Contact: Karen Emerton karen.emerton at esrc.ac.uk 44-1793-413122 Economic & Social Research Council
World poverty is far worse than standard measures indicate
The problem of world poverty is far worse than is indicated by standard measures of the quality of life, such as GNP per capita and the United Nations’ Human Development Index (HDI). Indeed, measures of the true wealth of nations – their productive base of physical, human and natural capital – reveal that something like a third of the world’s population have become even poorer over the past three decades. And in a cruel paradox, it may well be that contemporary economic development is unsustainable in poor countries because it is sustainable in rich countries.
These were some of the conclusions of Professor Partha Dasgupta of the University of Cambridge, delivering ESRC’s 12th Annual Lecture on Wednesday 17 October. Dasgupta argued that while GNP and HDI indicators suggest steady improvement over the past thirty years in much of the developing world, they fail to take account of what really matters for a society’s prospects: its productive base of institutions and capital assets, including natural resources. And it seems clear that in the Indian sub-continent, sub-Saharan Africa and China - countries and regions that together encompass half the world's population - this has been declining relative to their populations.
Dasgupta’s rough and ready calculations of per capita wealth show how misleading the assessment of long-term economic development can be by simply looking at GNP per capita or HDI. For example, Pakistan’s GNP per capita grew at a healthy 2.7 percent per year, implying a more than doubling of living standards in the period 1965-96. The per capita wealth measure shows that living standards actually almost halved for the average Pakistani over this period.
For sub-Saharan Africa, the picture is even worse according to per capita wealth measures, with living standards halving after only twenty years. The ills of this continent are well known but they are rarely depicted in terms of such a massive decline in wealth. It will take years for the region to recover, if it is able to do so at all.
At the heart of Dasgupta’s lecture was the idea of sustainable development, signalled by an increase in a country’s wealth over time and signifying an increase in economic well-being. Given that, properly measured to include environmental degradation, a vast swathe of the developing world is growing less wealthy in per capita terms while countries like the UK and the US are growing wealthier, it might be cruelly inferred that poor countries are consuming beyond their means while rich countries are not consuming enough. But the issue is far more complex than that.
Key features of the depletion of these countries’ productive base are the resources that make up natural capital: commercial forests, oil and minerals, water, fisheries, soil, biodiversity, the atmosphere as a sink for carbon dioxide, etc. And owing to imperfect systems of property rights, these are typically under priced or free to those who use them. This means that countries exporting primary products (and they are often among the poorest) may well be subsidising the consumption of the importing countries (typically the richest). This suggests that contemporary economic development may well be unsustainable in poor countries because it is sustainable in rich countries.
### For further information, contact ESRC Media Consultant Romesh Vaitilingam on 0117-983-9770 or 07768 661095 Email: romesh at compuserve.com
Or contact Lesley Lilley or Karen Emerton in ESRC External Relations on 01793 413119 or 413122.
NOTES TO EDITORS 1. The ESRC is the UK’s largest funding agency for research and postgraduate training relating to social and economic issues. It has a track record of providing high-quality, relevant research to business, the public sector and government. The ESRC invests more than £46 million every year in social science research. At any time, its range of funding schemes may be supporting 2,000 researchers within academic institutions and research policy institutes. It also funds postgraduate training within the social sciences, thereby nurturing the researchers of tomorrow. The ESRC website address is http://www.esrc.ac.uk 2. REGARD is the ESRC’s database of research. It provides a key source of information on ESRC social science research awards and all associated publication and products. The website can be found at http://regard.ac.uk 3. Partha Dasgupta delivered ESRC’s 12th Annual Lecture – ‘Is Contemporary Economic Development Sustainable?’ - on Wednesday 17 October 2001. Dasgupta is Frank Ramsey Professor of Economics at Cambridge University and a former President of the Royal Economic Society.
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