In the past few decades something amazing has happened. The share and the number of extremely poor people in the world (on the current definition, people who consume less than $1.90 a day at purchasing-power parity) has plunged. This is hugely welcome. People who live on less than $1.90 a day are very poor indeed—poor, in fact, even by the standards of the world’s poorest countries. So it is regrettable that the steep decline in poverty is unlikely to continue. Extreme poverty will probably not fall as quickly in the next few years as it has done for the past few decades. Why?
The World Bank, which tracks poverty, estimates that 1.9bn people were extremely poor in 1981. In that year, the poor accounted for 42% of the world’s population. In 2013, by contrast, only 767m people were poor. Because the world’s population has grown so much in the interim, the share of poor people in the population has fallen even faster, to just below 11%. The single biggest reason for this delightful trend is China. In 1981, almost unbelievably, 88% of Chinese (and 96% of rural Chinese) seem to have lived below the poverty line. In 2013 only 2% of Chinese were extremely poor.