Are the Poorest Catching Up?
Are global incomes converging or diverging Despite recent empirical evidence supporting the hypothesis of unconditional beta convergence, this paper argues that such findings overlook the stark reality facing the world’s poorest people. Many lower income countries, including those among the so-called “Bottom Billion,” continue to slip further behind the rest of the world, while the numbers of those living in extreme poverty are beginning to rise again after decades of decline. The paper explores how these contradictions can coexist and discusses the policy importance of looking beyond global average trends. The paper identifies three confusions that can arise when analyzing trends in income convergence. First, a focus on unconditional convergence can overlook important policy questions, such as whether countries are likely to eradicate extreme poverty or to catch up with the rest of the world. Tests for convergence may yield only partial answers, especially in light of recent findings that show that unconditional beta convergence can coexist with a significant group of countries slipping ever further behind the rest of the world. Meanwhile extreme poverty numbers are increasing rather than decreasing. Second, average trends can both obscure and be distorted by underlying differences in country composition. In the extreme case, while fast-growing China was below global mean incomes between 2000 and 2020, it significantly boosted empirical support for global convergence. Now that China has passed this threshold, the finding will likely reverse in the coming years as more data is available. Third, different levels of availability of time periods and country coverage can distort and even bias empirical findings, especially where limitations to data availability is correlated with lower income or diverging economies.
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Format: | Working Paper biblioteca |
Language: | English English |
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World Bank, Washington, DC
2023-12-05
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Subjects: | EXTREME POVERTY, POVERTY DATA, DEVELOPMENT ECONOMICS, ECONOMIC GROWTH, CONVERGENCE, INEQUALITY, |
Online Access: | http://documents.worldbank.org/curated/en/099257212012320427/IDU04b6e9b6e0a87504b5d09a0b0012bb203154e https://openknowledge.worldbank.org/handle/10986/40687 |
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dig-okr-10986406872024-05-13T17:52:09Z Are the Poorest Catching Up? Collier, Paul Cust, James Rivera-Ballesteros, Alexis EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY Are global incomes converging or diverging Despite recent empirical evidence supporting the hypothesis of unconditional beta convergence, this paper argues that such findings overlook the stark reality facing the world’s poorest people. Many lower income countries, including those among the so-called “Bottom Billion,” continue to slip further behind the rest of the world, while the numbers of those living in extreme poverty are beginning to rise again after decades of decline. The paper explores how these contradictions can coexist and discusses the policy importance of looking beyond global average trends. The paper identifies three confusions that can arise when analyzing trends in income convergence. First, a focus on unconditional convergence can overlook important policy questions, such as whether countries are likely to eradicate extreme poverty or to catch up with the rest of the world. Tests for convergence may yield only partial answers, especially in light of recent findings that show that unconditional beta convergence can coexist with a significant group of countries slipping ever further behind the rest of the world. Meanwhile extreme poverty numbers are increasing rather than decreasing. Second, average trends can both obscure and be distorted by underlying differences in country composition. In the extreme case, while fast-growing China was below global mean incomes between 2000 and 2020, it significantly boosted empirical support for global convergence. Now that China has passed this threshold, the finding will likely reverse in the coming years as more data is available. Third, different levels of availability of time periods and country coverage can distort and even bias empirical findings, especially where limitations to data availability is correlated with lower income or diverging economies. 2023-12-05T15:34:24Z 2023-12-05T15:34:24Z 2023-12-05 Working Paper http://documents.worldbank.org/curated/en/099257212012320427/IDU04b6e9b6e0a87504b5d09a0b0012bb203154e https://openknowledge.worldbank.org/handle/10986/40687 English en Policy Research Working Papers; 10622 CC BY 3.0 IGO https://creativecommons.org/licenses/by/3.0/igo/ World Bank application/pdf text/plain World Bank, Washington, DC |
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EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY |
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EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY Collier, Paul Cust, James Rivera-Ballesteros, Alexis Are the Poorest Catching Up? |
description |
Are global incomes converging or
diverging Despite recent empirical evidence supporting the
hypothesis of unconditional beta convergence, this paper
argues that such findings overlook the stark reality facing
the world’s poorest people. Many lower income countries,
including those among the so-called “Bottom Billion,”
continue to slip further behind the rest of the world, while
the numbers of those living in extreme poverty are beginning
to rise again after decades of decline. The paper explores
how these contradictions can coexist and discusses the
policy importance of looking beyond global average trends.
The paper identifies three confusions that can arise when
analyzing trends in income convergence. First, a focus on
unconditional convergence can overlook important policy
questions, such as whether countries are likely to eradicate
extreme poverty or to catch up with the rest of the world.
Tests for convergence may yield only partial answers,
especially in light of recent findings that show that
unconditional beta convergence can coexist with a
significant group of countries slipping ever further behind
the rest of the world. Meanwhile extreme poverty numbers are
increasing rather than decreasing. Second, average trends
can both obscure and be distorted by underlying differences
in country composition. In the extreme case, while
fast-growing China was below global mean incomes between
2000 and 2020, it significantly boosted empirical support
for global convergence. Now that China has passed this
threshold, the finding will likely reverse in the coming
years as more data is available. Third, different levels of
availability of time periods and country coverage can
distort and even bias empirical findings, especially where
limitations to data availability is correlated with lower
income or diverging economies. |
format |
Working Paper |
topic_facet |
EXTREME POVERTY POVERTY DATA DEVELOPMENT ECONOMICS ECONOMIC GROWTH CONVERGENCE INEQUALITY |
author |
Collier, Paul Cust, James Rivera-Ballesteros, Alexis |
author_facet |
Collier, Paul Cust, James Rivera-Ballesteros, Alexis |
author_sort |
Collier, Paul |
title |
Are the Poorest Catching Up? |
title_short |
Are the Poorest Catching Up? |
title_full |
Are the Poorest Catching Up? |
title_fullStr |
Are the Poorest Catching Up? |
title_full_unstemmed |
Are the Poorest Catching Up? |
title_sort |
are the poorest catching up? |
publisher |
World Bank, Washington, DC |
publishDate |
2023-12-05 |
url |
http://documents.worldbank.org/curated/en/099257212012320427/IDU04b6e9b6e0a87504b5d09a0b0012bb203154e https://openknowledge.worldbank.org/handle/10986/40687 |
work_keys_str_mv |
AT collierpaul arethepoorestcatchingup AT custjames arethepoorestcatchingup AT riveraballesterosalexis arethepoorestcatchingup |
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1802820781610106880 |