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Many of world's poor could still live in middle-income countries by 2030

27 July 2012

In two new working papers Where do the world's poor live and Is global poverty becoming a matter of national inequality, IDS fellow Andy Sumner argues that global poverty will increasingly become an issue of national inequality with at least half and possibly up to two-thirds of the world's poor people continuing to live in middle-income countries (MICs) up to 2030.

This research follows on from Andy Sumner's earlier work on the Bottom Billion and contributes to the current debate on the future of poverty and what might follow the Millennium Development Goals after 2015.

The recently published ODI-Brookings (2012) Horizon 2025 report asserted that economic growth would largely eliminate middle-income poverty by 2025 and the world’s poorest would become concentrated in low-income countries (LICs) and fragile states.

In contrast, Andy Sumner's projections across various scenarios for economic growth suggest that poverty towards MICs will remain an issue and many of today's LICs may well be MICs by 2020 or 2030.

As outlined by The Economist, Andy Sumner suggests that by 2030 there could still be roughly equal shares of the world's poor in LICs and MICs. However, given that many current LICs will be MICs by 2020 or 2030, MICs might account for two-thirds of the world's poor in 2020 and 2030. These conclusions were reached by generating a number of scenarios for economic growth using the IMF's World Economic Outlook growth projections.

This 'global poverty paradox' of many of the world's poorest continuing to live in MICs raises a number of important questions for MIC-donor engagement. In particular what role does 'traditional aid' have to play if global poverty is re-framed as an issue of national inequality and politics?

Andy Sumner said:

"The changing distribution of global poverty away from the poorest countries to MICs suggests that a new approach to understanding and tackling extreme poverty is required as the world looks ahead beyond the 2015 MDG deadline. MICs will need and want "traditional aid" less and less as domestic resources expand. However, concessional loans will still be useful even if grants are less appropriate given expanding resources. Policymakers in donor countries and MICs could work together by developing a new joint focus on the chronic poor and ensuring the benefits of growth and public spending are more equitably distributed. Important aspects of this include strengthening domestic taxation systems, regulation of tax havens and untaxed capital flight from MICs; inclusive spaces for policy processes; the co-financing of global public goods and - most importantly for donors credibility - policy coherence across donors development policies in trade, migration and so forth."

These issues will be addressed in more detail by Andy Sumner in his new IDS In Focus Policy Briefing, Where will the world's poor live? Global poverty projections for 2020 and 2030, which is due to be published at the beginning of August.