By Andy Sumner, King’s College London

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This blog is part of an ongoing series evaluating various facets of Development in Transition.
The 2019 Perspectives on Global Development: Rethinking Development Strategies adds to this discussion

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This blog is the first of two. Part one outlines five facts about global poverty and economic development in the developing world and discusses how the nature of development is changing. Part two, which will post tomorrow, will consider the implications of these changes for future development co-operation.

Fact 1. A new polarisation is emerging in the developing world. A new polarisation is emerging within the developing world between ‘moving’ and ‘stuck’ countries, as well as between ‘high-ODA’ and ‘post-ODA’ countries.

Only a small set of 25 developing countries remain ‘stuck’ in terms of slow or no economic growth. These countries are home to just 10% of the population of the developing world. In contrast, most people in the developing world live in countries that are ‘moving’ at a faster rate.

This multi-speed trajectory of global development has given rise to a binary between a small group of countries that are likely to be poor, and to remain so for some time to come, and a larger set of developing countries that have been growing substantially.

What’s more, a second and related new binary results from the varied rates of economic growth taking place in the developing world, which has direct consequences for the future of development co-operation.

That new binary is between aid-dependent developing countries and what could be labelled as ‘post-ODA’ developing countries, meaning that ‘traditional’ official development assistance (ODA) is, or in the foreseeable future will be, irrelevant vis-à-vis domestic resources.

Taking an arbitrary measure of ODA as 5% or more of gross national income (GNI), only 31 developing countries remain highly dependent on ODA. These countries – which overlap somewhat with the ‘stuck’ group – are also home to about 600 million people, or 10% of the total population living in developing countries, while 86% of the population of the developing world now live in countries that have already reached, or are rapidly heading towards, a ‘post-ODA’ stage in development.

Fact 2. The global poverty headcount is 0.7 billion or 4.5 billion. When measured by the new extreme poverty line of USD 1.90-per-day, the global poverty headcount has fallen. Yet, the fall in the number of people living in poverty outside China is more modest.

The estimate that about 750 million people, or a tenth of the world’s population, is poor according to the USD 1.90-per-day standard sits alongside the fact that every 10 cents added to this poverty line adds almost 100 million more people to the global poverty headcount (a trend that continues up to around the mark of USD 3.50-per-day).

Estimates of multidimensional poverty similarly point towards a much higher poverty headcount than that given by the USD 1.90-per-day indicator. When poverty is measured as multidimensional poverty – which includes indicators of education, health and nutrition – the USD 1.90-per-day poverty count actually more than doubles.

At USD 10-per-day, a line associated with the permanent escape from poverty, 4.5 billion people are living in poverty.

Fact 3. The world’s poor are rural but not necessarily farmers, and half are children. Poor households tend to be rural households consisting primarily of young people. Half of the world’s multidimensional poor are under 18 years of age, and three-quarters are under 40.

Yet surprisingly, in countries for which data is available, between one-third and a half of poor households have no member employed in agriculture.

At a disaggregated level, poverty in rural areas tends to be characterised by overlapping deprivations in education and access to decent infrastructure (water, sanitation, electricity and housing).

It is child mortality and malnutrition that are more frequently observed within urban poverty. That’s surprising though, given the proximity to better health care and higher incomes in principle.

Fact 4. Three quarters – or 1 billion – of the world’s multidimensionally poor live in fast growing, ‘post-ODA’ developing countries. Yes, you read that right. Three-quarters of the world’s multidimensionally poor – or a billion people – live in fast-growing, ‘post-ODA’ developing countries, as do two-thirds – or 500 million – of the USD 1.90-a-day poor.

The extent to which the world’s poor live in sub-Saharan Africa or ‘fragile states’ is very sensitive to the poverty measure taken and is also contingent on the definition of ‘fragile state’ used. For instance, estimates for the share of global poverty in sub-Saharan Africa range from just 20% up to 57% depending on how poverty is measured. Similarly, estimates for the proportion of global poverty in countries defined as ‘fragile states’ ranges from 8% to 62%, depending on how poverty is measured and the definition taken of ‘fragile state’.

This points towards questions about the ‘fragility’ lens and whether it has become too ‘elastic’. The term’s conceptual history is narrow in conflict and post-conflict discussions. Yet the label ‘fragile state’ has been stretched to describe not only conflict and post-conflict states, but also states facing a broad range of other governance-related problems.

The fact that many ‘fragile states’ are also officially classified as middle-income countries (or even high-income countries) and are thus to some donors ineligible for ODA raises further questions about the term’s usefulness. What also raises questions is the issue that many countries defined as fragile have sub-national regions of conflict/post-conflict rather than entire territories (and some countries categorised as non-fragile have substantial sub-national conflict).

Fact 5. More than half of global poverty is to be found in countries that are deindustrialising. For the most part, global poverty is located in middle-income countries, which are ‘moving’ and post-aid. What’s more, many of these countries are now experiencing a deindustrialisation or tertiarisation of employment or GDP or both, having built a manufacturing base whose expansion has stalled in the face of liberalising trade and as new competitors enter global value chains.

The changes in supply chains and the shift to lower productivity economies have spread manufacturing jobs more thinly across many countries, making it harder for individual countries to sustain high levels of manufacturing employment. Additionally, this is happening at lower levels of GDP per capita than previously, leading to the ‘premature’ deindustrialisation label.

This raises questions about the future of economic development and the capacity of services to provide productivity and employment growth in developing countries.

So what does this all mean for the future of development co-operation? Stay tuned for the second part of this blog tomorrow for an answer to that question.

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Further reading

Sumner, A. (2019) Global Poverty and Inequality: Change and Continuity in Late Development. Development and Change. 50(2): 410–425