With all the MDG stats flying around at the moment, you may have missed a new paper that presents one simple statistic that will, over time, revolutionise how rich countries use aid and support development. It is this: more poor people live in middle-income countries (MICs) than low income countries (LICs). Lots more.
According to Andy Sumner (at the Institute of Development Studies), who wrote this paper, approximately three quarters of the world’s 1.3 billion poor people today live in MICs, with the others living in LICs, mostly in Africa.
Sumner emphasises the contrast between today’s situation with that of 20 years ago when 93% of poor people lived in LICs. Poor people have not been moving, obviously. Rather the countries within which they live have changed from being LICs to being MICs.
Some might be fairly underwhelmed by this statistic. We have been well aware for some time that the massive populations of China and India alone mean they host more poor people than the entire population of Africa, let alone just the African poor.
Others might wonder why this matters. After all, the World Bank’s LIC/MIC classification is fairly random. Countries with a GDP per capita of $995 or less are called “low income”, cross that threshold and you become “middle income”. So what?
The statistic matters because it raises serious questions about the way donor countries use aid in the future. And the paper matters because it is another well-argued case for a rethink of the tired aid dynamics that have now held sway for over half a century. Its message contrasts with one of the most influential papers/books to have been published in the last few years, Paul Collier’s “The Bottom Billion”.
Collier, in his important and well-argued contribution, comes up with that rare thing: a statistic that sticks in the mind and changes the language. His main argument is that development efforts should now be focused more exclusively on a group of the poorest countries in the world which are falling behind the rest, in which about a billion people live. Such thinking has become very influential in the corridors of aid power with Ban Ki Moon, the UN’s Secretary General, going so far as to declare 2008 the “year of the bottom billion”. To focus on this group of 1 billion people would mean focusing on the 60 or so countries which have failed to “take off” in the last few decades.
But Sumner takes a direct swipe at this logic, calling his paper Global Poverty and the New Bottom Billion. In his view, the fact that most poor people live in countries that have taken off economically, means we need to find a new way of helping the poor in these MICs, and that means focusing on poor people, not just poor countries (as Collier suggests).
And if Sumner is right (which he is), that means fundamentally changing the way we give aid and encourage poverty reduction. It is one thing transferring money to very poor countries – there is a logical argument for filling a savings gap, although one that I have criticised. But to transfer cash to countries like China and India that not only have nuclear power and space programmes, but also have their own multi-billion dollar aid programmes, is quite another. Aid money is irrelevant to them – should the traditional donors therefore just leave them to it?
The world needs to find new ways to help other countries respond to persistant poverty and increasing inequality. The era of aid as we know it is ending. Let’s hope that a new era of development cooperation takes its place.