Rapid economic growth in Asia and in the Pacific has led to a dramatic improvement in living standards. Extreme poverty, when measured as income or expenditure of less than 1.25 US dollars (USD) per person per day in 2005 purchasing power parity terms, could fall to 1.4 per cent by 2030, if current trends continue says the Asian Development Bank (ADB) in a recent report and notes that a poverty rate below 3 per cent is interpreted as poverty having been eradicated.
However, in the new report, “Key Indicators for Asia and the Pacific 2014”, the Bank points out that the threshold taken so far of 1.25 USD per day does not fully capture the extent of extreme poverty of today. “1.25 USD a day is not enough to maintain minimum welfare in many parts of the Asian and Pacific region,” said ADB Chief Economist Shang-Jin Wei in launching the report in August. “A fuller understanding of poverty is needed to help policy-makers develop effective approaches to address this daunting challenge.”
Three additional elements should be factored into the poverty picture: cost of consumption specific to Asia’s poor, food costs that rise faster than the general price level and vulnerability to natural disasters, climate change, economic crises and other shocks.
The new ADB report explores how including these elements in poverty assessments changes the region’s poverty landscape. Key findings include
While these factors are not necessarily mutually exclusive, the report finds the combined impact would increase Asia’s estimated extreme poverty rate for 2010 by 28.8 percentage points to 49.5 per cent. This increases the number of poor by about 1.02 billion to 1.75 billion people.
The report projects that if recent economic growth trends continue, the overall poverty rate would fall to 17.1 per cent in 2030, with most of the poor living in middle income countries. To confront this challenge, the report urges a stronger focus on efforts to enhance food security and reduce vulnerability in addition to promoting growth.
According to the report, food security can be improved by enhancing food availability through, for example, more rapid productivity and technological development, expanding affordability and access through targeted food aid for the poor and upgrading farm-to-fork infrastructure, and stabilising food supply through steps such as the creation of national or regional emergency reserve stocks.
To manage increasing vulnerability, governments can invest in risk-mapping and disaster risk reduction efforts such as early warning systems and livelihood diversification, suggests the report. Fostering the development of insurance products accessible to the poor, making infrastructure more resilient, and strengthening social safety nets are also important components of a poverty reduction strategy.
More information: ADB