Subject Guide
Global and regional/continental progress towards poverty reduction, including the growth of the “new global middle class”
1. What is poverty?
There are many different types of poverty; three important types are briefly explained below:
- Situational poverty is caused by a sudden crisis or loss and is often temporary. Causes might include environmental disasters, divorce, or severe health problems.
- Absolute poverty involves a lack of basic needs such as shelter, clean water, and food. People in absolute poverty will probably focus on day-to-day survival.
- Relative poverty is where people's incomes fall significantly below the average for the place where they live. They may have access to basic needs and more but will be poorer than other people and families in the same place.
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Absolute poverty
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Relative poverty
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What is the poverty line or poverty threshold?
This is a level defined by national governments or economists to identify the minimum income needed to be able to access the necessities of life.
This threshold will be vary widely between countries because of how much can be purchased with a given amount of money in that place. For example the poverty level for a single person in the US is currently $12, 240 per year or $33 a day (2018). The equivalent for India is $0.40 for urban dwellers and $0.25 for rural dwellers. The World Bank sets the world poverty threshold at $1.90 a day.
This is a level defined by national governments or economists to identify the minimum income needed to be able to access the necessities of life.
This threshold will be vary widely between countries because of how much can be purchased with a given amount of money in that place. For example the poverty level for a single person in the US is currently $12, 240 per year or $33 a day (2018). The equivalent for India is $0.40 for urban dwellers and $0.25 for rural dwellers. The World Bank sets the world poverty threshold at $1.90 a day.
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2. How are global patterns of poverty changing?
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Use the graph on the left (or the one in your textbook p234) to identify and describe changing patterns of poverty worldwide. You should consider:
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The global economy has grown rapidly since the 1950s, at a rate much faster than population growth. Since the MDGs were introduced in 2000, global poverty has halved. The most rapid progress has been made in Asia, but as the World Bank data shows, progress has been made in all global regions (NB this is not the same as saying that progress has been made in all countries - what might be the exceptions?).
Poverty does remain widespread in many areas of southern Asia and in Sub-Saharan Africa.
Poverty does remain widespread in many areas of southern Asia and in Sub-Saharan Africa.
The Magic Washing Machine - Hans Rosling
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Yes They Can!
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3. The New Global Middle Class
Traditionally the term "middle class" has been used to describe a socio-economic group between the workers (working class) and the elite workers and capitalists (ruling class or bourgeoisie).
The term "new global middle class" is used to refer to the growing number of people worldwide who have moved out of poverty and who have "discretionary income" (money that is not needed to provide basic needs). This money can be spent on consumer goods, health care and, at the upper end, holidays and cars.
Definitions vary but a common one is those households with per capita incomes between $10 and $100 per person per day (pppd) in 2005 PPP terms. This implies an annual income for a four-person middle-class household of $14,600 to $146,000. Clearly, this means that there is huge variation within the NGMC.
The term "new global middle class" is used to refer to the growing number of people worldwide who have moved out of poverty and who have "discretionary income" (money that is not needed to provide basic needs). This money can be spent on consumer goods, health care and, at the upper end, holidays and cars.
Definitions vary but a common one is those households with per capita incomes between $10 and $100 per person per day (pppd) in 2005 PPP terms. This implies an annual income for a four-person middle-class household of $14,600 to $146,000. Clearly, this means that there is huge variation within the NGMC.
From THE UNPRECEDENTED EXPANSION OF THE GLOBAL MIDDLE CLASS AN UPDATE
by Homi Kharas
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Study the data and the graphs on the number and share of GNMC by region.
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