In the decades preceding 2020, significant progress was made in addressing global poverty. Between 1990 and 2015, as part of a globally coordinated effort, the extreme poverty rate (classified as the percentage of individuals living on less than $1.90/day) dropped from 36% to 10%. As of 2018, pending an official review of the data, the World Bank had even estimated that the extreme poverty rate had declined to 8.6 percent [1]. The global community could proudly point to these facts to highlight the impact that came from a coordinated & collaborative effort to improve human lives. However, the Coronavirus pandemic has thrown cold water on all this progress.
This is a disease that will undoubtedly impact developing countries, and their poverty-stricken populations, more than developed countries. COVID-19 is anticipated to proliferate more quickly in already struggling countries who don’t have access to adequate healthcare facilities, suffer from a lack of comprehensive data, and even are absent basic nutrition in some instances. These are countries that do not have the capacity to fight the virus and stave off economic despair at the same time. These countries will suffer economically as a result of job loss, loss of remittances, rising prices and disruptions in education & healthcare [2]. The World Bank has projected the first increase in global poverty rates since 1998, as the global economy experiences a recession. It estimates that the extreme poverty rate could rise back to 9 percent by the end of 2020 [2].
In addition, the economic shock and the resulting slow recovery will force wealthier nations, who have financed large portions of the previous poverty-reduction efforts, to look inward and dedicate more resources towards their own citizens. With all of these factors coming together simultaneously, it may be several years before significant poverty reduction efforts start whittling down the extreme poverty rate once more. This time, however, new initiatives will have the benefit of being informed by Nobel Prize winning research.
The 2019 Nobel Prize in Economics was awarded to a group of economists that conducted innovative research based on field experiments to find the most effective ways to design measures that reduce global poverty. The research described how best to leverage programs related to the delivery of education, health, and economic stimulus (through microcredits) to create lasting change in poverty-stricken communities [3]. The foundation laid by these experiments offers development agencies a path towards achieving tangible results within the borders of the financially constrained world we currently live in.
While the accomplishments of the previous decades must always be remembered, it’s time for the world to adopt a more comprehensive and evidence informed approach towards poverty reduction; one that will hopefully sustain through the inevitable challenging times ahead.
References
[1] https://www.worldbank.org/en/news/press-release/2018/09/19/decline-of-global-extreme-poverty-continues-but-has-slowed-world-bank
[2] https://www.worldbank.org/en/topic/poverty/overview
[3] https://www.nobelprize.org/uploads/2019/10/popular-economicsciencesprize2019-2.pdf