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Wednesday, Jun 19, 2002
Industry & Economy
Unctad report on least developed countries -- `Extreme poverty doubled in past three decades'
NEW DELHI, June 18
THE UN Conference on Trade and Development (Unctad) has warned that the number of people living on less than $1 a day in the world's 49 least developed countries (LDCs) would reach at least 420 million by 2015 if current economic trends persist.
In its Least Developed Countries Report 2002, released here by Dr Veena Jha, Co-ordinator, Unctad India, the UN body has presented a new set of poverty estimates showing that extreme poverty in these countries has doubled over the past three decades to 307 million. But such poverty could be dramatically slashed by doubling average household living standards. This is due to the poverty-reducing effects of economic growth in low- income countries where the majority of the population live at or below income levels sufficient to meet their basic needs. If real private consumption per capita in a given country doubled from $400 to $800 a year, the percentage of the population subsisting on less than $1 a day would shrink from 65 per cent to less than 20 per cent, it said.
Unctad said the power of rising average consumption to reduce extreme poverty in low-income countries has not been apparent in currently used global poverty statistics owing to unreconciled discrepancies between national accounts and household survey estimates of private consumption.
Four out of every five people in the LDCs were living on less than $2 a day in 1995-99, according to the new Unctad estimates, with their average private consumption just above the $1-a-day poverty line, at $1.03 a day. Poverty is particularly severe in the African LDCs, which account for 34 of the 49 countries in this group. In the second-half of the 1990s, almost nine out of 10 people in African LDCs were living on less than $2 a day. Their average consumption was just 86 cents a day, as compared with $41 a day in the US.
However, Unctad said, Asian LDCs have been doing better. Between the second-half of the 1970s and the second-half of the 1990s, the share of people living on less than $1 a day fell from 36 per cent to 23 per cent in 1995-99. Their average daily consumption rose from 85 cents to 90 cents a day. In the second-half of the 1990s, two-thirds of the population of Asian LDCs were living on less than $2 a day with their average consumption being $1.42 a day.
The report notes that among the LDCs, the incidence of extreme poverty is highest in those that rely on primary commodity exports for their survival and development. It said 18 of the 49 LDCs, comprising 42 per cent of the LDC population, have diversified from primary commodities and were exporting primarily manufactured goods or services by the end of the 1990s; 31 others continue to specialise in primary commodities with oil being the major export of Angola, Equatorial Guinea, Yemen and Sudan. Besides oil, the link between extreme poverty and commodity dependence is the result of the interplay of national and international factors that together constitute an international poverty trap, Unctad said.
The report argues that recent changes in the structure of global commodity markets are reinforcing the cycle of economic stagnation and pervasive poverty.
This is because they are leading to higher marketing margins between producers and consumers and greater commodity price instability. They are also increasing the probability of LDC commodity producers being excluded from global markets. The latter process supervenes as buyers within commodity chains upgrade their volume, reliability and quality criteria for purchasing and as ever larger investments are needed to meet buyers' quality requirements and specifications.
The identification of the link between commodity dependence and extreme poverty shows that there are two key gaps in the current global approach to poverty reduction in the poorest countries.
These are lack of an international commodity policy and insufficient attention being paid to South-South co-operation and also to the adverse effects on LDCs of polarization of the global economy.
A central recommendation of the Unctad report is that it is necessary to shift from adjustment-oriented poverty reduction strategies to development-oriented poverty reduction strategies.
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