Poverty is a world problem, but its measurement relies on the local context.
Although poverty is a world problem how we measure the massive impact of local circumstances on it. Although the World Bank has set a world border of poverty, in actual fact, each country still defines poverty in its own way.
This raises a vital query: why do poverty standards differ depending on the country? Shouldn’t there be one universal measurement?
The answer consists in differences in income levels, maintenance costs and consumption patterns in numerous countries.
Understanding the border of poverty
Simply put, the poverty limit is a minimum level of income or expenses needed for the person to fulfill basic needs, resembling food, clothing and shelter. Everyone who lives below this line is taken into account poor.
. World bank He established several categories of worldwide poverty lines based on parity purchasing power (PPP) to permit comparisons between countries. The major standards are:
- USD 2.15 per day (PPP 2017): Used to measure extreme poverty in low -income countries
- USD 3.65 per day (PPP 2017): Applied to countries with lower income
- $ 6.85 per day (PPP 2017): Used in countries from higher average income, resembling Indonesia, Malaysia and Thailand
However, countries don’t mechanically accept this data of their national policy. Why is it?
Why poverty lines differ everywhere in the world
Each country has different maintenance costs, which significantly affects the definition of poverty. This, every $ 2 can purchase in Ethiopia, is significantly different from what he can purchase in Switzerland. As a result, wealthier countries are likely to determine the upper domestic poverty lines which can be more according to the living standards of their residents.
For example, Ethiopia has an income per capita of around 1750 USD, while Switzerland is about USD 69,000 (corrected with purchase power parity), in accordance with Our world in data. This clear contrast reflects a large difference in economic conditions and buying power between two nations.
No wonder that this difference can also be reflected of their national poverty thresholds.
In Ethiopia, the poverty line is 7184 BIRR per 12 months (about USD 53.37). In Switzerland, an individual is taken into account weak if he earns lower than USD 2,815 (about USD 2,802) per 30 days. In the case of a family of two parents and two children, the edge increases to 4,051 CHF (about USD 4,903) per 30 days.
These numbers show that although there are global poverty standards, national poverty lines are more adapted to the local perception of basic needs. Adjusting poverty thresholds to a neighborhood context is obligatory to develop politicians which can be each essential and effective.
World Bank’s approach
To solve this challenge, the World Bank uses a way called Harmonized poverty line. In this approach, domestic data of the poverty line is customized by way of purchasing power parity (PPP) to enable significant international comparisons.
The World Bank then adopts the median of the National Poverty Line from 37 income income countries and uses it as a reference point for the worldwide poverty line.
However, changes in PPP calculations can have an incredible impact. For example, when the World Bank updated its base 12 months PPP in 2011–2017, the intense poverty line increased from USD 1.90 to USD 2.15 per day.
The influence was significant. For example, in Indonesia, the number of individuals classified as poor increased from 54 million (based on PPP 2011) to 67 million (based on PPP 2017). In China, growth was much more dramatic, and the number increased from 24 million to 42 million.
Poverty changes to medium income countries
Interestingly, the newest data from World bank It shows that poverty is increasingly focused in medium income countries. This change is powered by two key aspects:
- Reviews of national poverty lines which can be growing in lots of developing countries.
- Large countries, resembling Indonesia, China and Brazil, have huge populations – so even small changes in poverty standards can significantly affect global statistics.
For example, resulting from the revision of poverty based on PPP, Indonesia recorded a rise in 13 million people classified as poor, while Nigeria recorded a decrease of 14 million. It emphasizes how sensitive global poverty statistics are for each calculation methods and domestic population size.
Global standards vs. Local realities
The World Bank provides a world poverty measurement framework, but local measurements remain obligatory. Each country has its own definition of what’s a “decent way of life”.
Therefore, poverty indicators between countries can’t be quite compared using one global comparative point.
In fact, these differences teach us that efforts to limit poverty cannot comply with the universal model. Strategies should be adapted to the particular needs and conditions of every country, even in the event that they contribute to the common purpose of worldwide well -being.
