The World Bank and Global Poverty - Research Paper Example

Poverty cannot be measured just by a study of the people’s income levels. The purpose of this letter is to point out some of the weaknesses of the poverty measures that your organization relies upon to gauge the extent of poverty around the world. The World Bank uses absolute terms in its description of poverty. The bank classifies people living in ‘extreme poverty’ as those whose earnings are less than US$1.25 per day (PPP), and relative poverty for people earnings less than $2 per day.

In light of these figures, an estimated 1.4 billion and 2.7 billion of people currently live in extreme poverty and relative poverty situations respectively. The World Bank, therefore, erroneously believes that the global economy can still sustain the reduction of poverty as envisaged in the Millennium Development Goals by 2015, since the number of people whose daily earnings are below $1.25 has been decreasing. The reality, though, is that, with the current poverty measures in place, with the exclusion of China, the rest of the countries in the developing world as still far from achieving much in terms of poverty reduction.

The main shortcoming of the poverty measurement tool (PPP) used by the World Bank is that it is premised upon intrinsic representation of lack of resources. It is evident that poverty lines do not provide accurate estimates of the level of poverty because poverty is all-encompassing. Evidence confirms that a number of the current statistics on poverty lines might have been justifiably grouped in the dollar-a-day category. In the latest round of poverty measurement, you organization’s line of $1.

25 per person per day are premised upon the standard poverty line for 15 countries with the weakest economies in the world. These inconsistencies call for a new approach to measuring poverty by your organization. An alternative approach revolving around the estimation of the poverty based on the median country normally brings about significantly higher figures of the poor, especially in highly populated countries such as India and China. Moreover, the new World Bank approach ignores the rate of inflation in developed countries like the United States; a factor that would have pushed the original $1.

08 mark to $1.45 for 2005, with clear repercussions on the equivalent estimates of people in poverty, and thus for the realization of the MDGs on the issue by 2015. The study of earnings by people within a given country and across the world in general, gives a skewed understanding of poverty in favour of income as opposed to other factors that stem from poverty and enhance its pangs on the affected persons. In light of this disparity, a multi-dimensional measurement of poverty would provide a more all-encompassing understanding of poverty.

Multi-dimensional poverty index Your organization’s reliance upon measurements of just relative earnings to ascertain the level of poverty covers only a small section of the whole issue and falls short of comprehensively describing the complex nature of poverty. I believe that your approach to measuring poverty should involve an evaluation and measurement of other factors, which are associated with the multi-dimensional disposition of the situation as well. These encompass factors such as the rate of joblessness, the level of poor health care or educational