Jakarta
The Asian Development Bank has joined growing calls for a radical rethink of the way poverty is measured, arguing that the number of poor people in Asia would jump by more than one billion if more realistic criteria were used.
The development lender argued in a report released on Wednesday that while rapid economic growth has led to a dramatic improvement in living standards for many, existing “poverty lines” used by governments and multilateral organisations were far too low.
The ADB said that measures of poverty failed to take account of food insecurity and vulnerability to economic shocks and natural disasters, which mean that many people move in and out of poverty from year to year. “A fuller understanding of poverty is needed to help policymakers develop effective approaches to address this daunting challenge,” said Shang-Jin Wei, the newly appointed chief economist of the ADB.
The World Bank is considering increasing its poverty line and the new Indian government is also looking into a similar change as it struggles to work out how better to help the hundreds of millions of people who have hardly benefited from the economic growth of recent decades.
A Financial Times analysis of World Bank data show that almost one billion people in the developing world were at risk of slipping out of the ranks of the nascent middle-class, underlining the fragility of the global march out of poverty of the past 30 years.
Kevin Watkins, executive director of the UK-based Overseas Development Institute, said that developing countries risked social discord and instability if they failed to reflect the aspirations of those who have risen out of poverty but remain economically fragile. “The big public backlash we saw in Brazil was largely from people who have escaped poverty and were being served by abysmal public services but wanted to raise the bar,” he said. “These people are maybe earning $4-$5 a day and they are not just asking can my child get into a school, but can they get a good education that will mean something in the job market?”
The ADB report said that its existing poverty line of $1.25 a day was not enough to maintain minimum welfare in many parts of the region.
It said that the number of poor in Asia would rise from 473 million to 1.5 billion as of 2015 if this was raised to $1.50 a day and rapidly rising food prices and vulnerability to shocks were taken into account.
That would push the poverty rate in Asia, which has been the poster child for global economic development, up from 12.7 per cent to 41.2 per cent.
Jonathan Pincus, executive director of Transformasi, a public policy think-tank in Jakarta, said that a re-evaluation of global poverty measures was long overdue. “It’s important to realise that poverty lines are political and not scientific,” he said. “If you feel poor, then you are poor. Development lenders want to make it objective and measure poverty on the basis of how much it costs to keep someone alive. But that’s not poverty, that’s extreme destitution.”
— Financial Times
