In this introduction we set out the main argument of the book which is as follows: In order to better understand the impact of growth on poverty, it is necessary to consider what happens across a wide range of poverty lines, and to understand how different poverty lines imply very different understandings of how the global economy needs to work if poverty is to be eradicated. This point is not widely recognised because it is not immediately apparent if one focuses only on poverty levels without putting them, as we do, into the context of the distribution of growth across the entire global population.
KeywordsPoverty Inequality Growth
The End of Poverty
The end of global poverty has long been an aspiration of the UN. Recent progress seems to have brought just that prospect within reach. According to the UN (2015, p. 4), since 1990, global extreme poverty more than halved, falling from 1.9 billion in 1990 to less than 0.9 billion—meeting and surpassing the target set for the Millennium Development Goals (MDGs). This apparent success story was underpinned by dramatic growth in global output and consumption, which have both doubled in the 25 years since the end of the Cold War. These headlines read as a story of the benefits of the spread of global growth since 1990. Today, the end of global poverty is often framed in a narrative that if growth continues, then the world might well meet the Sustainable Development Goals (SDGs) target to ‘eradicate extreme poverty for all people everywhere’ by 2030.
How fair is such a picture? What progress is being made with poverty reduction? How meaningful is it, and what might be the prospects for further reductions in the future? And, perhaps most importantly of all, if global output has doubled in recent decades, then is the problem one of insufficient growth overall? Just how different would the pattern, or distribution, of global growth need to have been in the period since the end of Cold War in order to have ended poverty already? And what does that history tell us about the likelihood of meeting the UN SDG1 to eradicate extreme poverty by 2030?
These are, of course, contentious issues, as we show in this book. Poverty lines are typically presented as technically based and politically neutral, but in practice, this is far from the case. Different poverty lines carry within them assumptions both about what constitutes the end of global poverty, and about what is implied in terms of the welfare regime required to end poverty in a reasonable time frame. Fortunately, there is a growing set of data about income, consumption and inequality around the world. This data remains far from perfect. That said, it is the data that are used to generate the global poverty headcounts for the SDG target. Thus, it is reasonable to assume that it is good enough to interrogate patterns of growth, and in doing so to address the questions outlined above, if the limitations are not forgotten.
In this book, we describe how we constructed, predominantly from those same data sets used to produce ‘official’ estimates of global poverty, a model of global consumption that spans the entire global population. We call this the Growth, Inequality and Poverty (GrIP) model. We have previously published work, in a variety of academic papers, using earlier versions of this model (see for example, Edward and Sumner 2013a, b, 2014). That work led us to recognise how narratives of impressive poverty reduction are more fragile than they may first appear. This is largely due to the hypersensitivity of poverty headcounts to small variations in poverty line values. Ten cents on or off a line can equate to 100 million people more or less on the poverty headcount.
Another way of putting this is that a lot of the people who are counted as poor by one poverty line are counted as non-poor by a line barely much higher. When this issue is compounded, in forecasts, with uncertainties (and different assumptions) over future growth rates and trends in inequality distributions, we find that the prospects for eradicating extreme poverty by 2030 are very uncertain (see Edward and Sumner 2014). And even if extreme poverty were to be eradicated by 2030, there would still be a very large number of people living only slightly above the extreme poverty line; a situation that some, maybe many, people would not really consider amounted to the ending of global poverty ‘in all its forms’ as the SDGs aspire to do.
The main argument of the book is that to understand better the impact of global growth on poverty, it is necessary to consider what happens across a wide range of poverty lines, and to understand how different poverty lines imply very different understandings of how the global economy needs to work if poverty is to be eradicated. This point is not widely recognised because it is not immediately apparent if one focuses only on poverty levels without putting them, as we do, into the context of the distribution of growth across the entire global population.
The construction of poverty lines is typically presented as a politically neutral, technical matter arising from unbiased statistical analysis of economic data. But, as we show here, different poverty lines lead to very significantly different political implications for how capitalism should be pursued. What seem like impartial statistical decisions not only frame what poverty is thought to be, but they also imply different degrees of challenge to the welfare regime (the set of policies and institutions promoting raised standards of living) and the functioning of the global capitalist economy. The implications of these different challenges typically remain largely unexplored to some considerable extent. We argue that they are hidden by the attention placed instead on the relationship between growth and falling extreme poverty headcounts. As a result, the more complicated and problematic implications of the interrelationship between growth, poverty and the distribution of the benefits of growth are neglected.
Our aim in this book is to bring this omission back in from the cold by exploring this interrelationship. To do this, we ask this question: why has global poverty not been ended yet? Given that the global economy has doubled since the end of the Cold War, we argue that it is not because there has just not been enough growth overall. So how different would the working of the global economy need to have been to have eradicated poverty by now, and what does that imply for the challenge of the UN SDG1 to eradicate global poverty ‘in all its forms’ by 2030?
The book is structured as follows: Chapter 2 gives an overview of the issues of contention. In Chapter 3, we outline our methodology and introduce our custom-built global distribution data set (and more detail is provided in the methodological annex). In Chapter 4, we then consider the scale of and trends in global poverty by different poverty lines. In Chapter 5, we ask what it would have taken to end poverty at different poverty lines. Chapter 6 concludes.
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- Edward, P., & Sumner, A. (2013b). The geography of inequality: Where and by how much has income distribution changed since 1990? (Centre for Global Development Working Paper 341). Washington, DC: CGD.Google Scholar
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- UN. (2015). The Millennium Development Goals Report. New York: UN.Google Scholar