MercoPress. South Atlantic News Agency

World poverty down: 1.4 billion lives on less than USD 1.25

Booming China has cut dramatically poverty

The World Bank said improved economic estimates showed there were more poor people around the world than previously thought while also revealing successes in the fight to overcome extreme poverty.

The new estimates, which reflect improvements in internationally comparable price data, offer a much more accurate picture of the cost of living in developing countries and set a new poverty line of US$1.25 a day. They are based on the results of the 2005 International Comparison Program (ICP), released earlier this year. In a new paper, "The developing world is poorer than we thought but no less successful in the fight against poverty," Martin Ravallion and Shaohua Chen revise estimates of poverty since 1981, finding that 1.4 billion people (one in four) in the developing world were living below US$1.25 a day in 2005, down from 1.9 billion (one in two) in 1981. An earlier estimate?of 985 million people living below the former international US$1 a day poverty line in 2004 ?was based on the (then) best available cost of living data from 1993. The old data also indicated about 1.5 billion in poverty in 1981. However, the new and far better ICP data on prices in developing countries reveal that these estimates were too low. The new estimates continue to assess world poverty by the standards of the poorest countries. The new line of US$1.25 for 2005 is the average national poverty line for the poorest 10-20 countries. "The new estimates are a major advance in poverty measurement because they are based on far better price data for assuring that the poverty lines are comparable across countries," said Martin Ravallion, Director of the Development Research Group at the World Bank, "Data from household surveys have also improved in terms of country coverage, data access, and timeliness." "The new data confirm that the world will likely reach the first Millennium Development Goal of halving the 1990 level of poverty by 2015 and that poverty has fallen by about one percentage point a year since 1981, " said Justin Lin, Chief Economist and Senior Vice President, Development Economics at the World Bank. "However, the sobering news that poverty is more pervasive than we thought means we must redouble our efforts, especially in Sub-Saharan Africa." The new data show that marked regional differences in progress against poverty persist. Poverty in East Asia has fallen from nearly 80% of the population living below US$1.25 a day in 1981 to 18% in 2005. However, the poverty rate in Sub-Saharan Africa remains at 50% in 2005?no lower than in 1981, although with more encouraging recent signs of progress.