globalization and the improving quality of economic governance.
“We’re on the cusp of an age of mass development which will see the world transformed from being mostly poor to mostly middle class. The implications of such a change will be far-reaching, touching everything from global business opportunities, to environmental and resource pressures to our institutions of global governance,” the authors write.
“Yet fundamentally, it’s a story about billions of people around the world finally having the chance to build better lives for themselves and their children. We should consider ourselves fortunate to be alive at such a remarkable