Global poverty rates continued to fall in the first four years of the 21st century, according to new estimates published in the World Development Indicators 2007 released yesterday.

The proportion of people living on less than US$1 a day fell to 18.4 percent in 2004, leaving an estimated 985 million people living in extreme poverty. By comparison, the total number of extreme poor was 1.25 billion in 1990. Two-dollar-a-day poverty rates are falling too, but an estimated 2.6 billion people, almost half the population of the developing world, were still living below that level in 2004.

Developing countries have averaged a solid 3.9 percent annual growth in GDP per capita a year since 2000, which contributed to rapidly falling poverty rates in all developing regions over the past few years. Another key reason US$1-a-day poverty fell by over 260 million between 1990 and 2004 was China's massive poverty reduction over that period. Indeed, East Asia’s extreme poverty rate dropped to 9 percent in 2004.

In the rest of the developing world, good economic performance and a lower poverty incidence in most regions have offset a rise in the sheer numbers of poor people that might have otherwise accompanied population growth. In Sub-Saharan Africa, 298 million people were living in extreme poverty in 2004, practically the same number as in 1999, whereas the number of poor had increased continuously in the previous two decades.

The report finds that, in the past decade, poverty reduction was not always or everywhere commensurate with income growth. In some countries and regions, inequality worsened, as poor people did not reap the fruits of economic expansion, because of a lack of job opportunities, limited education or bad health.

"Growth is essential to reducing poverty, but it isn't the only factor. The World Development Indicators go beyond growth and poverty rates to ask how income is distributed, whether health care and education are improving, and to assess the business environment. These factors all affect the quality of people's lives," said François Bourguignon, World Bank chief economist and senior vice president for development economics.

World Development Indicators 2007 (WDI) provides a detailed picture of the world through data. It includes, for example, information on health expenditures, on transport and other infrastructure services, on the quality of public sector management, on internet access, on access to improved water sources, and on carbon dioxide emissions.

This 11th edition of the WDI looks at countries that have done unusually well over the past decade. It finds strong performers in all regions, with notably fast growth in GDP per capita among many states of Eastern Europe and the former Soviet Union. But it also finds that the countries with the highest rates of under-5 mortality a decade ago have, on average, made the slowest reduction in mortality.

"These results are worrying," said Alan Gelb, director of development policy, "The fact that under-five mortality is 15 times higher in low income countries than in wealthy ones is a stark example of how far we still need to go."

Measuring the effectiveness of country policies and institutions

"This year we've added new data on the performance of governments," explained Eric Swanson, program manager with the World Bank's development data group, "Governance indicators are tools for assessing the strengths and weaknesses of public institutions. Capable governments and high-quality institutions promote growth, raise incomes, and reduce poverty."

The World Bank has used performance assessments of governments as a basis for allocating concessional resources since the mid-1970s. In the annual Country Policy and Institutional Assessment, or CPIA, Bank staff evaluates country policies and institutions covering four main clusters: economic management, structural policies, policies for social inclusion and equity, and public sector management and institutions.

WDI 2007 lists the most recent Country Policy and Institutional Assessment (CPIA) data for the 76 countries eligible to receive grants or credits from the International Development Association (IDA), the World Bank’s funding arm for the poorest countries. CPIA indicators measure the extent to which a country's policy and institutional framework supports sustainable growth and poverty reduction and, consequently, the effective use of development assistance.

New poverty data

In the past 25 years, there has been huge progress in undertaking nationally representative household surveys for developing countries -- the best data for assessing poverty reduction. Using data from over 500 such surveys spanning 100 countries, Senior Research Manager Martin Ravallion and Senior Statistician Shaohua Chen have just published new 2004 regional poverty estimates for both the US$1 and US$2 a day poverty lines. For more on this research, which feeds into the WDI, go to: http://econ.worldbank.org/povcalnet.

A comprehensive guide to development trends

Although the WDI draws on a database of over 600 indicators covering 206 countries and territories, there are still serious gaps in statistics from poor countries.

"We are working with our international partners and developing countries to improve the quality and availability statistics covering every aspect of development," stressed Shaida Badiee, director of the development data group.

While the full WDI database is available via WDI Online or on CD-ROM, several Little Data Books are also available on a range of topics. An Atlas of Global Development and an Online Atlas of the MDGs (http://devdata.worldbank.org/atlas-mdg/) are also available.

(China Development Gateway April 16, 2007)