Where do the poor live, and how do we make them become middle class?

The Economist reports:

“WHERE do the world’s poor live? The obvious answer: in poor countries. But in a recent series of articles Andy Sumner of Britain’s Institute of Development Studies showed that the obvious answer is wrong. Four-fifths of those surviving on less than $2 a day, he found, live in middle-income countries with a gross national income per head of between $1,000 and $12,500, not poor ones. His finding reflects the fact that a long but inequitable period of economic growth has lifted many developing countries into middle-income status but left a minority of their populations mired in poverty. Since the countries involved include giants like China and India, even a minority amounts to a very large number of people. That matters because middle-income countries can afford to help their own poor.”

The article raises important issues that inform the debate on how to tackle problems of poverty and underdevelopment – is it all about politics & governance or all about economic expansion? The answer, of course is that it is a moderate mix of both.

But since political realities often force governments to concentrate on one or the other, a responsible answer is that it is all context-dependent; some places need strong economic expansion first, before political reforms can be anchored in society. In others, political change should be top of the checklist.

The Botswanas and Singapores of this world are lucky in that their leaders were smart enough to know what their countries needed and pursued it with singular ambition, despite the unavoidable mess that came with the choices they made.

This of course goes against the received wisdom among academics (me included) who believe in the strong power of the right types of (liberal, in the classical sense) institutions to put countries on the path to becoming Denmark. The problem with this approach is that it does not tell us how to compress the more than 600 years that transpired between the Magna Carta and the voting reform legislations in England in the latter part of the 19th century. Lest we forget, England (which is every scholar’s favorite source of empirical conceptualization of institutional development) has not always had good institutions.

Institutions take a lot of time to build. A lot more time than the average human life span.

So the question still stands: How do we get the most number of people out of poverty in the least amount of time with the least harm to their political and human rights?

More on this here.

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4 thoughts on “Where do the poor live, and how do we make them become middle class?

  1. Great points to raise, Ken. My only quibble is with your statement that Singapore and Botswana did better because their leaders were smarter. It’s just as plausible—and, to my mind, more likely—that those countries simply got lucky. They are the restaurants that survived, the people who lived to 100. Looking backwards, we ascribe that outcome to the decisions their leaders made, but if success were distributed randomly, we would also expect at least a few cases to turn out well.

    This matters because, if it really is luck and not skill, we risk doing harm by trying to learn from those cases and applying those “lessons” to other ones.

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  2. Thanks for the comment, Jay.

    Fair point, although it is hard to attribute it all to a random coin toss. I still think, though, that there is a residual (in institutional development) that can be explained by leadership, even without buying into the great man fallacy.

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  3. Pingback: Persistence of Culture (and Institutions) « Opalo's weblog

  4. 今ではオンラインの世界と見なされます完全なメディア、それ一般的がインストールされているテレビに従う同じオンラインモデル。数年前、私は発見、ダイバースタイル遺物夢中時計JCペニーさんで。

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