A slippery ladder: 2.8bn people on the brink - FT.com
▻http://www.ft.com/intl/cms/s/2/e8f40868-c093-11e3-a74d-00144feabdc0.html#b04g18t20w14
There is no doubt the world is less poor than it once was or that decades of rapid growth have created millions of consumers around the developing world. In 1990 an estimated 1.9bn people, or more than a third of the world’s population, survived on less than $1.25 a day, according to the World Bank. By 2010 that figure had fallen to 1.2bn, less than a fifth of the people on earth.
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But put in a global context, the number of solidly middle-class people remains small, while the fragile middle has grown exponentially.
A Financial Times analysis of more than 30 years of World Bank data from 122 countries in the developing world illustrates this change in fortunes. As poverty has fallen, the number of people clustered in a narrow band above the poverty line has grown. But only a relatively small number of people tend to make it beyond that. The result is that four in 10 of the word’s people now live in its fragile middle.
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extending the gains is becoming harder now that the great emerging-market growth spurt of the past 30 years appears to many to be coming to an end. As growth slows, the rise of an emerging-market middle class may look less inevitable. In a paper presented last week, World Bank economists warned that “developing-country growth could be 2-2.5 percentage points weaker than it was during the pre-crisis boom period”.
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According to Kaushik Basu, chief economist of the World Bank, even if the developing world delivered the above-average growth that it did in the past 20 years it is unlikely that the bank would meet its goal of effectively eliminating extreme poverty by 2030.
More worrying is the possibility that a prolonged period of slow growth would erode the gains of recent decades. How vulnerable would those who have risen out of poverty be to sliding back into it?
“That’s a very good question,” Mr Basu says. “And I think they are still very vulnerable.”
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