Poverty on the rise: number of poor countries double

The number of very poor countries has doubled in the last 30 to 40 years, while the number of people living in extreme poverty has also grown two-fold, according to AFP.

In its annual report on the 49 least developed countries in the world, the UN Conference on Trade and Development said that the model of development that has prevailed to date for these countries has failed and should be re-assessed, the Financial Express reported.

“The traditional models that have been applied to LDCs [Least Developed Countries] that tend to move the LDCs in the direction of trade-related growth seem not to have done very well,” said Supachai Panitchpakdi, secretary general of UNCTAD (the United Nations Conference on Trade and Development).

“What happened is that in the past 30-40 years, the number of LDCs has doubled so it has actually deteriorated, the number of people living under the poverty line has doubled from the 1980s.” The most of the poorest people live in 58 countries, 70% of them in Africa and most of the rest in Central Asia.

The report indicated that the situation has sharply deteriorated in the past few years. The number of individuals living in extreme poverty “increased by three million per year during the boom years of 2002 and 2007”, reaching 421 million people in 2007. While these countries proved somewhat resilient during the crisis, they are nevertheless very fragile, notably due to their dependence on imports.

“The import dependence has become quite devastating, the expenditure for LDCs on food imports rose from 9 billion dollars in 2002 to 23 billion in 2008,” Supachai said.

In addition, the economies in these countries are little diversified, with very weak improvements in domestic savings, a strong reliance on external savings and a faster depletion of natural resources, UNCTAD concluded.

“The real challenge of development is that there is a group of countries at the bottom that are falling behind, and often falling apart,” says Paul Collier, Director of Oxford University’s Centre for the Study of African Economies.

In his book, The Bottom Billion, Collier wrote that the poorest countries are stuck in at least one of four traps that include the conflict and natural resource traps, as well as land locking with bad neighbors and bad governance in small countries.

Collier notes that 50% of civil wars are actually post-conflict relapses. This is because fighting exacerbates the economic conditions correlated with conflict: low income, low growth, and dependence on natural resource exports. His causal hypothesis is that young men living in poverty and without hope for the future come cheap to warring factions trying to capture resource rents. According to the BFP (Business Fights Poverty), these traps are by no means mutually exclusive; an unlucky country may exhibit all four and find that they reinforce one another.

Furthermore, Collier stated that globalization is working against the bottom billion. Unlike the emerging economies that have used globalization to launch into a period of high growth, the bottom billion may have “missed the boat.”

According to the Economist, the rich world should concentrate not on throwing aid at Africa, whether in budget support or projects, but on taking measures to encourage growth, above all through improving trade. The poor billions of East Asia have begun to race out of poverty not because of aid (very few received much) but because the conditions were created for their countries’ economies to grow.

According to Collier, monetary aid is part of the question’s solution rather than the problem, as it reduces capital flight and makes foreign investment more attractive. He also controversially advocated for military interventions and military guarantees in order to provide stability in post-conflict situations. He also called for the establishment of laws that should be enacted by Western governments, and of charters, mainly for poor countries to sign up to, that would provide a framework for setting things on the right track.

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