World Bank Counts More Poor People

By Anthony Faiola
Washington Post Staff Writer
Wednesday, August 27, 2008

Far more people around the world live in severe poverty than previously thought, with the global underclass now numbering an estimated 1.4 billion, up from around 1 billion, according to a landmark World Bank report released yesterday.

The report does not suggest that the world has suddenly gotten poorer. In fact, it shows remarkable reductions in poverty levels since the 1980s. Rather, the report represents a revised snapshot of global development using more recent household surveys, demographic figures, price data and purchasing power analyses.

The bank has also altered its definition of global poverty, moving the benchmark up from $1 to $1.25 per day.

The report, the World Bank's most ambitious attempt ever to update its poverty estimates, suggests that while huge economic progress has been made around the world, many nations, including emerging juggernauts such as China, are not as rich as many had thought. Previously, the bank had estimated that 6 percent of Chinese were living in severe poverty; it now estimates the figure to be almost 16 percent.

The figures, which incorporate data from 2005, do not factor in the impact of soaring food and energy prices over the past year. But they amount "to a quantum leap forward in our understanding of poverty in the developing world," said co-author Martin Ravallion, director of the bank's Development Research Group.

While the report found that roughly 26 percent of the world's population is now living in extreme poverty -- as opposed to 17.2 percent, as previously estimated -- it also confirmed that poverty has been reduced in some regions, most stunningly in East Asia.

China's rise has also lifted the fortunes of neighboring countries. Roughly 1 billion people, or 79 percent of the population in East Asia, mostly in China, were living in severe poverty in 1981. The report estimates that figure fell to 337 million, or 18 percent of the region, by 2005.

No other region has come close to matching East Asia's success. By comparison, while the percentage of people living in severe poverty in South Asia and Latin America has indeed come down, those reductions have not kept pace with population growth. As a result, there were actually more poor people living in those regions in 2005 than in the 1980s. The trend is worse in sub-Saharan Africa. There, the number of poor people jumped from 202 million in 1981 to 384 million in 2005.

"Now that we have a better picture of the scope of poverty around the globe, we can better set to the task of fighting it," Ravallion said.

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