World Bank researchers have been trying to assess the extent of extreme poverty across the world since 1979 and more systematically since the World Development Report 1990, which introduced the dollar-a-day international poverty line. From the beginning, the idea was to measure income poverty with respect to a demanding line which, first, reflects the standards of absolute poverty in the world’s poorest countries and, second, corresponded to the same real level of well-being in all countries. The first requirement led researchers to anchor the international poverty line on the national poverty lines of very poor developing countries. And the second requirement led them to use purchasing power parity exchange rates (PPPs) – rather than nominal ones - to convert the line into the US dollar and, more importantly, into the currencies of each developing country.
Achieving shared prosperity, one of the World Bank’s twin-goals, isn’t just a middle-income country’s preoccupation. It has a special resonance in Tanzania, a US$1,000 per capita economy in East Africa.
Tanzania has seen remarkable economic growth and strong resilience to external shocks over the last decade. GDP grew at an annualized rate of approximately 7 percent. Yet, this achievement was overshadowed by the slow response of poverty to the growing economy. The poverty rate has remained stagnant at around 34 percent until 2007 and started a slow decline of about one percentage point per year, attaining 28.2 percent in 2012. To date, around 12 million Tanzanians continue to live in poverty, unable to meet their basic consumption needs, and more than 70 percent of the population still lives on less than US$2 per day. Promoting the participation of the poor in the growth process and improving their living standards remains a daunting challenge.
However, does economic growth affect poverty reduction equally in different countries? Contrary to conventional wisdom, we don’t think so. And here’s why.
The availability of poverty data has increased over the last 20 years but large gaps remain
About half the countries we studied in our recent paper, Data Deprivation, Another Deprivation to End are deprived of adequate data on poverty. This is a huge problem because the poor, who often lack political representation and agency, will remain invisible unless objective and properly sampled surveys reveal where they are, and how they’re faring. The lack of data on human and social development should be seen as a form of deprivation, and along with poverty, data deprivation should be eradicated.