The World's Poor Are Richer
SINGER, MAX
The World's Poor, Are Richer by Max Singer Afirst glance at the World Bank's 1997 World Development Report is very depressing. The latest numbers make it look as if the old claim is true, that...
...It turns out that the incomes of ordinary poor countries (other than China and India) didn't go down at all...
...Combining these countries into a group with others that weren't Communist (while excluding China and India) conceals the real source of increasing poverty in a handful of countries...
...There are 17 "ordinary" poor countries that are getting poorer, but they are very small, with only 150 million people in all...
...But numbers don't always mean what they seem to...
...Since almost all now have two hands free, we should expect growth to be faster in the future...
...And things looked just about as bad for the lower-middle-income countries: Their incomes went down by about 1.3 percent per year over the same decade...
...Now, china and india, with almost as many people as these two groups combined, are not included in these averages, and their incomes grew at over 6 percent per year...
...But it is still bad news indeed if, on average, incomes in countries with more than 2 billion people were going down for 10 years...
...But in the former Communist countries, incomes dropped by 5.4 percent per year...
...The latest numbers make it look as if the old claim is true, that "the poor are getting poorer" around the world...
...Overall, the 59 "ordinary" poor countries—with 1.3 billion people— grew by an average of 22 percent during the decade...
...In recent years, these ways of thinking have been greatly discredited...
...they grew at a respectable average of 2 percent per year from 1985-'95...
...Besides the accidentally misleading categories and the overestimates of Communist income in 1985, there is a more subtle way in which the World Bank's numbers (and much past experience) may be misleading us about the future...
...they are the world's biggest poverty problem, even if their decline is not as great as the statistics indicate...
...Now there is increased appreciation, especially among younger people, of the efficiency of markets and competition to deliver economic growth—as well as more real fairness...
...Where the World Bank had divided countries into "low income" and "lower middle income," i divided all the countries for which they provided data into "ordinary countries" and "former communist countries," mostly the countries that used to be part of the Soviet Union or its empire in Eastern Europe...
...This is a devastating collapse, though probably not quite as bad as it looks, because incomes in Communist countries were overestimated in 1985...
...The poor aren't "getting poorer," then...
...Most of these are countries that were strongly affected by communism or other special circumstances that made their experience atypical...
...We shouldn't let their misfortune and the World Bank categories confuse us about the favorable state of the struggle against ordinary poverty...
...Maybe we should think of the impressive overall growth in poor countries during the half century after World War II as an indication of what they can accomplish with one hand tied behind their backs...
...Throughout the postwar period, most poor countries were dominated by socialist and national-planning ideas that created immense obstacles to growth...
...It is certainly unfortunate for the nearly 500 million people in the formerly Communist countries that their incomes fell during this period...
...But their difficulties are not the usual problems of poverty...
...A third set of countries, with some 428 million people, also showed declining incomes...
...The bank's new report shows incomes declining in "low income countries" by about 1.4 percent per year over the decade from 1985 to 1995...
...they are the results of their special experiences with communism, war, and revolution...
...Max Singer is the author (with Aaron Wldavsky) of The REAL World Order: Zones of Peace/Zones of Turmoil...
...In recent years there has been a major change in thinking in the poor countries, which is gradually leading to changes in economic policy that may have dramatic effects in coming years...
...since i was surprised to hear that the years 1985-'95 had been so bad for the poor countries of the world, i looked more closely at the statistics...
...Most of the world's poor countries are growing nicely...
...Instead, countries that had the misfortune of being Communist are getting poorer—or they were already poor and are now simply being measured more realistically...
...Thus there's no need to be depressed or surprised...
...China and India— with 2.1 billion people—grew by 80 percent...
Vol. 3 • December 1997 • No. 14
