Martin Ravallion's blog

Each year the mass media and many governments look keenly at the country rankings by the Human Development Index (HDI). In the 2010 Human Development Report, Zimbabwe has the lowest HDI in the world at 0.14 on a (0,1) scale (UNDP, 2010). The next lowest is the Democratic Republic of the Congo (DRC), with 0.24. (Norway is highest, at 0.94.)

It is natural to ask: what would Zimbabwe need to do to get its HDI up to the level of the DRC or better? Zimbabweans will no doubt have a strong interest in knowing the answer, as will those interested in the HDI in general.

There are three components to the HDI, for life expectancy, schooling and income. Let’s look at these in turn.

Maxim Pinkovskiy and Xavier Sala-i-Martin (PSiM herafter) have confidently claimed that “The conventional wisdom that Africa is not reducing poverty is wrong” and that “African poverty is falling and is falling rapidly.” This sounds like good news. But is it right?

We must first be clear about what we mean when we say “poverty is falling”. What many people mean is falling numbers of poor. However, PSiM refer solely to the poverty rate—the percentage of people who are poor. (There is no mention of this important distinction in their paper.) And it is not falling over their whole period of their analysis, which goes back to 1970. Rather they find that the poverty rate has been falling since the mid-1990s.

Sub-Saharan Africa now has the highest incidence of extreme poverty, such as judged by the World Bank’s $1.25 a day poverty line. Granted, Africa has shown encouraging signs since the mid 1990s of reversing its past record of relatively poor performance against poverty.