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THE WORLD'S POOR ARE RICHER

Dec 15, 1997, Vol. 3, No. 14 • By MAX SINGER
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AT FIRST GLANCE at the World Bank's 1997 World Development Report is very depressing. The latest numbers make it look as if the old claim is true, that "the poor are getting poorer" around the world. But numbers don't always mean what they seem to.


The bank's new report shows incomes declining in "low income countries" by about 1.4 percent per year over the decade from 1985 to 1995. And things looked just about as bad for the lower- middle-income countries: Their incomes went down by about 1.3 percent per year over the same decade. Now, China and India, with almost as many people as these two groups combined, are not included in these averages, and their incomes grew at over 6 percent per year. But it is still bad news indeed if, on average, incomes in countries with more than 2 billion people were going down for 10 years.


Since I was surprised to hear that the years 1985-'95 had been so bad for the poor countries of the world, I looked more closely at the statistics. Where the World Bank had divided countries into "low income" and "lower middle income," I divided all the countries for which they provided data into "ordinary countries" and "former Communist countries," mostly the countries that used to be part of the Soviet Union or its empire in Eastern Europe.


It turns out that the incomes of ordinary poor countries (other than China and India) didn't go down at all; they grew at a respectable average of 2 percent per year from 1985-'95. But in the former Communist countries, incomes dropped by 5.4 percent per year. This is a devastating collapse, though probably not quite as bad as it looks, because incomes in Communist countries were overestimated in 1985.

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