Chapter 19: Economic Development

Start Up: Being Poor in a Poor Country

You are four years old. You live with your family in the vicinity of Lagos, the capital of Nigeria. You are poor. Very poor.

You and your father, mother, four brothers and sisters, and grandmother live in a shack with a dirt floor. It commands a rather nice view of the Gulf of Guinea to the south, but the amenities end there. Drinking water, which you are learning to help fetch, is badly polluted—so you are sick much of the time. As for sanitation, there is not any in your neighborhood. You are also hungry. You think of the gnawing feeling in your stomach, the slight dizziness you always feel, as normal.

Your newest brother, who was born last month, just died of cholera. Your mother tried to get him to the clinic, but it was closed when your brother needed it. Your father’s usual optimism has vanished—he talks of going east to Abuja to find work. He has given up finding a job here.

Your father worked in the peanut fields in the eastern part of the country for several years, but he lost his job. After some very tough years marked by ethnic violence, your family came to the city. You were born shortly after that—you have never known your father to have a regular job. Your mother has had better luck finding work as a maid for some of the wealthy people, with real homes, across town.

You will be old enough to start school next year and are looking forward to that. Your parents say you will be fed there. But if you are like your older brothers and sisters, you will not go to school for more than a couple of years. Your family will need you to earn some money in the streets—begging, running errands, hustling.

You have no reason to think your life will ever get any better. Your own family’s fortunes seem to have declined, not risen, all your life.

You cannot know it, but you are not alone. The World Bank estimated that in 2005 about 1.4 billion people, about a quarter of the population of developing countries, were poor, defined as living on less than $1.25 a day, the international poverty line. You are on the poor end even of that group, but there are plenty of others who live pretty much the way you do.

In this chapter, we will take a look at the economies of poor countries. We will see that malnutrition, inadequate health care, high infant mortality, high unemployment, and low levels of education prevail in much of the world. But, we will also see that overall, and especially in some countries, great strides in improving living standards have been made. In 1980, about half of the population of developing countries, or 1.9 billion people, were poor. Poverty reduction in East Asia has been phenomenal, with the poverty rate falling from around 80% to less than 20% over the last 25 years. Declines in the poverty rate, at about 50%, have been minimal in Sub-Saharan Africa over that period.Shaohua Chen and Martin Ravallion, “The Developing World Is Poorer than We Thought, but No Less Successful in the Fight against Poverty,” World Bank Policy Research Working Paper 4703, August 1, 2008.

In 2000, eight Millennium Development Goals were adopted by the international community. They are (1) to eradicate extreme poverty and hunger, (2) to achieve universal primary education, (3) to promote gender equality, (4) to reduce child mortality, (5) to improve maternal health, (6) to combat HIV/AIDS, malaria, and other diseases, (7) to ensure environmental sustainability, and (8) to develop a global partnership for development.

The United Nations monitors progress on these goals, which have been concretely specified (e.g., between 1990 and 2015, halve the proportion of people whose income is less than $1 a day, reduce the under-five mortality rate by two-thirds, halt and begin to reverse the spread of HIV/AIDS). The United Nations’ most recent annual goals report notes that not only have governments been supportive of the goals, but so have many private foundations. As might be expected, it appears that some of the goals will be reached by their target dates, mostly 2015, while other goals are less likely to be achieved. Some that are likely to be achieved are the halving of the absolute poverty rate, the increase in primary school enrollment, reductions in deaths from measles and AIDS, the increase in access to safe drinking water, and the reduction in the use of ozone-depleting substances. Goals that are likely to be missed are reaching the absolute poverty reduction goal in Sub-Saharan Africa, improvements in gender parity and job security, and improvements in conditions in slums.United Nations, The Millennium Development Goals Report 2008 (New York: United Nations, 2008).

The challenge of economic development is to find ways to achieve sustained economic growth in poor countries and to improve the living conditions of most of the world’s people. It is an enormous task, one often marked by failure. But there have been successes. With those successes have come lessons that can guide us as we face what surely must be the most urgent of global tasks: economic development.