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World Poverty Rate Cut in Half Since 1970

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Release Date: October 16, 2006
As the United Nations prepares to mark the International day for the Eradication of Poverty on October 17th, research released today by The Fraser Institute shows that world poverty rates in 2000 were one-third to one-half the rates experienced in 1970.

"The world has already achieved more than 60 per cent of the United Nations' Millennium Development Goal of cutting the world poverty rate to half of 1990 levels by the year 2015," said the study's author Dr. Xavier Sala-i-Martin, a world-renowned economist, professor at Columbia University and author of The Fraser Institute report Falling Poverty and Income Inequality: A Global Phenomenon.

Since there is no agreement on the level of income below which people are poor, Sala-i-Martin used four different measures of poverty for his analysis:

(1) the World Bank (WB) Poverty Line of $1 per day;
(2) an adjusted World Bank Poverty Line of $1.5 per day;
(3) $2 per day; and
(4) $3 per day.

UN poverty reduction targets are based on the proportion of people with incomes below one dollar per day.

Sala-i-Martin's study shows that poverty rates unambiguously fell for all four poverty lines, indicating that 212 to 428 million people escaped poverty over the past three decades.

"This is especially impressive given that world population increased almost 50 per cent over this time period," said Sala-i-Martin.

Sala-i-Martin attributes these changes to the dramatic rise in economic growth of Asia, especially in China and India. In East Asia, for example, poverty rates fell to 2.4 per cent in 2000 from 32.7 per cent in 1970. Poverty fell to 2.5 per cent from 30.3 per cent in South Asia.

But Sala-i-Martin cautions that the picture is not uniformly bright. He points to Africa where the proportion of the population living in poverty increased to 48.8 per cent in 2000 from 35.1 per cent in 1970.

As a result, world poverty is now concentrated in Africa. While more than 80 per cent of the world's poor lived in East and South Asia in 1970, three decades later Africa is home to 70 per cent of the world's poor. Thus, while close to half a billion (487 million) people were lifted out of poverty in East and South Asia, an additional 200 million Africans have fallen into poverty over the past three decades.

"While poverty was once mostly an Asian problem, the dismal lack of economic growth in Africa means poverty is now largely an African tragedy," Sala-i-Martin said.


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