How Poverty Ends..?

For all the worries today about the explosion of inequality in rich countries, the last few decades have been remarkably good for the world’s poor. Between 1980 and 2016, the average income of the bottom 50 percent of earners nearly doubled, as this group captured 12 percent of the growth in global GDP. The number of those living on less than $1.90 a day—the World Bank’s threshold for “extreme poverty”—has dropped by more than half since 1990, from nearly two billion to around 700 million. Never before in human history have so many people been lifted out of poverty so quickly. 

There have also been massive improvements in quality of life, even for those who remain poor. Since 1990, the global maternal mortality rate has been cut in half. So has the infant mortality rate, saving the lives of more than 100 million children. Today, except in those places experiencing major social disruption, nearly all children, boys and girls alike, have access to primary education. Even deaths from HIV/AIDS, an epidemic that once seemed hopeless, peaked soon after the turn of the millennium and have been declining ever since. 

A great deal of the credit for these gains can go to economic growth. In addition to increasing people’s income, steadily expanding GDPs have allowed governments (and others) to spend more on schools, hospitals, medicines, and income transfers to the poor. Much of the decline in poverty happened in two large economies that have grown particularly fast, China and India. But now, as growth has begun to slow down in both countries, there are reasons to be anxious. Can China and India do anything to avoid stalling? And do these countries offer a sure recipe that other countries can imitate, so that they can lift millions of their people out of poverty?

Economists, ourselves included, have spent entire careers studying development and poverty, and the uncomfortable truth is that the field still doesn’t have a good sense of why some economies expand and others.

(Foreign affairs)