Monday, March 01, 2010

African Poverty

Still not the best place in the world, but things have been improving. Here's the abstract from a new paper by Sala-i-Martin and Pinkovskiy:

The conventional wisdom that Africa is not reducing poverty is wrong. Using the methodology of Pinkovskiy and Sala-i-Martin (2009), we estimate income distributions, poverty rates, and inequality and welfare indices for African countries for the period 1970-2006. We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic. All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty. In particular, poverty fell for both landlocked as well as coastal countries; for mineral-rich as well as mineral-poor countries; for countries with favorable or with unfavorable agriculture; for countries regardless of colonial origin; and for countries with below- or above-median slave exports per capita during the African slave trade.

Note #3 from the abstract-- a popular (ill-guided) concern over African growth is that income inequality will result, and that's bound to cause problems. The latter is debatable, but the former isn't the case.


People In The River said...

I guess:
(1) they did not account for the world wide inflation and price rising.
(2) Even in China, the income inequality is increasing, probably because their household income data is not that reliable.


why they want give such a perfect conclusion? Maybe they should give a more conservative conclusion, then they can actually help poor in those countries get more money and investment from developed countries.

Justin M Ross said...

PITR: Thanks for your interesting comments.

I'm not particularly interested in defending someone else's work, but it seems that:

1) They seem to have tried several different indexes of purchasing power parity derived by the World Penn Tables.

2) (See Figure 14) Why would we expect income inequality to move in the same way within African Countries as within China? Wouldn't a more accurate comparison ("accurate" is relative here, as income inequality measures seem completely arbitrary to me) be to look at Chinese regions vs African countries, or Africa as a continent to China as a country? Even still, there are so many differences between China and the many countries within Africa, I do not see a direct reason to make China the benchmark comparison.

3) Just curious: What would a more "conservative conclusion" look like? How do you think the current results impact the willingness of developing countries to help?

All the Best,