The decline in South Asian poverty

It has long been asserted that South Asia may make average strides economically, but it is still in absolute terms the locus of most of the world’s grinding poverty. This may not be true much longer. In particular, some estimates now suggest that India is no longer the world’s “leader” in extreme poverty in absolute terms. From Brookings, The start of a new poverty narrative:

According to our projections, Nigeria has already overtaken India as the country with the largest number of extreme poor in early 2018, and the Democratic Republic of the Congo could soon take over the number 2 spot (Figure 1 below). At the end of May 2018, our trajectories suggest that Nigeria had about 87 million people in extreme poverty, compared with India’s 73 million. What is more, extreme poverty in Nigeria is growing by six people every minute, while poverty in India continues to fall. In fact, by the end of 2018 in Africa as a whole, there will probably be about 3.2 million more people living in extreme poverty than there are today.

Bangladesh has been making progress as well, from the World Bank:

Bangladesh has made remarkable progress in reducing poverty, supported by sustained economic growth. Based on the international poverty line of $1.90 per person per day, it reduced poverty from 44.2 percent in 1991 to 13.8 percent in 2016/17. In parallel, life expectancy, literacy rates and per capita food production have increased significantly. Progress was underpinned by 6 percent plus growth over the decade and reaching to 7.3 percent in 2016/2017, according to official estimates. Rapid growth enabled Bangladesh to reach the lower middle-income country status in 2015. In 2018, Bangladesh fulfilled all three eligibility criteria for graduation from the UN’s Least Developed Countries (LDC) list for the first time and is on track for graduation in 2024.

Here’s GDP for South Asian countries in 2005 dollars:

I left Bangladesh in 1980. Not too long after I was born. I went back to visit in 1989 and 2004. In relation to 1980, per capita GDP was 1.15x. in 2004 it was 1.6x. In 2016 it was 2.9x. So over the past 14 years there’s been a 2x increase in GDP per capita in Bangladesh! The equivalent figure in the United States is 1.1x.

32 thoughts on “The decline in South Asian poverty”

  1. The linked article doesn’t clarify these things to me:

    1. Which definition of poverty being used? I remember that India has redefined the threshold income for extreme poverty that is specific to the country and reports those numbers. I am not sure if that has changed.

    2. Poverty in increased absolute numbers in Africa may be an outcome of increased population that might have previously succumbed to malaria or aids. I am not how much of this affects the numbers.

    It is a good outcome for India if the results hold up after the above considerations and validate the projections in 2018.

    Or, maybe the intent of the article is to change the “narrative” and not necessarily anything else.

    1. To clarify the above comment a little more:

      There has been significant change in prosperity of many Indians. It is very evident even in small towns and villages. The purchasing power of many lower middle class Indians is much greater and given the employment rate of the youth it is not that surprising that on the whole many more people are doing better than 20 years ago.

      However, (and this is an honest question) did the higher income of middle class show up as
      greater GDP (per capita) of the country while the absolute number of extreme poor continue to be poor? Was there just an exchange of rural poverty for urban poverty? I am not sure if income inequality has decreased while there are several indicators that it could have increased
      instead (e.g., housing costs, purchasing power, schooling costs, food prices).

      Statistically, if we had 3 groups (for simplicity): rich (10%), middle class (30%), poor (70%). It is possible that a rapid rate of growth by the rich and middle class could increase GDP per capita while not making much of a dent on poor. That is why the top figure about decrease of absolute number of poor is important and had to be checked with more thoroughness to be sure that we are not blinded by the exponential growth of middle class (particularly when there is a prediction of a non-linear trend into the future – note that quoted text says “according to our projections”).

      Perhaps there are trickle down economics, but I haven’t looked at any data and have only anecdotes regarding child labour and maid salaries. Sorry for being lazy and lobbing this question to others instead of searching for the data by myself.

      1. “However, (and this is an honest question) did the higher income of middle class show up as
        greater GDP (per capita) of the country while the absolute number of extreme poor continue to be poor?”
        The large majority of the increase in per capita real GDP accrued to the middle class and upper middle class. This is correct. However the number of absolute poor continued to drop. Note that the bottom third of Indians earn a minuscule percentage of total income. It takes very little money to move people out of extreme poverty.

        “Was there just an exchange of rural poverty for urban poverty?”
        Excellent question. Partly if you mean moderate (non extreme) poverty. But the above article is a reference to extreme poverty which is fast disappearing.

        “I am not sure if income inequality has decreased while there are several indicators that it could have increased instead (e.g., housing costs, purchasing power, schooling costs, food prices).”

        Inequality has soared. Often soaring inequality significantly benefits poor people. Note that poor people earn so little that their income hardly affects Gini coefficients.

        “Statistically, if we had 3 groups (for simplicity): rich (10%), middle class (30%), poor (70%). It is possible that a rapid rate of growth by the rich and middle class could increase GDP per capita while not making much of a dent on poor.” Yes. Poor earn an extremely small percentage of income. Note however that only a very small fraction of poor people suffer from extreme poverty, which this article is referring to. Your question is more relavent to moderate non extreme poverty. They are not benefiting as much from economic development as the middle class.

        “That is why the top figure about decrease of absolute number of poor is important and had to be checked with more thoroughness to be sure that we are not blinded by the exponential growth of middle class (particularly when there is a prediction of a non-linear trend into the future).” You are correct. Note you are probably a very young female. India was indescribably poor in the 1970s. Compared to then, today’s poor are vastly better off.

        “Perhaps there are trickle down economics, but I haven’t looked at any data and have only anecdotes regarding child labour and maid salaries. Sorry for being lazy and lobbing this question to others instead of searching for the data by myself.” What does “trickle down” economics mean to you? In general we benefit from each other’s economic success. We complement each other.

        1. Lol , @ calling me very young. We all wish we were. 😀

          You are addressing very different points than the ones I was looking answers for. I don’t take the top figure as data when it is only a projection (i.e. model prediction).

          All the rest is your experience vs. mine. We can all know about different parts of the same elephant but we won’t get anywhere near the truth.😀

          1. Quick reference to data from World Bank until 2012 approximately.

            55% of Nigeria earns less than 1.25$ /day, while about 20% of India is the same.

            This comes out to be 100 million Nigerians and about 240 million Indians. Are there any latest numbers?

  2. 1)I wonder how Bhutan has done relatively well? Small population + natural resources = high per capita rate doesn’t seem to cut it by a quick glance at Wikipedia.

    2) I find it odd that Bangladesh starts off richer than India in the graph. It was poorer at the start of the century (which is why Curzon wanted to partition Bengal as most government resources flowed to Calcutta/West Bengal) and was neglected by the Pakistani government as far as I know.

    3. The Sri Lanka-India GDP per capita ratio looks as if it is constant over time. What accounts for the higher level of income in Sri Lanka (despite a civil war)? I can guess higher levels of education (I think the colonial state invested more in education Vs in India: I guess this persisted after independence), higher priced export crops. Maybe comparing Sri Lanka to Kerela is better than a national comparison and some of the gap would disappear.

    Most of what I’ve read has been about precolonial/colonial times, so feel free to correct my guesses.

    1. Sri Lanka has a higher GDP per capita than India mainly due to remittances. Remittance inflow to GDP is 8.5% for SL, and 3.29% for India, a 2.5 times difference. Regarding agriculture, it earns 1.1 $ in exports per dollar in imports, same figure for India is 1.4 $.

      1. Regarding agriculture, it earns 1.1 $ in exports per dollar in imports, same figure for India is 1.4 $. a 2.5 times difference.

        SL GDP is 3,759 and India is 1,861. Thats almost double (100% difference). A 2.5 differences in remittances cannot explain the GDP difference.

        One thing the remittances do is decrease inequality, or raise the living standards of the poor. Some number like 70% of the remittances are from housemaids working in the Middle East. (Sri Lanka (and Philipines ) is considered the country of house maids in ME). Maids typically make about USD 300/month and in the case of Saudi and upfront USD 2,000 fee (like a sign up). With this money they build their houses and everyone aspiration is to have floor tiled house with a tiled bathroom. It is getting to be the norm in, i.e a nice house. Very rare to see a mud hut in even very poor villages like where I live.

        That said they is a lot of social disruption. Then on the other hand, plenty of social disruption when poverty is prevalent as well.

        Regarding agriculture, it earns 1.1 $ in exports per dollar in imports, same figure for India is 1.4 $
        Did not understand the above.

        1. @sbarrkum: “That said there is a lot of social disruption. Then on the other hand, plenty of social disruption when poverty is prevalent as well.”

          Well said. I don’t mind social disruption when daily necessities are met than otherwise. Poverty should be avoided like a plague both by individuals and nations.

        2. sbarrkum, the problem with remittances is that they rely on the host country’s economic conditions and policies, and do not develop the intrinsic economic capacity of the sender country.

          Regarding the agriculture comment, Sri Lanka’s agricultural trade surplus in 2015 was $ 160 million, India’s was $ 9 billion.

  3. Or, maybe the intent of the article is to change the “narrative” and not necessarily anything else.

    well these authors aren’t indian nationalists or anything. they are just making the observation on the decline (or lack of in certain regions).

    1. Lol, I won’t go directly to calling them nationalists or anything. I am not yet so jaded to attribute malice where incompetence will do. 😀

      But people do put forward models without thorough checking of data. So, wondering if that was the case, because these are their projections. (Top figure)

  4. Poverty has reduced dramatically in India, there is little question about this. Above all else, this is evident in the withdrawal of women from the agrarian workforce, and the increases in energy imports. Punjabi farmers face more and more problems getting labor from Bihar and UP every year.

    The question is whether this reduction is driven by remittances or a genuine modernization of the economy. Here I would argue that the position of states like Maharashtra, Gujarat, Haryana , Tamil Nadu and interior Karnataka is much better than that of Kerala and coastal Karnataka. The former group of states genuinely make things (automobiles, software, pharmaceuticals, textiles and petrochemicals), whereas the latter are sustained by transfers from wealth generated elsewhere. Indians have managed to become entrenched at all levels in the Gulf, especially in the UAE, Kuwait, where they are directly involved in production (oil, financial products and even some software), so maybe the situation isnt as bad as it looks.

    1. I’m a bit less positive on this i suppose. Indeed, urban wealth has skyrocketed, and that goes down many echelons to taluk level towns in the hinterlands, but I still feel the class of people who are benefiting are a small fraction. Inflation of essential goods is extraordinary, this not being a specific criticism of the current government but of a decade on decade assessment. In my region although farm labor wages have doubled in the last 5 years, and that reportedly exceeds inflation, its not clear that households are better off. Most economic studies at least in the financial press examine issues from an aggregate national perspective. One could say that wages are outpacing the cost of subsistence, and that is important, but the basic joys of a poor persons life like quality food, a hygienic environment and other public goods are becoming more inaccessible.

      1. girmit, it would be perhaps better if we take the perspective of life expectancy. Quality food and environment do improve life expectancy, but nowhere near as much as having money to afford medical treatment and drugs. Or even being able to afford refrigeration.

        13% of Indian households had refrigerators in 2006, the number is close to 30% today. If households in your region have more appliances than they did 10 years ago, then I would say they are better off. Being able to refrigerate food will improve their lives more than clean air will.

        1. Vikram life expectancy, physical health, mental health and intelligence can be sharply improved by:
          –exercise
          –stretching
          –breathing
          –sound
          –meditation
          –quality food and environment
          –basic very inexpensive immunity shots and preventive care
          –good company

          Expensive health care does little to improve health outcomes versus cheap healthcare based on econometric studies.

          1. AnAn, I agree with your sage advice. I have some clarification to add. These practices serve well if they are followed when one is in general good health. It prolongs good health and avoids extreme ill health. But this is not an end in itself. When one is inflicted it is better to take the nearest and best available medical help man has painstakingly built. I mean modern medicine. It is nice to be able to have means and access to it. That is where poverty, marginal and extreme, comes into play. To be able to take aspirin or acetaminophen (Tylenol) when one has a headache is advisable than starting on pranayama etc.

            Our friends on this blog opined that grinding poverty is fast disappearing in south Asia. I defer to them. One comment I caught on Indian TV panel discussion that I would like to share with the readers here. Thousands of people (in the range of 50,ooo) a year in India die due to routine infections because of lack of purchasing power to get Rs.100 worth of antibiotics.

            End of my Sunday rant. With thanks to the BP blog owners and administrators. Their magnanimity in running this site is not to be ignored. Cheers.

          2. Ann,

            You should have a look at Sri Lankan life expectancy, infant mortality and other health care number and compare to per capita income.

            Free Primary health care available to all makes a big difference.

        2. It would be a shame to evaluate the impact of economic policy on narrow parameters like home appliance ownership, or in a severely technocratic way at all. To wave off the spiritual and social needs of communities would be to turn development economics into animal husbandry. Moreover, increased life expectancy is not necessarily an outcome of rapid economic growth if its not equitable. Many of those drivers have to do with health science innovations originating in advanced nations that are becoming accessible to Indians once they become affordable. Bangladesh, while having a notably smaller GDP per capita has a significantly higher life expectancy than India. Bad hygiene, chronic malnutrition, and severe pollution create setbacks in childhood development that have lifelong consequences. I would hope humanity aspires to something more sublime than a future of sufficiently nourished workers in an adequately inhabitable environment.

          1. girmit, the life expectancy difference between India and Bangladesh is 3 years today, it was 4.5 yrs in 1960. Parts of the subcontinent were introduced to modern medicine earlier due to the pattern of colonization.

            Bad hygiene and pollution in India are political problems due to the distribution of power between the rural and urban areas in states. They have nothing to do specifically with India’s economic growth, which with its reliance on service exports is a lot cleaner than most other developing countries.

            Not to mention, the process of industrialization in every catch up country to the UK, be it Germany, Russia or China, involved mass killings, rural depopulation and starvation and war. India is a rare country that is going through industrialization while maintaining among the highest agrarian trade surpluses in the world, and avoiding any such loss of life.

  5. Violet, extreme poverty in India is rapidly disappearing by any reasonable definition. The data is legitimate.

    “Poverty in increased absolute numbers in Africa may be an outcome of increased population that might have previously succumbed to malaria or aids. I am not how much of this affects the numbers.”
    Absolutely correct. You are a smart one aren’t you 🙂 The data should be seen in this light.
    ++++++++++++++
    Iskander, Bhutan receives massive amounts of foreign aid, much of it from India. India also protects Bhutan for free. The Indian military buys goods and services from the Bhutanese economy. Bhutan also enjoys a large positive technology shock from low crime, violence, stability, predictability. Bhutan also benefits greatly from trade with India, China and the world. Bhutan’s rapid economic growth is no surprise.

    Sri Lanka had far better economic policy than India before 1991 and was a vastly richer country per capita in the early 1990s than India. Of course India is now rapidly converging with Sri Lanka–which is easier when a country is starting from a lower base. India has states that are richer than Sri Lanka per capita. Sri Lanka is similar to a upper middle income Indian state. Of course Sri Lanka and India share a common religious/cultural/civilizational history.
    ++++++++++++++++++++++++++++++++++++++++++++++++++
    Razib, this is one of the most important global trends and one I was hoping to write about. Global extreme poverty is rapidly becoming an almost entirely black phenomenon. The percentage of global moderate poverty (which isn’t extreme) is also rapidly becoming more black. This is one of the world’s largest challenges. I would rank order the world’s challenges as:
    1) Increase Love [it really isn’t corny]
    2) Economic
    2a) Increase global total factor productivity [product development and process innovation]
    2b) Increase global savings (including in human capital)
    2c) Maximize the global commons (investments with large global externalities)
    2d) Lower global structural unemployment
    2e) Lower global structural poverty
    2f) Lower structural poverty in the muslim world
    2g) Lower structural poverty for black people around the world
    3) Increase freedom of art, thought, intuition and feeling for muslims and facilitate dialogue with Islamist extremists
    4) Global warming

    The world doesn’t have any other large problems that I can think of.

    The world needs a comprehensive strategy to facilitate greater love, capacity and competence among global blacks. Africa doesn’t have as many rapidly growing nexuses of prosperity as the rest of the world and continues to trail far behind the rest of the world in per capita real GDP:
    https://en.wikipedia.org/wiki/List_of_African_countries_by_GDP_(PPP)_per_capita
    Razib, perhaps you can consider adding the above link to the article.

    1. . India has states that are richer than Sri Lanka per capita. Sri Lanka is similar to a upper middle income Indian state.

      Which Indian states ?

      Of course Sri Lanka and India share a common religious/cultural/civilizational history.
      Yes SL does share much with India with one big difference an egalitarian ethos. Are the same egalitarian forces working in Bangaladesh.

      1. Gujarat for one. The below data is misleading since it is not PPP per capita:
        https://en.wikipedia.org/wiki/List_of_Indian_states_and_union_territories_by_GDP_per_capita

        This is 2014 data (since then India’s PPP per capita GDP has grown more than 20%):
        https://statisticstimes.com/economy/comparing-indian-states-and-countries-by-gdp-capita.php

        sbarrkum, some Indian states have an egalitarian ethos and some don’t. India is a collection of many very diverse, different countries. Comparable to the UN. Sri Lanka seems more Indian to me than many of India’s more exotic locales. And that is a complement.:- ) Further note that most of India’s poor live in a few geographic areas.

        BTW, many of my friends visit Sri Lanka. Sri Lanka has many of the oldest and most important centers of Sanathana Dharma. Many of the greatest saints of eastern tradition come from Sri Lanka.

        1. AnAn,

          From your links there is no comparison between Gujarat and Sri Lanka (PPP or GDP/capita).

          some Indian states have an egalitarian ethos
          Please justify and name with a GINI Index (or other)

          Many of the greatest saints of eastern tradition come from Sri Lanka.
          I dont any “Saints” from Sri Lanka. Please name a few.

          1. I haven’t been able to find well calculated GINI coefficients by state in India. Please share if you find any.

            Articles on Sri Lankan saints are planned in the future. Many of the greatest Sanathana Dharma (including Buddhist) saints spent a lot of time in Sri Lanka.

  6. One of the major reasons for the UN, Reporters without Borders, Human Rights Watch, Amnesty International (all controlled by post modernists) hatchet job against India is precisely because of India’s rapid economic progress, freedom and extraordinary socio economic cultural success.

    America’s success (including with respect to freedom, human rights, racism, bigotry, sectarianism, prejudice, poverty, economic development) is a major reason why America is so viciously attacked by the same cast of characters.

    http://www.brownpundits.com/2018/06/22/post-modernist-attack-against-muslims-darkies-india-america-and-the-world/

    Note I applaud all constructive feedback. However these global institutions describe what is bad as good and what is good as bad. They recommend policies that would make all the things they claim to care about far worse.

  7. Non Africans have to do a lot more to socio-economically empower people of African ancestry, or there will be a large surge in anti Asian sentiment–strongly encouraged by the post modernist intelligentsia:

    https://www.youtube.com/watch?v=UYr-PzLxPvU
    Africa is already seeing surging anti Indian sentiment. Black Lives Matter is partly an anti Asian movement.

    What can be done to socio-economically surge the capacity of people of African ancestry around the world?

    1. post modernist intelligentsia:

      can you write a post about what you mean here? i have no idea. is there a postmodernist cabal that meets every few years?

  8. Article is planned on post modernism. Maajid Nawaz calls them the “regressive left”. I don’t like that terminology because there remain many self identified reasonable left who I greatly admire.

    Glenn and John call this them the “white intelligentsia”. But not all of them are white, so I don’t like this phraseology either. I also prefer the phrase “caucasion” versus “white”.

    To vastly oversimplify and summarize post modernists have certain assumptions about how the world works that I disagree with. Including:
    1) people are not potentially very powerful and wise, don’t have agency and can easily be harmed by others, including through others exercising free art, free thought and free action.
    1a) people can easily be oppressed, exploited, be subjected to racism, bigotry, prejudice, sectarianism, imperialism, empire, hegemony by others
    1b) colonization of the mind with inferiority complex to damage self confidence and mental health
    1c) people are not sovereign [or people are not divine]
    2) Foucault power dynamics dominates human interactions (versus less than 1% which is what I believe)
    2a) a complete failure to understand “power”
    3) people are identical to each other except with respect to power dynamics [boys, LBGTQ and girls are the same]
    4) truth, data and science can hurt others
    4a) humans don’t deserve freedom of art, thought, intuition and feeling
    4b) enlightened post modernist autocracy should replace liberalism and democracy
    5) they have negated and transcended all meta-narratives and universalists versus replaced all meta-narratives and universalist norms with their own post modernist meta narrative and universalist norms.
    6) people benefit from harming (exploiting) others versus the truth that almost always people harm themselves by harming (exploiting) others
    7) assume that everyone has bad motives versus the truth that the road to hell is paved with good intentions and that most of the harm in the world is inadvertently done by people trying to help
    8) failure to understand that in many cases we benefit from other ham-handedly trying to harm us
    9) a complete failure to understand “inspiration”, “working smart versus working hard”, “intelligence”, mental health (which I believe is Chitta Shuddhi), technology, product development, process innovation; and how these things influence the world
    10) people are defined by “identities” and “identity politics”

    I am going to stop here. Eventually an article is coming. The “Intellectual Dark Web” also refers to some of these themes:
    http://www.brownpundits.com/2018/05/14/intellectual-dark-web/

  9. Anyways, I did some analysis using World Data. From the available data I selected “poverty headcount ratio at $1.9 per day” given as % of population, and also the total population from 1960 to 2017 for India and Nigeria. These are converted to absolute numbers for extreme poverty. The data is sparse as given below
    India:
    year number (millions)
    1977 390
    1983 403
    1987 366
    1993 424
    2004 430
    2009 378
    2011 264

    Nigeria:
    Year number (millions)
    1985 44.6
    1992 57.2
    1996 70.3
    2003 70.6
    2009 82.6

    Now, knowing the since 1992 there has been significant economic reforms in India, I fit a dumb model (no better than what Excel offers as trend line) to both data sets between years 1992 to 2011.
    Since, India data is nonlinear, I picked a quadratic (yeah, no great options for inverse exponential or such), and Nigeria data is more or less linear.

    My predictions are:
    Year India Nigeria
    2016 304 84
    2018 244 86
    2020 176 88
    2022 100 90
    2024 16 92

    This model is slower to converge to the proposed projections (i.e, eyeballing the numbers, 2020 seem to be at-par with projected 2016 numbers), but does show that absolute numbers in India may decrease in near future given the current rate of decrease.

    However, the model fit for India data was not very sophisticated and depends on very sparse data, and mostly driven by the drop in less than a decade between 2004-2011. So, I am still hesitant if the projected rate of decrease should be the same as historical rate of decrease given the global economic effects catching on to India.

    Threshold numbers of $1.25/day or $1.90/day or $3.20/day may change the projected numbers by +/-5 years margin, but overall seem reasonable since rate of decrease was shown as similar for all thresholds.

    1. Violet

      I had done the same analyses and extended it to 2018 and concluded that the India/Nigeria population under $1.9/day is at least 3 ( I got 256 MM for India vs. 85 Million in Nigeria); $3.25/day is about 3.9. I was too lazy to type tables, and glad that you took the time. I am not at all convinced by the first figure, and was afraid to respond, but glad someone also got a similar result, especially vis-a-vis absolute povery headcount. My numbers also do not match yours because there is uncertainty about population in 2014-2020.

      Related, even if the population of very poor is concentrated in about 8 states it is not negligible even in well off states like Gujarat, Tamilnadu, maharashtra, etc.

  10. Violet I love the way your mind thinks. And yes I would at first glance do something similar.

    However extreme poverty is concentrated into a few dysfunctional geographical areas inside India. Much of India already has solved extreme poverty (just as Sri Lanka has).

    If you want to use your model methodology, please apply it to certain poor Indian states:
    https://en.wikipedia.org/wiki/List_of_Indian_states_and_union_territories_by_GDP_per_capita
    And I don’t know where to get the data to fit a nonlinear model too in these poor Indian states.

    sbarrkum
    “Free Primary health care available to all makes a big difference.”
    You are correct. A small amount per person in high ROI preventive health care can have enormous physical health outcomes.

    Expensive health care has a very low (or even negative) ROI in terms of human health outcomes.

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