The World Halved Global Poverty In Just Two Decades. But Who Did It?

The prevalence of extreme poverty is steadily shrinking and the world is slowly getting better. But is the MDGs framework responsible for this progress?
12/02/2014 05:44 pm ET Updated Feb 01, 2015

The number of people living in extreme poverty around the world -- crudely defined as those below 1.25 U.S. dollar per day -- has been halved in the past two decades. From 1990 to 2010, around a billion people moved out of the rank of extreme poverty to a "better-yet-unknown" rank. They didn't become rich, for sure, but nevertheless they escaped the indignities and deprivations of extreme poverty, which is a great feast for humankind. The term of choice in development lexicon is that the extremely poor were "lifted out of poverty", which implies that there are some people doing the heavy lifting and others being merely lifted.

In 2000, world leaders committed to the framework of the Millennium Development Goals (MDGs) -- a set of development goals to be met by 2015. The United Nations (UN) has been tracking progress toward achieving the MDGs. According to the latest edition of the UN progress report on MDGs (2014), the first target and perhaps the most important of all -- to "halve, between 1990 and 2015, the proportion of people whose income is less than $1.25 a day" -- has been met five years ahead of the 2015 timeframe, noting that it "reaffirms that the MDGs have made a profound difference in people's lives".

While it is true and worthy of celebration that the world has made tremendous progress in reducing extreme poverty, from 36 percent of world's population in 1990 to 18 percent in 2010, it is important to understand how it happened and "who did what" so that lessons are learnt for the next round of development goals, already dubbed Sustainable Development Goals (SDGs).

The prevalence of extreme poverty is steadily shrinking and the world is slowly getting better. But is the MDGs framework responsible for this progress?

The first obstacle is to actually define what this framework of MDGs is and what it is not. It is neither a single entity with 15-year plan and commensurate budget to meet its goals, nor all things that reduce poverty. It has to be something. So for the sake of the argument, let's define this framework for what it is understood or misunderstood to be, which is the sum of all the global efforts in international development: aid from foreign governments, charity foundations, the myriad of NGOs and multinational organizations like the World Bank and UN agencies. Anything but what's happening in recipient countries themselves. Call them the "lifters".

The report notes that most of the progress came from China, which spectacularly reduced its poverty rate from 60 percent in 1990 to 12 percent in 2010. Note that China actually never signed up for the MDGs framework and that much of its progress happened before 2000, prior to the MDGs framework. The remarkable progress China made in reducing poverty was due to its staggering economic growth since its economy opened up in 1978. So the "concerted efforts from governments and donors" that the report points out as a rationale of this good progress is likely missing an important point and therefore missing important lessons of the past 20 years or so in development experience.

China pays no attention to the MDGs framework which has defined development policy and practice in the past decade and half. Nonetheless, according to the Economist, "between 1981 and 2010 it lifted a stunning 680m people out poverty--more than the entire current population of Latin America" and contributed three-quarters to the global reduction in extreme poverty. On the other hand, parts of the world where the "lifters" have concentrated their efforts have made little progress. In Sub-Saharan Africa, poverty rate budged from 56 percent in 1990 to 48 percent in 2010. India, home to most of the world's poor in absolute numbers today and another hub of MDGs efforts, also showed slower progress than its giant neighbor. I am not implying correlation or causality here. China obviously started out ahead of the game than most of African countries , and comparing it to Africa is sort of a futile exercise which yields little insight. But if economic growth in China lifted all those hundreds of millions of people out of extreme poverty, it is an indication of where the focus of development efforts, whatever that is, should ideally be directed.

Even in Africa, crediting its slow progress to MDGs framework is misleading. Africa's growth has picked up and its combined economies are growing at a pretty good rate, projected at 5.1 percent this year by IMF, which most regions outside Southeast Asia can only envy. While uneven between and within countries, this growth has most likely been the main contributing factor to the slowly but steadily declining poverty rate on the continent. In MDGs progress reports, this always goes unnoticed and ignored, which makes it seem like some "government and donor efforts" are responsible of any progress. The MDGs framework simply points to a destination -- like a bystander guide, which is good enough -- but individual countries took on the journey largely on their own and are responsible for almost all the progress. MDGs framework should be regarded as a mechanism to track progress, not to be credited with progress itself.

The new Sustainable Development Goals are now in the pipeline and are likely going to define development policy and practice in the next 15 years. If we were to learn from the experience of the past decade and half, the next development goals could be to create another China story, so to speak, which would bring humanity at the doorstep of ending extreme poverty for good. Giving credit where it is due is important and helps us better understand what development is actually all about.

So hats off to China's state capitalism and market planning -- however flawed the system might be -- for doing the heavy lifting in tackling extreme poverty. Now all eyes on Southern Asia and Africa, home to the vast majority of the remaining 1.2 or so billion people in extreme poverty (numbers widely vary depending on how you measure poverty). If both these regions were able to maintain economic growth at an average of 9.6 percent a year for two decades, like China did between 1990 and 2010 by IMF figures, extreme poverty is almost surely made history.

But growth alone doesn't do the magic, it has to trickle down to the masses, which hasn't been the case for Africa so far. For Africa to substantially reduce poverty, it must increase productivity in agriculture, invest more in labor-intensive industries like manufacturing and add value to its varied natural resources like oil, gas and other minerals.

China's experience has shown that specific policies geared towards agricultural and rural development works well. According to a World Bank study on China's poverty reduction, "about three-quarters of the overall reduction in poverty from 1981 to 2001 came from gains to the rural poor. Growth in the primary sector (largely agriculture) did much more to reduce poverty and inequality than growth in either the secondary or tertiary sectors". These are important lessons in development practice of the past two decades worth highlighting, even though we know well that there is no panacea for development.

A version of this post appeared first in French in Libre Afrique where the author is a columnist.