Between 1990 and 2010, the number of people living in poverty was halved. In developing countries, the percentage of people subsisting below the internationally recognized extreme poverty line of $1.25 a day fell from 43% to 21%, or by 1 billion people. This reduction was a Millennium Development Goal (MDG), and was in fact achieved 5 years before the deadline – a feat achieved, says The Economist, thanks to capitalism and free trade.
“Most of the credit,” reports the Economist, “must go to capitalism and free trade, for they enable economies to grow – and it was growth, principally, that has eased destitution.” As average annual growth rates in developing countries have increased – from 4.3% from 1960 to 2000, to 6% from 2000-2010 – poverty rates have collapsed. This can most clearly be seen in China, where 680 million people were pulled out of poverty between 1981 and 2010, and where economic growth reached up to 14% during those years.
Over the next year, international leaders will meet to draw up a new set of goals to replace the MDGs when they expire in 2015. It is expected that the main goal will be to reduce the number of people living in extreme poverty by another 1 billion by 2030. For this goal to be achieved, however, economies in south Asia and in Africa will need to maintain their growth rates and keep up with the rest of the global economies. The Economist notes, “if the poorest countries are not left behind by faster-growing middle-income ones; and if inequality does not widen so that the rich lap up all the cream of growth—then developing countries would cut extreme poverty from 16% of their populations now to 3% by 2030.”
And, from the standpoint of the U.S., investing in these developing countries not only enables them to lift themselves out of poverty, but also helps Americans. 95% of the potential consumers of American goods live outside the USA, and by creating an emerging middle class in developing countries, American companies will soon start to reap the benefits of global investment.
– Chloe Isacke