Most of the poor live now in middle income countries

March 27th, 2011 by Dave Leave a reply »

A new IDS report says that 72% of the world’s poorest 1 billion people live in (so-called) middle income countries … a huge change from 20 years ago when > 90% of the world’s poor lived in low-income countries.  Low-income countries are defined by the World Bank’s definition of < $995 per person GDP (which is itself pretty arbitrary).

See an interactive version of above.

Here’s another way of looking at countries in rank order of their poor populations by middle and low income countries:

Below is an interesting podcast discussion where Paul Collier (see my review on his book, The Bottom Billion) and Andy Sumner share their dramatically different interpretations of this new data.

Paul Collier key points:

  • If you ask the wrong question, you’re bound to get the wrong answer — by focusing on measuring poverty simply by looking at people’s daily income today is a reductionist (and unhelpful) way of measuring poverty
  • A better way to look at poverty and where the international community should consider intervention is where you’ve got both current poverty with lack of a credible opportunity for the future
  • Countries like Nigeria shouldn’t be considered middle income just because they have oil while few of their populace participates in this wealth … it needs help in economic governance to change its course
  • We should seriously reconsider whether to provide further aid to middle income countries who continue on a growth trajectory as in a generation they will likely have very few poor (assuming they deal with income redistribution which is largely a domestic issue)

Andy Sumner key point:  We should start looking at allocating aid based on where the poor live, not just to low-income countries.

 

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3 comments

  1. Tara K. says:

    This is an interesting concept. As an intern with Opportunity International this summer, I have learned about the many countries Opportunity works in (full list can be found at opportunity.org). Some of these countries have large middle class populations (such as India for example), but others are much poorer (such as much of Sub-Saharan Africa). What countries are most optimal to focus on? How should the financial system be structured differently in different types of countries? What organizations are focussing on what countries?

  2. Francisco says:

    Paul’s point about how normal it is that people care more about the future of their children than about the present is fallacious, it does not go to the point.

    The discussion runs as follows: Andy says that 3/4 of the world’s poor live in middle income countries. So, if one directs international aid to those countries with low income, then you are going to miss the largest amount of people in need of that help. Paul answers that we should not meddle with those middle income countries’ distribution, because anyway the poor who live there will probably lift out of poverty in the future, whereas the poor in the low income countries, thou they represent just 1/4 of the world’s poor, will probably not lift out of poverty in the foreseeable future without help.

    Then Paul presents an argument in favor of helping those in low income countries that runs as follows: people normally care more about the future of their children than about their own present and future; then it is the right thing to do to focus aid on countries whose future inhabitants will continue to be in poverty.

    But this argument is fallacious. Of course, people in a low income country (say, Nigeria) will privilege their children’s well being over theirs; and people in a middle income country (say, India) will privilege their children’s well being over theirs. And all this is perfectly normal. But what Paul and Andy are discussing is not whether to help people that are currently in poverty or people whose children will also be in poverty (that is out of the question), but whether to direct aid to India or to Nigeria.
    Now, If the choice were in the donors, it would not be affected by the donors’ desire of promoting their own children’s welfare above theirs, but by the people receiving aid’s desires of promoting the same. Nigerian people would obviously prefer their own children welfare above Indian people’s welfare. But Indian people would obviously prefer their own present well being over the Nigerian people’s children future well being. This is also perfectly normal, and it does not contradict the other normal desire to promote one’s own children well being over one’s own well being.

    The conclusion is that the normality of one’s desire of promoting one’s own children well being adds nothing to the choice of where to send aid.

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