Poverty Declines as Inequality Deepens

  • by Thalif Deen (united nations)
  • Wednesday, September 25, 2013
  • Inter Press Service

The number of people living on less than 1.25 dollars a day fell from 47 percent in 1990 to 22 percent in 2010, five years ahead of the targeted 2015 deadline, according to the latest figures released Wednesday by the world body.3

But much of the reduction in poverty - amounting to about 700 million people leaving the ranks of the indigent - has taken place in countries such as India, China and Brazil, which have huge populations. There are still 1.2 billion people still living in extreme poverty in most of the world's poorer nations in Africa, Asia and Latin America and the Caribbean.

But poverty alleviation has also resulted in the rise of a new middle class.

On the negative side, this has triggered mass social protests in Brazil, China, India, Turkey, Egypt and Tunisia. And this may be an unintended consequence of poverty eradication.

Perhaps more importantly, poverty alleviation even in these countries may hit a dead end soon because of the widespread financial crisis worldwide - as currencies collapse and exports shrink.

Martin Khor, executive director of the Geneva-based South Centre, told IPS the analysis on poverty eradication is valid and makes good points.

"The reduction of poverty coincided with exceptional global factors in the first decade of this century that is coming to an end," he noted.

The credit boom in developed countries fuelled trade and economic growth - a rise in Gross National Product (GNP) - in developing countries, including commodity exports, he said. These countries also recovered from the financial crisis of 2008 to 2009 because of the reflationary policies of rich countries.

"But the Northern economies are in trouble, as they have changed to austerity policies and the U.S. easy money policy will have to taper down sooner or later," said Khor, a former director of the Penang-based Third World Network.

Developing countries are now vulnerable to lower exports, reduced commodity prices and revenues and capital outflows, he warned.

In the next few years, Khor said, the slowdown of growth and possible recession in some countries and lower commodity prices are likely to impact on jobs and income, while poverty could rise again.

"It's happening in Greece already and could happen in some developing countries," he said.

Winnie Byanyima, executive director of Oxfam International, told IPS the MDGs have been an important force for development progress over the last 13 years.

"So many people lifted out of extreme poverty in such a short time is an achievement to celebrate," she said.

Yet globally, more than a billion people still live on less than 1.25 dollar a day.

She said progress has been slow or non-existent where there has been protracted conflict, or where growth has been highly inequitable. "Global poverty is declining but in country after country, inequality is on the increase," Byanyima said.

Billions of people are being left behind by economic growth, she noted.

There is an emerging consensus that high levels of inequality are not just morally objectionable, but they are damaging for social stability and to growth itself.

"These challenges must be met head-on," she added.

Without targeted efforts to reduce gaps between rich and poor, the next set of global development goals will likely be unachievable.

"A focus on reducing inequality was a major omission in the original MDGs. Without it, the next set of global development goals is almost certain to fail," she warned.

A stand-alone goal to tackle inequality must be included in a future framework for global development, she said.

Sameer Dossani, advocacy coordinator, Reshaping Global Power at ActionAid, told IPS the United Nations, first and foremost, needs to move beyond the 1.25 dollars-a-day definition of poverty.

"The roots of global crisis are the incredible concentrations of wealth and the failure of that money to trickle down," he said.

One way to address the issue of global inequalities, he pointed out, is through reform of the international tax system. "At the moment we estimate that as much as 300 billion dollars in tax revenue is lost to development through a combination of corporate tax incentives and corporate tax dodging."

At the country level, he said, countries can move away from the liberalisation policies that the International Monetary Fund (IMF) and other institutions promoted in order to seek some protection.

At the global level, leaders should reform the international monetary system to reduce dependency on the U.S. dollar and ensure stability in the international financial system, said Dossani.

The debate so far has skirted these fundamental issues. A genuine development framework would have tax and international monetary system reform at the top of the agenda, he said, adding that "these issues can't be brushed under the carpet."

© Inter Press Service (2013) — All Rights ReservedOriginal source: Inter Press Service

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