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A new map for tracking the world's poor

Dec 29, 2010

Global Poverty and the New Bottom Billion discusses the origin and current definitions of the low/middle/upper income classification and compares the global distribution of the poor by measures of monetary, educational, nutritional and multi-dimensional poverty.

Global Poverty and the New Bottom Billion: What if Three-Quarters of the World’s Poor Live in Middle-Income Countries?

This paper argues that the global poverty problem has changed because most of the world’s poor no longer live in poor countries meaning low-income countries (LICs).

In the past poverty has been viewed as an LIC issue predominantly, nowadays such simplistic assumptions/classifications can be misleading because a number of the large countries that have graduated into the MIC category still have large number of poor people.

In 1990, 93 per cent of the world’s poor people lived in LICs. In contrast, in 2007-8, three-quarters of the world’s approximately 1.3bn poor people now live in middle-income countries (MICs) and only about a quarter of the world’s poor – about 370mn people live in the remaining 39 low-income countries, which are largely in sub-Saharan Africa.

It implies there is a new ‘bottom billion’ who do not live in fragile and conflict-affected states but largely in stable, middle-income countries. Further, such global patterns are evident across monetary, nutritional, and multi-dimensional poverty measures.

If development is about poverty reduction, where the poor live is a crucial question.

This paper seeks to add to the existing analysis of global poverty estimates by region by estimating the global distribution of the world’s poor by low-income country (LIC) and middle-income country (MIC) classification and by fragile and conflict-affected states (FCAS).

It is recognised that the endeavour of this paper is an inherently imprecise exercise but it is argued that the general pattern generated is robust enough to warrant further investigation and discussion.

The analysis presented can be summed up in three points as follows.

First, there’s a new ‘bottom billion’ living in the MICs: three-quarters of the world’s poor – or almost one billion poor people – now live in MICs. Indeed, about two-thirds of the world’s poor live in stable MICs. This isn’t just about India and China as the percentage of global poverty accounted for by the MICs minus China and India has risen considerably from 7 per cent to 22 per cent. The findings are consistent across monetary, nutritional and multi-dimensional poverty measures.

Second, the remaining 39 LICs account for just a quarter of the world’s poor, and fragile LICs account for just 12 per cent of the world’s poor.

Third, contrary to earlier estimates that a third of the poor live in fragile states, our estimate is about 23 per cent if one takes the broadest definition of FCAS (43 countries), and they are split fairly evenly between fragile LICs and fragile MICs.

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