Notice

KUALA LUMPUR, Malaysia, November 6, 2024 (IPS) – Despite previous income convergence between nations, many low-income countries and populations are falling further behind. Worse still, the number of poor and hungry people has increased again after declining for decades.

Jomo Kwame Sundaram

After the end of the post-World War II “golden age” more than half a century ago, the world experienced uneven economic growth, industrialization, and poverty reduction. unequal. Divergence of income and convergence involved inequalities within and between countries.

Although some national income inequality has declined, North-South disparities have evolved unevenly, in part due to the quantitative influence of the large economies of China and India.

Divide billions
The original by Paul Collier’Lower billion» included 58 developing countries. In 2021, they had 1.4 billion inhabitants. In the absence of sustainable growth, poverty in these countries persisted.

Although they reject the World Bank’s LICs and the UN’s least developed countries, Collier and his World Bank colleagues’ revival of his notion of the “Bottom Billion” offers a valuable examination of recent distributive trends.

Without supporting evidence, the authors insist that most developing countries were similar at independence, with little significant difference between the poorest billion and the “growing” five billion.

The per capita incomes of most countries in the bottom billion have not increased much. Although much of the world has grown since the 1960s, many of the poorest countries have fallen even further behind, albeit unevenly.

Slow economic growth and rapid population growth have reduced per capita incomes. Most countries in the bottom billion have barely grown since then and are now far worse off than the “lucky billion” of the 38 rich member countries of the Organization for Economic Co-operation and Development (OECD).

Poverty is increasingly concentrated in sub-Saharan Africa. Furthermore, overall poverty is worsening as African populations continue to grow faster, with the poor having more children to improve family circumstances.

Average per capita output in OECD member countries has increased by half, from less than $30,000 in 1990 to almost $45,000 in 2021. Even the poorest OECD countries are at least upper-middle income.

Despite a certain convergenceglobal inequality continued to grow unevenly after 2000. The gap in average per capita income between developing countries and prosperous economies has not narrowed since the turn of the century.

In recent decades, episodes of sustained high growth have occurred mainly in East and South Asia. Average per capita output in these “emerging markets” has almost tripled, from less than $5,000 in 1990 to almost $15,000 in 2021.

Convergence?
Angus Madison found divergences between world regions over the past two millennia, but agreed that recent Asian growth has made convergence more plausible.

Since the Industrial Revolution two centuries ago, long periods of divergence have been interrupted by brief episodes of convergence. Between 1870 and 1990, the ratio of highest incomes to lowest incomes tenfold.

The remaining “five billion” fall between the bottom billion and the lucky billion. Successful “developing market economies” include large, populous, fast-growing economies like India and China, as well as small, oil-rich states.

The Lucky Billion were already well ahead in 1990 and their situation has improved since then. The incomes of some of the five billion have risen rapidly to converge with those of the lucky billion, but the poorest billion are not much better off.

A few studies claim that this five billion has grown quickly enough for incomes to converge around the world. Rejecting claims of divergence, the authors insist on “unconditional convergence,” regardless of countries’ starting positions.

Other research calls for unconditional global convergence as poor countries catch up. Income convergence in the 1990s and 2004-2014 suggests that rising commodity prices financed growth during the last “Golden Decade,” enabling brief progress in LICs, including Africa.

This last brief burst of growth collapsed a decade ago along with most commodity prices. The average income growth rate of the poorest billion briefly exceeded that of the OECD between 2004 and 2014.

But the episode is wrong seen as evidence of longer-term convergence. Few developing countries have shrunk the average gap in per capita income with rich countries. Trends can be misleading if not interpreted in context.

For years, China’s average income has been lower than the global average. This previously supported claims of global convergence, but this will change as China’s average income exceeds the global average.

But global convergence can coexist with the growing backwardness of some countries and people while the number of people living in “extreme poverty” increases. However, data limitations and methodological disagreements make consensus unlikely.

Fall further behind
Global output (in constant dollars) more than doubled from $36 trillion in 1990 to $87 trillion in 2021. Although some developing economies have made rapid progress and others have made progress modest, many have been left behind.

As growth was higher in East Asia and India, the World Bank’s estimates of the poor fell between 1990 and the pandemic, even as the number of people living in “extreme poverty” increased.

Despite continued growth until the 2008 global financial crisis and a decline in poverty before the pandemic, per capita income in many developing countries continues to lag.

Hunger figures have increased over the past decade, while the number of poor people has increased since the pandemic. The current economic stagnation has been worse for the bottom billion, who have struggled to cope with higher interest rates and capital flight since 2022.

At the same time, hunger figures have been rising for a decade, while the number of poor people has increased since the pandemic. Worse still, the recent rise in interest rates has worsened the current economic stagnation.

IPS UN Office