The Sustainability of the Millennium Development Goal to Halve Poverty

The United Nations Millennium Summit in 2000 resulted in a commitment by UN member states to a development agenda comprised of eight specific human development goals with accompanying sub-targets, which are to be achieved by... [ view full abstract ]

The United Nations Millennium Summit in 2000 resulted in a commitment by UN member states to a development agenda comprised of eight specific human development goals with accompanying sub-targets, which are to be achieved by 2015. Most prominent among these ambitious objectives has been the halving of global poverty between 1990 and 2015. This MDG represents an international commitment to reduce the incidence of people living on less than $1 per day from approximately 3% to 15% of the developing world population. Given population growth, reaching this goal meant the abrogation of extreme poverty for an estimated one billion people. This paper makes two contributions to our understanding of the sustainability of progress toward to this goal. First, it extends recent work on sustainability indicators, such as the adjusted net savings figures of the World Bank, by incorporating novel methods for human capital accounting and the country-specific computation of capital-output ratios. Second, the paper applies these new measures of genuine income and comprehensive wealth to assess countries’ progress toward the MDG on poverty reduction. I use this new dataset on 126 countries from the period 1990 to 2014 to calculate annual genuine income, genuine income per capita, and genuine wealth per capita, and show that for a large subset of countries this indicators of sustainability were negative. Most importantly, I show that genuine wealth per capita was shrinking rather than growing in 58 countries over this time period. These countries may have made progress toward or achieved their Millennium Development Goal of poverty when looking at traditional income measures such as Gross Domestic Product but a more expansive view of economic activity suggests GDP per capita was boosted at the expense of the overall productive asset base on which the economy, and all human well-being, fundamentally depends. This finding raises concern about the medium to long-term sustainability of the globe’s recent halving of absolute poverty.