World Bank figures also reinforce the general poverty reduction story. Poverty has dropped substantially in East Asia and South Asia, with the Chinese drop part of the East Asian success and the Indian drop part of the South Asian success. Globally, there are problem areas elsewhere in South Asia and in sub-Saharan Africa. But an additional comment is in order about sub-Saharan Africa. Poverty figures for that region end in 2004. The point to note is that growth has picked up since then in several countries of sub-Saharan Africa and once we have later figures, the trickle-down may be true there too.

Let’s acknowledge that the World Bank is now an African Development Bank and that’s where donor money is also headed, barring odd peripheral areas. Why has the World Bank now increased the poverty line from $1 a day to $1.25 a day, thereby increasing the number of global poor from 1 billion to 1.4 billion? Media reports suggest better price data are now available and the cost of living in developing countries was earlier under-estimated. This is not a statistically convincing answer at all, since $1 is a real figure at 1985 prices. Better price data should affect conversion of $1 into today’s money figures, but is no argument for adjusting the real $1 figure upwards to $1.25.

The answer probably is an attempt to stimulate the ODA (official development assistance) and ensure the halving of poverty as targeted under the Millennium Development Goals (to be attained by 2015). Thanks to India and China, the 2015 target will certainly be reached. As for donor money and World Bank interventions, notwithstanding influential and popular books by Jeffrey Sachs (The End of Poverty, Common Wealth), the empirical evidence is unambiguous. Though donors have vested interest in poverty continuing (they face an identity crisis otherwise), as do Left parties, poverty reduction is a function of endogenous and internal changes. Paul Polak’s new book (Out of Poverty) explodes three poverty eradication myths and one of these is that we can donate people out of poverty.

... contd.