Progress in the fight against poverty has been made in the poorest large countries

in Asia in the last 40 years and the pace of progress in eliminating poverty has
been
particularly impressive in China and Vietnam. This graph shows the reduction over
time
in the proportion of the population that receives a daily income of $3.20 or less.
In 1990,
China, India, and Pakistan and Vietnam had poverty rates that were above
80%. By 2018, the poverty rate had dropped to under 5% in China and 7% in Vietnam.
There are two main reasons for the spectacular success of China and Vietnam in
reducing poverty.
First, the Chinese and Vietnamese governments not only focused their efforts in
keeping the growth
rate of GDP high, but also on implementing programs that reduced poverty directly.
Second, the governments changed their methods of bringing people out of poverty
as the nature of the shrinking pool of poor people changed over time.
For the case of China, the anti-poverty work could be divided into three phases.
The first phase is the 1978 to 1999 period, when sustained high economic growth
ended under-employment in the economy. The second phase of 2000 to 2011 was when
the
government concentrated on economic development in the poorer provinces. And Phase
3 is from 2012
to the present, when the government targeted its efforts on the remaining
impoverished individuals.
In the 1978 to 1999 period, China engineered a very high pace of industrialization
that
transferred Chinese peasants on a massive scale out from the low productivity
agricultural sector
into the high productivity manufacturing sector. The outcome is that the income of
the
former agricultural workers rose, and hence poverty was reduced.
Furthermore, as the pool of surplus agricultural workers shrunk over time
the wages of rural workers rose even faster, hence pulling even more people out
of poverty. The most important driver of poverty reduction in the 1978 to 1999
period was the large
trickling down effect generated by the blistering GDP growth rate of 9.8% annually.
The primary geographical characteristic about Chinese poverty at the end of the
20th century
is that the poverty rate increases as one travels westwards away from the
coastline .
In response to this growing development gap between coastal China and inland China,
the
government launched the Western China Development Agenda. The Western China
Development Agenda
was funded very generously to build feasible infrastructure like roads, airports,
bridges,
and power stations, and to build new cities with modern hospitals, universities,
and public housing.
Furthermore, each of the western provinces was partnered with a coastal province to
facilitate
the upgrading of the administrative software and knowledge base of the western
provinces.
The new Chinese president Xi Jinping reoriented poverty reduction programs
drastically to focus
on the individuals who were poor, so this is a switch from focusing on poor areas
to focusing
on poor individuals. Every individual in the extreme poverty category--that is,
every individual
with a daily income of $2.30 or less--was recorded in a national poverty registry,
tracked over time, and given tailored assistance to bring him over the extreme
poverty line. The
tailored assistant takes many forms. For example, training of farmers in technical
skills and
work habits suited for factory employment, and the relocation of a farming
community
from an isolated mountainous areas with poor soil conditions to a newly built
township with newly
established factories. Tailored assistance also includes direct cash transfers to
the physically
handicapped. Through the employment of this individual targeting approach,
the Chinese government was able to announce at the end of 2020 that it had wiped
out extreme poverty
in China. It must be mentioned that poverty is a multi-dimensional phenomenon
that is imperfectly captured by the income emphasis of the poverty line approach.
Poor people are also deprived in other fundamental ways, like
adequate nutrition and a reasonable length in their life spans. Stunting, which is
retarded growth
in young people, is the most obvious indicator of malnutrition. This diagram shows
the stunting rates
of these six Asian countries over time. We see that progress has been made in all
six countries but
there are some surprises in it. The most surprising feature of this diagram is that
Malaysia, which has
a per capita income that is twice that of China today, has a stunting rate of 20%
in 2018, which is four times higher than the Chinese stunting rate of 4.8% in 2018.
So what we have seen in this diagram is that China has not only made tremendous
progress
in reducing the poverty rate but also in reducing its
stunting rate, and it is has the slowest stunting rate in this group of six
countries.
And let me come back to the point that Malaysia, which has a stunting rate of 20%,
also had zero poverty in 2018. So it goes on to show that we have to look at
poverty in more
than one dimension. The third dimension by which we can look at poverty is the
infant mortality rate.
The infant mortality rate is the number of infant deaths for each 1,000 live
births.
This diagram shows that the infant mortality rates have declined for all six
countries over time but
the progress have been quite different across countries. Here, as we can see
the infant mortality rate of China, the Philippines, and Vietnam started off at
roughly 50 in 1976
but by 2019 it was 6.8 in China, 16 in Vietnam, and 22 in the Philippines. And
Malaysia, which
had started off with the infant mortality rate of 30% in 1976, was 7.3% in 2019,
which is higher
than that of China. And throughout this period Malaysia was at least twice as rich
as China.
The optimistic message that comes from this review is that countries can achieve
amazing progress
on these fronts, and China is an example of how one could do it by constantly
focusing on this three
dimensions and changing the policy instruments as the nature of the remaining
poverty
becomes different as the pool gets smaller.
Thank you very much for your kind patience. Signing off from Sunway University in
Kuala Lumpur.