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By Global Public Square staff
Watching countries from around the world grow and prosper, we tend to assume that global poverty is falling. And in fact, the World Bank says that in 1981 nearly half of the world's citizens were impoverished, that is, they lived on less than $1.25 a day. And today, less than a fifth of the world's population lives in poverty. In raw numbers, that translates to a 40 percent drop from about 2 billion to 1.2 billion people.
But when we dig deeper, it’s clear the picture is more murky. Put simply, most of the reduction in global poverty has to do with one country – China. Take it out of the equation and the numbers look very different.
Let's go back to 1981. Back then, China accounted for 43 percent of the world's poor. The other major contributors were South Asia, with 29 percent, and sub-Saharan Africa, with 11 percent. Fast forward just a decade, and you'll see that China's share of the world's poor began to drop. The trend continues through the 2000s. By 2010, China accounted for only 13 percent of the world's impoverished population. South Asia's share had jumped to 42 percent, while sub-Saharan Africa's share tripled, to 34 percent.
The World Bank data shows that the total number of impoverished Chinese declined by nearly 680 million people in the last three decades. That's about 95 percent of the total global decline. By registering double digit growth for three decades, Beijing has transformed the fortunes of a poor nation within a generation. That's amazing, but it tells you that in the rest of the world, progress has been much, much slower – if there's been progress at all.
There's a lesson here for other developing countries.
Take India, for example. New Delhi has also made strides against poverty. The problem is, those strides have only been a few steps ahead of population growth. Look at the numbers. In 1981, 429 million Indians lived in poverty – about 60 percent of the population. By 2010, the percentage of impoverished people had dropped to 33 percent. And yet the total number of Indians living in poverty was still around 400 million. Why? You see, India's population had expanded by about half a billion. For all the millions who were lifted out of poverty, millions of others were born into it.
What's the answer? Growth. In the 1960s and 70s India was infamously stuck in a rut of slow growth, a mediocre 2 percent a year often. Then, in the 1980s, it began opening up, and in the 1990s New Delhi scrapped much of the old socialist set of controls. By the mid-2000s, India was growing at around 9 percent. That growth helped create India's middle class, and dramatically reduced the number of people living in poverty. But according to the pro-free-market Cato Institute, if those reforms had taken place two decades earlier, India would today have fewer impoverished people: 175 million fewer. That's why India's recent drop in economic growth is alarming – those most affected will be the poor.
Africa is also changing, but for its poorest, change is still too slow. Since 1981, poverty rates have been dropping steadily in both the developing world, and the world as a whole. But in sub-Saharan Africa poverty rates actually got slightly worse in the 1980s and 90s. It has only recently begun to turn the corner, again, thanks in large part to faster economic growth.
Global poverty is falling. But China deserves most of the credit. And thanks to the Communist Party of China, we now know that the path to poverty alleviation is…capitalist-led growth.