Sunday, November 1

80% reduction in world poverty rate (1970-2006)

Perry's bottom line:
Both graphs are based on a poverty measure of $1/day, but the authors obtain similar results using four other measures of poverty from $2 to $10 per day, both for the overall reduction in world poverty (top graph) and the regional differences (bottom graph).

Assuming these estimates are accurate, the 80% reduction in poverty between 1970 and 2006 has to be the greatest reduction in world poverty in such a short time span in the history of the world, and the 97% reduction in East Asia has to be the most significant improvement in regional standard of living in history as well. The authors don't explore the reasons for the record reduction in world poverty, but some likely candidates might be: globalization, market-based reforms, liberalization, Information Age technology, productivity gains in agriculture, the collapse of central planning in China and India, etc.
Africa is a big negative outlier. It gets the most economic aid, yet is performing the worst in terms of absolute poverty levels and not making much headway at reducing them.

Perhaps there's something wrong with Africa itself, or perhaps there's something wrong with the economic aid model (counterproductive, ala Dambisa Moyo's argument, fostering dependence like welfare), or some combination of these.

Either way, more aid for Africa does not seem to be a solution to the problem nor a smart use of resources, despite what TV ads tell us.

Meanwhile, East Asia is an extraordinarily positive outlier. Ain't it amazing what embracing modernity can accomplish?

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