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U.N. foresees dramatic cuts in poverty - cites Pakistan as example

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Very good news, and very encouraging. Keep progressing, Pakistan! Damn the naysayers! :pakistan:

U.N. foresees dramatic cuts in poverty

By Mary Beth Sheridan
Washington Post Staff Writer

Tuesday, September 21, 2010

A decade ago, world leaders at the United Nations signed off on eight goals aimed at transforming the lives of the world's least fortunate - including cutting extreme poverty in half by 2015. Many Americans were skeptical; in a poll, only 8 percent thought that was possible.

This week, as nations gather to assess the goals, the United Nations countered the skeptics with an announcement: The world is actually on track to halve the percentage of people on the lowest rung of the economic ladder.

Even with the brutal global recession, the ranks of the world's desperately poor are likely to shrink to 15 percent of the population by 2015, less than half of the original 42 percent, said a recent U.N. report. The World Bank, in a separate analysis, said the objective appears "well within reach."

Despite the achievement, not everyone is celebrating.

Because of the economic crisis and jumps in food and fuel prices, "the momentum has been derailed" toward even deeper cuts in poverty, Dominique Strauss-Kahn, of the International Monetary Fund, said Monday at the opening session of a summit on the Millennium Development Goals, as the U.N. benchmarks are known.

Several of the original eight goals will probably not be met, including slashing the maternal and child mortality rate worldwide. Moreover,the progress on poverty comes with caveats: The absolute number of poor will shrink less than the percentage figure, because of population growth. Many note that the decline in poverty is due in large part to changes in a few big countries - in particular, China.

Still, development experts say that there are numerous underreported success stories in other countries, even in Africa. While the economic growth drove the reductions in poverty, the ambitious U.N. goals prompted a greater flow of international aid, and got some poor countries to adopt better policies, experts say.

"What is not often understood is how many countries there are that have been making real progress," said Mark Suzman, policy director at the Global Development Program of the Bill and Melinda Gates Foundation. For example, he said, nine African nations have already succeeded in halving their rate of extreme poverty since 1990, the baseline for the U.N. targets.

The U.N. goals are aimed at the dirt-poor, a different level of misery than what's measured in the United States. The U.S. census sets the poverty level at $22,000 a year for a family of four. The U.N. goal, in contrast, targeted people living on less than $1 a day (later raised to $1.25 to reflect inflation). Many of them live in mud huts and shanty towns, with little access to flush toilets, medicine or high school.

How have so many people managed to get out of poverty? China, with 1.3 billion people, has had the biggest impact. About 60 percent of its massive population lived in extreme poverty in 1990; because of pro-market overhauls, that figure had plummeted to 16 percent by 2005, according to U.N. figures.

Excluding China, the percentage of people worldwide in extreme poverty is still projected to drop from about 35 percent to 18 percent in 2015, according to the World Bank.

"There are a lot of very large countries in terms of population that have had dramatic reductions in poverty," said Benjamin Leo, a researcher at the Center for Global Development. He cited Brazil, Pakistan, Vietnam and Bangladesh as examples.

While growth is the most critical ingredient in lowering poverty, other factors have mattered too - like remittances, improved governance, international aid and social spending.

For example, Brazil's growth averaged 4.2 percent a year from 2003 to 2008, healthy if not red-hot like China's. But about one-quarter of the Brazilian population is now getting small cash payments under an innovative government program known as Bolsa Familia. The country's rate of extreme poverty fell by one-third, to 5 percent, according to the World Bank.

The relatively bright picture on poverty reduction doesn't extend to sub-Saharan Africa, which fared the worst of all regions. Analysts say development there has been stalled by conflicts in big countries like Sudan and the Democratic Republic of theCongo, as well as environmental devastation.

Africa's poverty rate fell from 58 percent in 1996 to 50 percent in 2005, according to the World Bank. But because of population growth, the absolute number of poor grew from 296 million to 388 million. In other words, the poor were a smaller slice of the pie, but the pie got bigger.

Still, analysts say, there are notable examples of improvement in the continent. Consider Ethiopia, which became the symbol of African suffering during the 1984 famine. The level of extreme poverty there has dropped from 60 percent to 39 percent.

The country was, of course, coming off a low base. But Ethiopia has benefited from strong growth and government policies that are more business-friendly and give local communities more say in spending on schools, water and sanitation, according to Africa experts.

"They've improved delivery of basic services quite dramatically," said Shanta Devarajan, chief economist for Africa at the World Bank, a major provider of aid to the country.



The Millennium Development Goals were originally proposed by a broad movement of activists and others to reinvigorate foreign aid after it plunged in the aftermath of the Cold War.

"In this context, they were extremely successful. Aid has exploded over the last 10 years," with such programs as the Global Fund to Fight AIDS, Tuberculosis and Malaria, said Leo. In addition, billions of dollars in poor countries' debts have been forgiven.

But many countries participating in the summit are angered the developed world hasn't been more generous, and hasn't kept some of its aid promises.

While many initially saw the goals as wildly optimistic, they were embraced by aid institutions and many poor countries.

"When I look at governments in low-income regions around the world, the [development goals] are very high on the minds of the cabinet, and very much embedded in government strategies and structures," said Jeffrey Sachs, a leading economist and adviser to U.N. Secretary General Ban Ki-moon.

"This has been a big change. . . .It's surprising, because most U.N. goals are not remembered, they don't last 10 years. They don't necessarily last a year."
 
The "unscientific" test, based largely on my own observations and contrasts between how things were in the past and are today, is certainly suggestive of the fact that Pakistan has made very rapid strides in reducing poverty, improving infrastructure and creating opportunities where they did not previously exist.

Yesterday, here in Lahore, I met with the representative of a company that specializes in drip irrigation installations. I asked him what the average size of a farm was where they typically conduct these installations. He told me that it was about 4-5 acres. And a good percentage of the cost was covered by government subsidies. This says that even in the agricultural sector, which has long been in need of reform and increases in efficiency, change is now afoot. A farmer with 5 acres is not a big shot by any means. He is at the lower end of the spectrum and with these modern technologies - made available to him only due to government assistance - he is now increasing per acre efficiency, saving Pakistan's fresh water and creating a better product. Very encouraging when you see all these things happening on the ground.
 
Good News.....Inshallah We'll recover from the floods soon.....Whats destroyed we'll build it again. There were times when we grew on 9 to 10%. we can do it again......Good going Pakistan. At this rate poverty will be below 5% soon (In 1 decade or so)....
 
^^ A little off topic, but let things settle and you will see that the floods have not caused as much damage as has been talked about.

Also, as is always the case with alluvial plains, the flooding will result in a bumper crop next season.
 
Good News.....Inshallah We'll recover from the floods soon.....Whats destroyed we'll build it again. There were times when we grew on 9 to 10%. we can do it again......Good going Pakistan. At this rate poverty will be below 5% soon (In 1 decade or so)....
I believe that it will take a good 7-8 years before Pakistan can see real growth to the pre-GWoT era ; Firstly, Pakistan is spending a whopping 28% just to pay off its debt, and by the next 5 years, Pakistan will have a total debt (internal and external) of close to $100 bn. So, while Pakistan is borrowing money at monstrously high rates, it keeps making huge payments on old debts. This will make every person in Pakistan maintain a debt about half of the GDP per capita.

So, yes, Pakistan has enormous challenges to overcome ; But it can be done only in a period of political stability. Which i do not see at least until 2013-2014. Hence, the first thing Pakistan has to get rid off are its bungling economic advisers to the GoP.
 
Wonderful News. But there is lot more to be done for Poverty reduction WORLD-WIDE including US/Europe. It can not happen with Donation. People should work and earn.

Donations can make living more expensive...

The big business houses who first "makes money" creates inefficiencies and later again create "inefficiencies" by donating money.
 
I believe that it will take a good 7-8 years before Pakistan can see real growth to the pre-GWoT era ; Firstly, Pakistan is spending a whopping 28% just to pay off its debt, and by the next 5 years, Pakistan will have a total debt (internal and external) of close to $100 bn.

Pre-WoT era? We were growing at 8% bang in the middle of the WoT!

7 years might be your estimate, but I believe the IMF is quite a bit more bullish. We will post growth this year despite the floods and are poised to see a significant uplift in our agri sector (we are both still dependent on agriculture) due to the increased fertility of the soil in flooded areas.

Also, what is relevant in the context of repayment obligations is external debt. This will be slightly under $70B even in 2015. There is a lot of water yet to flow through the Ravi until we get there. Numerous understandings, writeoffs and other events can happen. The $70B would be a pessimistic assessment in case there is no reprieve. Even then, $70B is not unmanageable. You must keep in mind that at a conservative CAGR of 4-5%, you are looking at economic expansion in the 25-30% range during this period.
 
Also, what is relevant in the context of repayment obligations is external debt. This will be slightly under $70B even in 2015. There is a lot of water yet to flow through the Ravi until we get there. Numerous understandings, writeoffs and other events can happen. The $70B would be a pessimistic assessment in case there is no reprieve. Even then, $70B is not unmanageable. You must keep in mind that at a conservative CAGR of 4-5%, you are looking at economic expansion in the 25-30% range during this period.
First off, you have messed up the figures for the CAGR and the GDP growth rate estimates ; If the GDP is projected to grow at 4 % annually, which i find highly unlikely given that how FBS fudged the figures the previous time, and also the effect of floods on the Agriculture Produce, i feel that the growth rate may be downgraded for the coming 2 years (2010-2011 and 2011-2012). If it were 4-5%, then yes, CAGR will be 27-28% approx.
 
^^ What specifically have I "messed up"? Your comment makes little sense to me. I already said that assuming 4-5% CAGR, GDP will show a growth of close to 30%.

You are wrong in saying "CAGR will be 27-28%". This is completely false. The growth in GDP will be 27-28%, not CAGR. That is the year to year growth in the number you are measuring (GDP in this case).

Please read the definition of CAGR before commenting further:

http://www.investopedia.com/terms/c/cagr.asp
 

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