30 August 2012

Rediscovering the New Bottom Billion

Voice of America is picking up on Andy Sumner's research about global poverty with a recent research. His 2010 paper, Global Poverty And The ‘New Bottom Billion’: What If Three-Quarters Of The World’s Poor Live In Middle-Income Countries? upended the idea that global poverty was concentrated in low-income countries.

The reporting makes it seem like it is new news, but better late than never. Sumner explains why it is important in the interview saying, “Many countries over the last decade, in particular, have gotten much better off in average income. But poverty hasn’t fallen as much as one might expect or hope. All of this speaks to a lot of the current debates about the rising importance of inequality around the world and whether debates around the U.N. poverty goals that are due for renewal of some kind in 2015 – whether issues about inequality – ought to have much higher focus."

Going forward, countries will move into middle-income status and poverty will be a problem that will need to be dealt with differently.
Sumner said that with the “distribution of global poverty away from the poorest countries to middle income countries, a new approach to understanding and tackling extreme poverty is required.” He added that this includes a more equitable distribution of the “benefits of economic growth and public spending…on the chronic, long-term poor wherever they live.” 

Sumner provided a concise version of his research in a policy brief for the Center for the Global Development.
To reduce global poverty, traditional donors will need to continue work in the new MICs. There are four reasons to continue ODA to new MICs on a case-by-case basis: pockets of poverty, spillover effects, knowledge transfer, and moral obligations.6 First, pockets of poverty call for aid no matter where they occur. Second, spillover effects of MIC growth, such as climate change, may negatively affect LICs and their poor and provide an argument for directing development assistance toward public goods and aid flows toward countries that can help solve the underlying negative externalities. Third, by engaging with MICs, aid agencies gain knowledge that can then be useful for development assistance to LICs, such as implementing social safety nets. Fourth, there is a moral obligation to give development assistance, given that MICs are still part of global power relations that may disadvantage them to some extent until those global relationships change (e.g. trade and finance patterns).
It is unlikely that taxpayers in donor countries will be comfortable with resource transfers to countries that have substantial domestic resources. It is true that many middle-income countries may be able to support their own poor people to a certain extent, but inequality remains an important issue. The poor often lack a voice in governance structures, and their governments may lack political will, even when domestic resources are on the rise.
In such cases, traditional donors might seek to direct their activities toward supporting inclusive policy processes and the media, social movements, civil society organizations, and other drivers of change. Doing so may not be well received by MIC governments; many of them will be donors themselves and perhaps less interested in “progressive change” and more in their foreign and economic policy interests as noted above.

For those of you who are just learning about these findings and the work of Sumner I would suggest listing to this discussion with Sumner and Paul Collier, the researcher who coined made famous the idea of the 'bottom billion.'

If you want less debate and more discussion, Sumner also sat down with Owen Barder to record an edition of Development Drums in December of 2010. As a bonus, Claire Melamed of ODI joins in to chat about the implications of the findings.