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An Even Poorer World

September 2, 2008, New York Times, An Even Poorer World, editorial.

There is a lot more poverty in the world than previously thought. The World Bank reported in August that in 2005, there were 1.4 billion people living below the poverty line — that is, living on less than $1.25 a day.

That is more than a quarter of the developing world’s population and 430 million more people living in extreme poverty than previously estimated. The World Bank warned that the number is unlikely to drop below one billion before 2015.

The poverty estimate soared after a careful study of the prices people in developing countries pay for goods and services revealed that the World Bank had been grossly underestimating the cost of living in the poorest nations for decades. As a result, it was grossly overestimating the ability of people to buy things. And the new research doesn’t account for the soaring prices of energy and food in the past two years.

The poverty expressed in the World Bank’s measure is so abject that it is hard for citizens of the industrial world to comprehend. The new count underscores how much more the developed world needs to do to help the world’s most vulnerable people.

It should also serve as a jarring reminder to the leaders of the world’s much-touted new economic powers — India and China — about the inequities growing amid their growing wealth. Forty-two percent of India’s people live below the World Bank’s poverty line, as do 16 percent of China’s.

The new data confirm the primary role that economic growth must play in lifting millions out of poverty. Fast growth slashed the number of Chinese living in extreme poverty by three-fourths in less than 25 years. Achieving broad-based growth will not be easy.

India, which has more people in extreme poverty than it did 25 years ago, must reform its farm sector to increase dismal productivity and broaden its narrow economic expansion. Sub-Saharan Africa — where 50 percent of the people live below the poverty line — requires stability, above all, to encourage investment. All developing countries must invest more in education.

There’s still a big supporting role for rich countries. Last year, development aid from the Group of 8 industrialized nations amounted to $62 billion — far below the $92 billion that was promised to be delivered by 2010. We hope the World Bank’s new poverty count finally shames the Group of 8 into keeping that promise.

Copyright 2008 The New York Times Company

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