For those who spend their days focusing on international development issues, only occasionally does the full public spotlight shine on their work. On Tuesday night, near the conclusion of his State of the Union address, the President articulated a vision that represented one of the clearest, most direct calls to development action in recent years. He noted that in many parts of the world, people still live on “little more than a dollar a day,” and called for the United States to “join with our allies to eradicate such extreme poverty in the next two decades.” This has caused a flurry of activity as the development community begins to dissect what exactly this means, how it will be done, and who will be affected. In the policy office at USAID, we’ve spent considerable time analyzing this issue and what it would take to eradicate extreme poverty.
First, while eliminating extreme poverty won’t be an easy task, it has moved from a rhetorical aspiration to a concrete possibility. The total number of people currently in extreme poverty (defined as $1.25/day) is 1.2 billion. Projections of how much extreme poverty will exist by 2035 range between 193 million and 660 million. The most optimistic scenarios assume that we can maintain our current rate of poverty reduction, resulting in 3% of the world population (less than 200 million) living in extreme poverty by 2035, a natural rate of equilibrium that most leading economists consider to be an “end” to extreme poverty. Other projections posit that poverty rate reductions in the developing world, especially in Africa, will slow down, in which case it may take us closer to 50 years to reach this threshold. Our own analysis leads us to believe that by focusing our shared political attention and applying the right tools we can collectively lift one billion people out of poverty and reach this 3% level in the next two decades.
We should recognize that we’ve made substantial progress – more than was ever anticipated. The number of people living in extreme poverty continued to rise until around 1981, when it reached 1.94 billion people. From 1981 until around 1993, the number did not change much overall, but after 1993 – for the first time in history – the number began to fall. Over the next fifteen years, historic growth rates were achieved and the extreme poverty figure fell from 1.91 to 1.29 billion, nearly a one-third decrease. It will be challenging to maintain this rate of reduction; as poverty numbers get smaller, the rate of decline may slow as remaining pockets of poverty persist in increasingly difficult environments. But economic growth has been the main determinant of progress in poverty reduction and we believe we are well positioned to help foster such growth.
Finally, it’s important to consider where poverty will reside in the future. By 2015, we will have achieved the first Millennium Development Goal (halving the rate of poverty) in all regions of the world except Sub-Saharan Africa. 85% of global poverty is now concentrated in the following countries: India and China (combined 618 million people or 48% of the total), Nigeria, Bangladesh, DRC, Indonesia, Pakistan, Tanzania, Philippines, and Kenya.
We’ve seen miraculous progress in poverty reduction in recent years, due to rapid economic growth in a small number of populous countries (China and India, especially). Countries like China and India are still poor and have huge populations—so large pockets of poverty persist – but most economists believe the strength of their economic growth will allow them to virtually eliminate extreme poverty in the near future. On the other hand, as poverty becomes increasingly diffuse, fragile countries (who struggle with conflict and instability) will be home to an ever greater proportion of the world’s poorest citizens.
So how will we in the global community achieve this goal? Ultimately, this effort will vary by country and region; we will need to assess the specific context and focus our efforts on that particular country’s development needs. In order to reach these diverse and dispersed populations, we will have to employ every tool and instrument at our disposal. This includes continuing to expand and scale efforts to harness science, technology, innovation and knowledge exchange to eliminate extreme poverty. This means rallying the global community and working in partnership with international donors, non-profit and charitable resources, and galvanizing private sector investment towards this effort. It also means leveraging existing efforts, notably the three Presidential Initiatives of Feed the Future, Global Health and Global Climate Change.
As the President said on Tuesday, “We also know that progress in the most impoverished parts of our world enriches us all.” When it comes to defeating the misery and wretchedness of poverty, it is in our nation’s interest and the interest of all nations to seize the mantle of this challenge and carry it forward.