Sunday, September 16, 2012

Another face of poverty

There is an interesting online report from the Brookings Institution that states in part:

In 1990, almost 600 million people lived on less than $5 a day in resource-rich countries. Today, it is estimated that poverty has increased to about 700 million people (in those countries). Among this population, close to 300 million live in dire poverty, surviving on $2 a day or less. The majority of the poor in resource-rich countries live in Africa, where 80 percent of citizens in extractive-intensive countries live on under $5 a day, and over 50 percent live on under $2 a day. 
  • Of the hundreds of millions of citizens living on under $2 a day in resource-rich nations, 85 percent live in very poorly governed countries – countries which, according to the updated Worldwide Governance Indicators (WGI), rate very poorly in corruption control and other governance dimensions.
  • Ultimately in these resource-rich countries, it is governance what will determine development success or failure.
  • While there are many nations facing enormous governance challenges, there are countries that show that natural resources can be a blessing.
Note that foreign aid is unlikely to be much help to the poor in resource rich countries that are allowing their own people to live in poverty.

The  correlation between corruption control and average per capita GDP is interesting. It might be, of course, that economic development brings better government and thus better prevention and control of government, but it is tempting to assume that corruption slows economic growth. Probably each contributes to the other.

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