Glossary

1.4 Historical context and current trends in global poverty

9 min read•july 30, 2024

Global poverty has deep historical roots in and . The and further widened wealth gaps between nations, while international institutions emerged to address these disparities through development goals and initiatives.

Recent decades have seen progress in reducing extreme poverty, but challenges persist. , , and COVID-19 threaten gains, disproportionately impacting the poor. Addressing these complex issues requires multifaceted approaches and international cooperation to achieve sustainable poverty reduction.

Global Poverty: History and Causes

Colonialism and Exploitation

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  • Global poverty has existed throughout human history, but the concept of measuring and addressing it on a global scale emerged in the 20th century
  • Colonialism and the exploitation of resources by powerful nations contributed to the impoverishment of many regions, particularly in Africa (e.g., Congo under Belgian rule), Asia (e.g., India under British rule), and Latin America (e.g., Spanish conquest of the Aztec and Inca Empires)
  • The extraction of wealth and resources from colonized territories enriched the colonizing powers while leaving the local populations in poverty and underdevelopment
  • Colonial policies often disrupted traditional economic systems, forced labor, and imposed unfavorable trade relationships that perpetuated poverty

Industrialization and Globalization

  • The Industrial Revolution led to increased wealth disparities between nations, as some countries (primarily in Europe and North America) rapidly industrialized while others remained primarily agricultural
  • The concentration of capital and technological advancements in industrialized nations gave them a significant economic advantage over non-industrialized countries
  • The of the 1930s and the two World Wars exacerbated poverty and inequality worldwide, with devastating impacts on global trade, production, and employment
  • The post-World War II era saw the emergence of international institutions, such as the and the , which began to address global poverty through development assistance and policy coordination
  • Globalization and the liberalization of trade have had mixed effects on global poverty, with some countries (e.g., China, South Korea) benefiting from increased economic integration while others (particularly in sub-Saharan Africa) have been left behind due to factors such as limited infrastructure, weak institutions, and unfavorable terms of trade
  • The debt crises of the 1980s and 1990s, often linked to structural adjustment programs imposed by international financial institutions, further entrenched poverty in many developing nations by requiring austerity measures and limiting public spending on social services

Milestones in Poverty Reduction

International Development Goals

  • The United Nations (MDGs), established in 2000, set eight goals to reduce poverty and improve living standards by 2015
    • The MDGs focused on eradicating extreme poverty and hunger, achieving universal primary education, promoting gender equality, reducing child mortality, improving maternal health, combating HIV/AIDS and other diseases, ensuring environmental sustainability, and developing a global partnership for development
    • While progress was made on several goals, such as reducing extreme poverty and increasing access to primary education, many targets were not fully achieved, particularly in sub-Saharan Africa and South Asia
  • The (SDGs), adopted in 2015 as a successor to the MDGs, set 17 goals to be achieved by 2030, with a broader focus on sustainable development and leaving no one behind
    • The SDGs encompass a wide range of objectives, including ending poverty, achieving gender equality, promoting sustainable , addressing climate change, and building peaceful and inclusive societies
    • The SDGs emphasize the interconnectedness of social, economic, and environmental challenges and the need for a holistic approach to poverty reduction

International Institutions and Initiatives

  • The World Bank's (IDA) provides concessional loans and grants to the world's poorest countries to support poverty reduction and economic development
    • IDA funding supports projects in areas such as agriculture, infrastructure, health, education, and governance, with a focus on promoting inclusive growth and building resilience
    • The World Bank also provides technical assistance and policy advice to help countries design and implement poverty reduction strategies
  • The (IMF) provides financial assistance and policy advice to countries facing economic challenges, with the goal of promoting economic stability and reducing poverty
    • IMF programs often include measures to address macroeconomic imbalances, such as fiscal deficits and inflation, which can have disproportionate impacts on the poor
    • Critics argue that some IMF policies, such as austerity measures and structural reforms, can exacerbate poverty and inequality in the short term
  • Various international aid agencies, such as the United States Agency for International Development () and the Department for International Development () in the United Kingdom, provide bilateral assistance to developing countries
    • These agencies fund a wide range of poverty reduction initiatives, including programs in health, education, agriculture, and governance
    • Aid effectiveness has been a subject of debate, with concerns about coordination, alignment with recipient country priorities, and the potential for aid dependency
  • Non-governmental organizations (NGOs), such as , , and , play a crucial role in implementing poverty alleviation programs and advocating for policy changes
    • NGOs often work directly with communities to provide services, build capacity, and empower
    • They also engage in advocacy and campaigning to influence government policies and public opinion on poverty-related issues
  • institutions, such as the in Bangladesh, have pioneered the provision of small loans and financial services to the poor, particularly women, to support entrepreneurship and economic empowerment
    • Microfinance has been credited with helping millions of people to start or expand small businesses, increase their incomes, and improve their living standards
    • However, concerns have been raised about the sustainability and impact of microfinance, including issues of over-indebtedness, high interest rates, and limited evidence of long-term poverty reduction

Progress and Disparities

  • The global , defined as living on less than $1.90 per day (in 2011 purchasing power parity), has declined significantly in recent decades, from 36% in 1990 to 10% in 2015
    • This progress has been driven largely by rapid economic growth and poverty reduction in East Asia and the Pacific, particularly in China
    • However, the has reversed decades of progress in poverty reduction, pushing an estimated 88 to 115 million people into extreme poverty in 2020
  • Progress has been uneven across regions, with sub-Saharan Africa and South Asia accounting for the majority of the world's extreme poor
    • In 2015, sub-Saharan Africa had an extreme poverty rate of 41%, compared to 12% in South Asia and less than 3% in other regions
    • Factors contributing to persistent poverty in these regions include weak institutions, conflict, climate vulnerability, and limited access to education and health services
  • within and between countries remains a significant challenge, with the richest 1% of the global population owning more wealth than the rest of the world combined
    • High levels of inequality can hinder poverty reduction by limiting opportunities for the poor to participate in economic growth and access social services
    • Addressing inequality requires policies that promote inclusive growth, such as progressive taxation, social protection, and investments in human capital

Multidimensional Poverty and Marginalization

  • Multidimensional poverty, which considers deprivations in health, education, and living standards, affects a broader population than income poverty alone
    • The (MPI) estimates that 1.3 billion people live in multidimensional poverty, with the highest rates in sub-Saharan Africa and South Asia
    • Addressing multidimensional poverty requires a comprehensive approach that goes beyond income support to include interventions in areas such as nutrition, sanitation, and access to basic services
  • Poverty disproportionately affects marginalized groups, such as women, children, indigenous peoples, and people with disabilities
    • Women and girls often face additional barriers to escaping poverty, such as discrimination, limited access to education and employment, and unequal distribution of unpaid care work
    • Indigenous peoples and ethnic minorities are more likely to experience poverty due to historical marginalization, loss of land and resources, and limited political representation
    • People with disabilities face higher rates of poverty due to barriers to education, employment, and social participation, as well as additional costs associated with their disability
  • Addressing the needs of marginalized groups requires targeted interventions and policies that promote social inclusion, empowerment, and access to opportunities

Challenges to Poverty Alleviation

Climate Change and Environmental Degradation

  • Climate change disproportionately affects the poor, who are more vulnerable to natural disasters, food insecurity, and water scarcity
    • Rising sea levels, more frequent and intense extreme weather events (e.g., hurricanes, droughts), and changes in rainfall patterns can disrupt livelihoods, particularly in agriculture, and force displacement
    • The poor often live in areas that are more exposed to climate risks, such as low-lying coastal regions or drought-prone areas, and have limited resources to adapt to changing conditions
  • , such as deforestation, soil erosion, and pollution, can exacerbate poverty by undermining the natural resource base that many poor communities depend on for their livelihoods
    • Overexploitation of resources, such as overfishing or unsustainable land use practices, can lead to declining productivity and income for the poor
    • Addressing environmental challenges requires policies that promote sustainable resource management, as well as investments in adaptation and
  • Adaptation and resilience-building measures are crucial to protect the poor from the impacts of climate change, but these efforts require significant financial resources and technical capacity
    • Examples of include drought-resistant crops, early warning systems for natural disasters, and improved water management practices
    • Building resilience also involves strengthening social safety nets, diversifying livelihoods, and promoting risk-sharing mechanisms such as insurance

Conflict and Fragility

  • Conflict and instability can trap populations in poverty, as violence disrupts economic activities, destroys infrastructure, and displaces communities
    • Conflict-affected countries often have higher rates of poverty, lower economic growth, and weaker institutions compared to stable countries
    • Displacement due to conflict can lead to loss of assets, reduced access to services, and heightened vulnerability to exploitation and abuse
  • Poverty can also contribute to conflict, as economic grievances and competition over scarce resources fuel tensions
    • Inequalities between groups, such as ethnic or religious divisions, can be exacerbated by poverty and lead to social unrest and violence
    • Addressing the root causes of conflict, such as exclusion, discrimination, and lack of economic opportunities, is crucial for sustainable poverty reduction
  • Peacebuilding and conflict resolution efforts must address the underlying drivers of poverty and inequality to achieve sustainable peace and development
    • This includes promoting inclusive political processes, strengthening institutions, and supporting economic recovery and reconstruction
    • Integrating conflict sensitivity into poverty reduction programs is important to ensure that interventions do not inadvertently exacerbate tensions or contribute to instability

COVID-19 Pandemic

  • The COVID-19 pandemic has exposed and exacerbated existing inequalities, with the poor and marginalized being hit the hardest by the health and economic impacts of the crisis
    • The poor are more likely to work in informal sectors or occupations that are vulnerable to lockdowns and economic downturns, such as daily wage laborers or street vendors
    • Limited access to healthcare, social protection, and remote learning opportunities has disproportionately affected poor households during the pandemic
  • The pandemic has disrupted global supply chains, reduced remittances, and strained health systems, setting back progress on poverty reduction
    • Global trade and investment have declined sharply, leading to job losses and reduced income for workers in export-oriented industries
    • Remittances, which are a vital source of income for many poor households, have fallen due to job losses and travel restrictions in host countries
    • Health systems in developing countries, which were already strained before the pandemic, have struggled to cope with the increased demand for services and the need for personal protective equipment and other supplies
  • Recovery efforts must prioritize inclusive growth and to prevent a further widening of the poverty gap
    • This includes targeted support for the most vulnerable groups, such as cash transfers, food assistance, and access to basic services
    • Investing in resilient health systems, digital infrastructure, and skills development can help to build long-term resilience and reduce vulnerability to future shocks
  • Addressing these emerging challenges requires a multi-sectoral approach that integrates poverty alleviation, climate action, peacebuilding, and public health efforts
    • Poverty reduction strategies must be designed with an understanding of the complex interactions between these challenges and the potential for co-benefits across sectors
    • For example, investing in climate-smart agriculture can help to reduce poverty, improve food security, and build resilience to climate change
  • Strengthening international cooperation and partnerships, particularly in financing and technology transfer, is crucial to support developing countries in tackling these complex challenges
    • Mobilizing additional resources for poverty reduction, including through official development assistance, debt relief, and private sector investment, is essential to meet the scale of the challenge
    • Sharing knowledge, best practices, and innovations across countries and regions can help to accelerate progress and promote learning

Key Terms to Review (33)

Adaptation Measures: Adaptation measures are strategies and actions taken to adjust to the impacts of climate change and other environmental changes, aiming to minimize damage and take advantage of potential opportunities. These measures can involve changes in practices, policies, or technologies, and are essential for vulnerable communities, particularly those affected by global poverty, as they help improve resilience against climate-related risks.
Care: Care refers to the concern and actions directed towards the well-being of individuals and communities, often driven by empathy and compassion. In the context of global poverty, care can manifest in various forms, including social services, healthcare, education, and community support. It plays a vital role in addressing the needs of marginalized populations and can significantly influence current trends in poverty alleviation.
Climate change: Climate change refers to significant and lasting alterations in temperature, precipitation, wind patterns, and other elements of the Earth's climate system. This term is often associated with the increase in global temperatures due to human activities, particularly the burning of fossil fuels and deforestation, which leads to greenhouse gas emissions. The consequences of climate change are profound, affecting agriculture, water supply, health, and overall socio-economic stability, especially in vulnerable communities already facing poverty.
Colonialism: Colonialism is a practice where a country establishes control over a foreign territory, exploiting its resources and population for economic gain. This often involves the settlement of people from the colonizing country, leading to significant social, cultural, and political changes in the colonized region. The impacts of colonialism have shaped historical contexts and continue to influence current trends in global poverty, as many former colonies struggle with the legacies of exploitation and unequal development.
Conflict: Conflict refers to a serious disagreement or argument, often arising from differing values, interests, or beliefs between individuals, groups, or nations. In the context of global poverty, conflict can exacerbate existing socioeconomic issues, hinder development efforts, and contribute to cycles of violence and instability that perpetuate poverty.
Covid-19 pandemic: The covid-19 pandemic refers to the global outbreak of the novel coronavirus, SARS-CoV-2, which began in late 2019 and led to widespread health crises, economic disruptions, and social challenges worldwide. This pandemic has exacerbated existing inequalities and vulnerabilities in global poverty, revealing the fragile nature of health systems and economic structures, particularly in developing nations.
DFID: The Department for International Development (DFID) was a United Kingdom government department responsible for administering overseas aid and development assistance to promote sustainable development and reduce poverty globally. DFID focused on improving the lives of people in developing countries through education, healthcare, economic development, and humanitarian response, reflecting the historical context and ongoing trends in global poverty alleviation.
Economic Growth: Economic growth refers to the increase in the production of goods and services in an economy over a specific period, typically measured as the percentage increase in real Gross Domestic Product (GDP). This concept is crucial for understanding how nations can improve their living standards, create jobs, and ultimately address issues related to poverty. Sustained economic growth is often seen as a key driver in reducing global poverty by increasing income levels and providing resources for social programs and infrastructure development.
Environmental degradation: Environmental degradation refers to the deterioration of the natural environment through the depletion of resources, destruction of ecosystems, and pollution. This process negatively impacts biodiversity and contributes to climate change, posing significant challenges to sustainable development and poverty alleviation efforts across the globe.
Exploitation: Exploitation refers to the act of taking unfair advantage of a person or group, often for economic gain. This term highlights the power imbalances that exist in relationships where one party benefits at the expense of another, typically in contexts of labor, resources, or social status. In discussions around global poverty, exploitation can manifest in various forms, such as labor exploitation, resource extraction without fair compensation, and systemic inequalities that keep vulnerable populations marginalized.
Extreme Poverty Rate: The extreme poverty rate refers to the percentage of the population living on less than $1.90 a day, adjusted for purchasing power parity. This metric is crucial for understanding the severity and scale of poverty worldwide, especially in low-income countries where access to basic necessities like food, clean water, and shelter is severely limited. The extreme poverty rate serves as a key indicator in tracking progress towards global poverty alleviation goals and highlights disparities in wealth and resources across different regions.
Fragility: Fragility refers to the vulnerability and instability of systems, communities, or nations that can easily collapse under pressure from various challenges. In the context of global poverty, fragility is often linked to social, political, and economic factors that make certain regions or populations more susceptible to crises, such as conflicts, natural disasters, and economic shocks.
Global Multidimensional Poverty Index: The Global Multidimensional Poverty Index (MPI) is a measure that assesses poverty by considering various deprivations across multiple dimensions, such as health, education, and living standards. Unlike traditional income-based measures, the MPI provides a more holistic view of poverty by identifying individuals who are deprived in several areas simultaneously, thus reflecting the complex nature of poverty beyond mere financial constraints.
Globalization: Globalization refers to the process by which businesses, cultures, and economies become interconnected and interdependent on a global scale. This phenomenon has led to increased trade, investment, and cultural exchange across borders, influencing various aspects of life including economic growth and poverty reduction. The rise of globalization has transformed how nations interact, making it essential to understand its impacts on historical contexts and trends in global poverty.
Grameen Bank: Grameen Bank is a microfinance organization founded in Bangladesh in 1983, primarily aimed at providing small loans to impoverished individuals without requiring collateral. The bank's innovative approach targets low-income entrepreneurs, particularly women, enabling them to start or expand small businesses and improve their living conditions, showcasing a model that blends social impact with financial sustainability.
Great Depression: The Great Depression was a severe worldwide economic downturn that began in 1929 and lasted through the late 1930s, marked by a dramatic decline in industrial output, widespread unemployment, and significant deflation. This period had profound implications for global poverty, as millions were plunged into economic despair, altering societal structures and prompting government interventions to mitigate its impact.
Income Inequality: Income inequality refers to the unequal distribution of income among individuals or groups within a society or economy. This disparity can affect social stability, economic growth, and overall quality of life, illustrating how wealth is not evenly shared and can significantly impact poverty levels and access to resources.
Industrial Revolution: The Industrial Revolution was a period of significant economic transformation that began in the late 18th century and continued into the 19th century, characterized by the shift from agrarian economies to industrialized and urban ones. This revolution fundamentally changed production methods, social structures, and the overall economic landscape, impacting global poverty by altering labor dynamics and resource distribution.
International Development Association: The International Development Association (IDA) is an international financial institution that provides concessional loans and grants to the world's poorest countries. Established in 1960 as part of the World Bank Group, the IDA aims to reduce poverty and promote sustainable economic growth by offering financial resources and technical assistance tailored to the specific needs of developing nations.
International Monetary Fund: The International Monetary Fund (IMF) is an international organization that aims to promote global monetary cooperation, secure financial stability, facilitate international trade, promote high employment and sustainable economic growth, and reduce poverty around the world. Established in 1944, the IMF plays a crucial role in stabilizing the global economy and provides financial support and advice to member countries facing economic difficulties.
Jeffrey Sachs: Jeffrey Sachs is an American economist and public policy expert known for his work on global economic development and poverty alleviation. He has been a prominent advocate for sustainable development strategies and has played a key role in shaping policies aimed at addressing global poverty. His approaches often emphasize the need for effective monitoring and evaluation systems to assess the impact of poverty alleviation projects.
Marginalized groups: Marginalized groups refer to communities or populations that experience social, economic, and political disadvantages, often leading to their exclusion from mainstream society. These groups typically face barriers such as discrimination, limited access to resources, and lack of representation, impacting their ability to participate fully in society. Understanding the experiences of marginalized groups is crucial in addressing global poverty and creating inclusive value chains.
Microfinance: Microfinance is a financial service that provides small loans and financial assistance to low-income individuals or groups who typically lack access to traditional banking services. This approach aims to empower marginalized communities, stimulate entrepreneurship, and promote sustainable economic development by enabling individuals to start or grow small businesses.
Millennium Development Goals: The Millennium Development Goals (MDGs) are a set of eight international development goals established following the Millennium Summit of the United Nations in 2000, aimed at addressing global issues such as poverty, hunger, education, gender equality, and health. The MDGs were designed to be achieved by 2015 and serve as a benchmark for measuring global development progress and coordinating international efforts to alleviate poverty and improve living standards.
Muhammad Yunus: Muhammad Yunus is a Bangladeshi social entrepreneur and economist, widely recognized for pioneering the concept of microfinance and establishing the Grameen Bank. His work focuses on providing small loans to impoverished individuals, particularly women, enabling them to start their own businesses and escape poverty. Yunus's approach blends social impact with entrepreneurial principles, making him a key figure in discussions about poverty alleviation and social entrepreneurship.
Oxfam: Oxfam is a global movement of organizations aimed at alleviating poverty and social injustice, founded in 1942 in Oxford, England. It works through advocacy, development programs, and humanitarian assistance to promote sustainable solutions to the challenges faced by marginalized communities. Oxfam connects historical contexts of poverty with current trends by addressing both the symptoms and root causes of inequality and injustice in society.
Resilience-building measures: Resilience-building measures refer to strategies and actions designed to enhance the ability of individuals, communities, and systems to withstand, recover from, and adapt to adverse conditions such as economic shocks, environmental changes, and social disruptions. These measures are essential in addressing global poverty as they empower vulnerable populations to improve their living conditions and develop sustainable livelihoods despite challenges they may face.
Save the Children: Save the Children is an international non-governmental organization dedicated to improving the lives of children around the world, particularly those affected by poverty, conflict, and disaster. Founded in 1919, the organization focuses on providing health care, education, protection, and advocacy for children's rights. Its efforts are essential in addressing both immediate needs and long-term solutions to global poverty.
Social protection measures: Social protection measures are policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people's exposure to risks, and enhancing their capacity to manage economic and social risks. These measures include safety nets, insurance schemes, and other supports that aim to improve the well-being of individuals and communities, ultimately contributing to more inclusive growth and development. They play a crucial role in addressing both historical and current trends in global poverty by providing essential resources and support to marginalized populations.
Sustainable Development Goals: Sustainable Development Goals (SDGs) are a universal call to action adopted by all United Nations member states in 2015 to end poverty, protect the planet, and ensure prosperity for all by 2030. The 17 goals address various global challenges, including inequality, climate change, environmental degradation, peace, and justice. These goals emphasize the importance of inclusivity and sustainability in development efforts, connecting closely to historical trends of poverty and the role of emerging technologies in addressing development issues.
United Nations: The United Nations (UN) is an international organization founded in 1945, aimed at promoting peace, security, and cooperation among countries. It serves as a platform for dialogue and collaboration on global issues, including economic development, human rights, and humanitarian aid, significantly impacting efforts to reduce poverty and foster partnerships between multiple stakeholders.
USAID: USAID, or the United States Agency for International Development, is an independent agency of the U.S. government that provides foreign aid and development assistance to support global development goals and alleviate poverty. Established in 1961, USAID works in over 100 countries, addressing a variety of issues such as health, education, economic growth, and democracy promotion, ultimately aiming to foster sustainable development and improve the quality of life for people in developing nations.
World Bank: The World Bank is an international financial institution that provides loans and grants to the governments of poorer countries for the purpose of pursuing capital projects. It aims to reduce poverty and support sustainable economic development through financial and technical assistance. The World Bank plays a critical role in addressing global poverty by funding development initiatives, fostering partnerships, and establishing monitoring systems for projects aimed at improving living conditions worldwide.
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