The number of people in extreme poverty has been cut in half since 1990 according to research by Visual Capitalist.
Unfortunately we sometimes get so caught up in our day-to-day probelms and all the negative news stories that we forget to look at the big picture.
Yet the big picture actually provides a lot of optimism.
Despite many of us being pessimistic about the future, the world is actually getting better as a whole:
- people are living longer and healthier lives,
- crime and violence are down, and
- living standards are generally improving.
According to Visual Capitalist, in absolute terms, the total amount of people living in extreme poverty peaked in 1970 when 2.2 billion of the world’s 3.7 billion people lived on less than $1.25 per day.
Today only 0.7 billion of 7.3 billion people are below this poverty-line worldwide.
While progress has been made in many countries, the story of China is of particular interest: after market reforms started being introduced in 1978, the country grew at an average pace of 10% per year until 2010.
Over this period of time, at least 800 million people were lifted out of absolute poverty.
And while there is still much work to be done, this is an undeniable step in the right direction.
The U.N. even has a bold target to end extreme world poverty by 2030.
Based on the progress so far, this doesn’t seem unrealistic.
Why have we made so much progress?
One of the most important factors is very simple: it’s estimated that two-thirds of poverty reduction comes from good old-fashioned economic growth.
For every 1% increase in GDP per head, poverty is reduced by 1.7%.
From 1960 to 2000, developing nations grew at an average pace of 4.3% – and from 2000 to 2010, they grew at an even faster pace of 6.0% per year. This helped lift a lot of people out of extreme poverty.
The other factor for the remaining one-third?
It’s income distribution.
The degree to which economic growth helps the poorest depends on their chances of getting some of that benefit.
It’s estimated that a 1% increase in GDP per head in the least equal countries only reduces poverty by 0.6%, while it does so by 4.3% in the most equal of places.
More growth and more equality will make it possible for this powerful trend in poverty reduction to continue.
And by 2030 – who knows – maybe extreme levels of poverty will be an afterthought for society.
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