A new data set on national poverty lines is combined with new price data and almost 700 household surveys to estimate absolute poverty measures for the developing world We find that 25% of the population lived in poverty in 2005, as judged by what “poverty” typically means in the world's poorest countries This is higher than past estimates Substantial overall progress is still indicated—the corresponding poverty rate was 52% in 1981—but progress was very uneven across regions The trends over time and regional profile are robust to various changes in methodology, though precise counts are more sensitive

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The Developing World is Poorer than We Thought, But No Less Successful in the Fight Against Poverty

Climate change is the defining human development challenge of the 21st Century. Failure to respond to that challenge will stall and then reverse international efforts to reduce poverty. The poorest countries and most vulnerable citizens will suffer the earliest and most damaging setbacks, even though they have contributed least to the problem. Looking to the future, no country — however wealthy or powerful — will be immune to the impact of global warming.The Human Development Report 2007/8 shows that climate change is not just a future scenario. Increased exposure to droughts, floods and storms is already destroying opportunity and reinforcing inequality. Meanwhile, there is now overwhelming scientific evidence that the world is moving towards the point at which irreversible ecological catastrophe becomes unavoidable. Business-as-usual climate change points in a clear direction: unprecedented reversal in human development in our lifetime, and acute risks for our children and their grandchildren.There is a window of opportunity for avoiding the most damaging climate change impacts, but that window is closing: the world has less than a decade to change course. Actions taken — or not taken — in the years ahead will have a profound bearing on the future course of human development. The world lacks neither the financial resources nor the technological capabilities to act. What is missing is a sense of urgency, human solidarity and collective interest.As the Human Development Report 2007/8 argues, climate change poses challenges at many levels. In a divided but ecologically interdependent world, it challenges all people to reflect upon how we manage the environment of the one thing that we share in common: planet Earth. It challenges us to reflect on social justice and human rights across countries and generations. It challenges political leaders and people in rich nations to acknowledge their historic responsibility for the problem, and to initiate deep and early cuts in greenhouse gas emissions. Above all, it challenges the entire human community to undertake prompt and strong collective action based on shared values and a shared vision.

Human development report 2007/2008: Fighting climate change: Human solidarity in a divided world

The World Bank's approach to estimating the extent, distribution and trend of global income poverty is neither meaningful nor reliable. The Bank uses an arbitrary international poverty line that is not adequately anchored in any specification of the real requirements of human beings. Moreover, it employs a concept of purchasing power equivalence that is neither well defined nor appropriate for poverty assessment. These difficulties are inherent in the Bank's "money-metric" approach and cannot be credibly overcome without dispensing with this approach altogether. In addition, the Bank extrapolates incorrectly from limited data and thereby creates an appearance of precision that masks the high probable error of its estimates. It is difficult to judge the nature and extent of the errors in global poverty estimates that these three flaws produce. However, there is reason to believe that the Bank's approach may have led it to understate the extent of global income poverty and to infer without adequate justification that global income poverty has steeply declined in the recent period. A new methodology of global poverty assessment, focused directly on what is needed to achieve elementary human requirements, is feasible and necessary. A practical approach to implementing an alternative is described.

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How Not to Count the Poor

In 2005, China participated for the first time in the International Comparison Program (ICP), which collects primary data across countries on the prices for an internationally comparable list of goods and services. This paper examines the implications of the new Purchasing Power Parity (PPP) rate (derived by the ICP) for China's poverty rate (by international standards) and how it has changed over time. We provide estimates with and without adjustment for a likely sampling bias in the ICP data. Using an international poverty line of USD 1.25 at 2005 PPP, we find a substantially higher poverty rate for China than past estimates, with about 15% of the population living in consumption poverty, implying about 130 million more poor by this standard. The income poverty rate in 2005 is 10%, implying about 65 million more people living in poverty. However, the new ICP data suggest an even larger reduction in the number of poor since 1981.

/pdf/china-is-poorer-than-we-thought-but-no-less-successful-in-3kbue5oluz.pdf

China Is Poorer Than We Thought, But No Less Successful in the Fight Against Poverty

The results of new direct price level comparisons across 146 countries in 2005 have led to large revisions of PPP (purchasing power parity) exchanges rates, particularly for China and India. The recalculations of international and global inequalities, using the new PPPs, show that inequalities are substantially higher than previously thought. Inequality between global citizens is estimated at 70 Gini points rather than 65 as before. This high level of inequality is confirmed by the results obtained from the new set of 122 national household surveys from around year 2005.

https://www.gc.cuny.edu/CUNY_GC/media/CUNY-Graduate-Center/PDF/Centers/LIS/Milanovic/papers/2012/milanovic_JOEI.pdf

Global inequality recalculated and updated: the effect of new PPP estimates on global inequality and 2005 estimates

China's gross domestic product in U.S. dollars is higher than earlier estimates would indicate, if calculated on the basis of purchasing power parity with the United States. China's gross domestic product per capita was only US$300 to $370 in 1980 - 91 in an estimate based on the World Bank Atlas approach used in the World Development Report. These estimates fail to capture the fact that in the 10 years since embarking on a program of economic reform aimed at rapid economic development, China has been one of the fastest growing economies in the world. Knowing what its true standard of living and productive potential is important not only for measuring the size of China's economy but for assessing its growth performance. Ruoen and Kai provide a detailed comparison of the GDP of China and the United States using the purchasing power parity approach formulated by the U.N. International Comparison Program (ICP), with 1986 as a base. Using this approach, which establishes a conversion factor based on prices for comparable items rather than on exchange rates, they find that: ° China's per capita GDP in 1986 international dollars is between $770 and $1,044, depending on assumptions made about comparison-resistant service sectors and quality adjustments made in a number of selected ones in calculating purchasing power parities. ° China's per capita GDP in 1991 international dollars is between $1,227 and $1,663, allowing for the impact of inflation in the United States on the purchasing power parity and growth rates in China computed from national currency GDP data in constant prices. This paper - a product of the Socio-Economic Data Division, International Economics Department - is part of a larger effort in the department to expand coverage for purchasing power parity-based estimates to most countries of the world.

Ren Ruoen

Papers

China's GDP in U.S. Dollars Based on Purchasing Power Parity