Volume 15, No.2 - February 2011

Feature articles

Eradicating poverty, the greatest global challenge


During the Copenhagen World Summit for Social Development in 1995, leaders from across the globe recognized poverty eradication as an ethical, political and economic imperative and identified it as one of the three pillars of social development. Since then, the world has come together to eliminate poverty. As a major step towards this objective, the Millennium Declaration set the target of halving the proportion of people living on less than $1.25 a day between 1990 and 2015.

There has been some success in reducing global poverty levels. World Bank data show that the number of people living on less than $1.25 a day in developing countries declined from 1.9 billion to 1.4 billion between 1981 and 2005 and the proportion of people living in extreme poverty dropped from 52.0 to 25.7 per cent during the same period.

Furthermore, at the High-level Plenary Meeting of the General Assembly on the Millennium Development Goals, held in New York last year, it was predicted that, at the global level, the target would be met. Nonetheless, in some regions the likelihood of achieving the expected objectives will not be feasible.

Beyond income poverty

The absolute number of people living in poverty has gone up in several regions including Sub-Saharan and Northern Africa, Latin America, the Middle East and Central Asia totaling 1 billion people who are living in extreme poverty. In fact, today’s poverty situation is even more serious if we consider its wider definition.

In one of DESA’s flagship publications, Rethinking Poverty: Report on the World Social Situation 2010, it was highlighted that poverty is not simply a lack of adequate income. In short, poverty is the deprivation of one’s ability to live as a free and dignified human being with the full potential to achieve one’s desired goals in life.

The report further explains that the poverty line approach limits the field of vision to individuals and households below the prescribed poverty line, ignoring the fact that there is a large share of the population above the poverty line who are highly vulnerable to poverty. Many households enter and exit poverty as defined by a poverty line as their circumstances and fortunes fluctuate, such fluctuations being a hallmark of deprivation.

In response to the flaws of the monetary based approach, several new measures and approaches are being considered. For example, The United Nations Development Programme (UNDP) launched a new poverty index that takes into consideration deprivations in health care, education and living standards.

The index highlights that the number of people living in multidimensional poverty considerably exceeds those who live on $1.25 a day or less. The new index estimates that about 1.7 billion people live in multi-dimensional poverty while 1.3 billion are suffering from income poverty. This shows that even though countries might have succeeded at reducing income poverty, they are still unable to ensure access to education, health care and food.

While these approaches are presenting more complex data and provide alternative points of entry for developing a framework for a social analysis of deprivation, they all have features that tend to significantly limit their usefulness for this purpose. As a result, the 2010 DESA report stresses that there is the need for more research and reflection to develop a wider analytical framework that incorporates the social exclusion approach to poverty reduction efforts.

Emerging challenges

Reducing poverty requires sustained, inclusive and equitable economic growth. Unfortunately, recent economic changes have failed to enable the right environment for this growth to happen. In fact, in many low-income countries, the slow rate of economic growth constitutes the main challenge to poverty reduction. Without an adequate rate of economic growth to raise the average level of income, opportunities for redistribution and fiscal space for social policy are limited.

Moreover, the economic crisis led to an increase of unemployment rates across the globe. The International Labour Organization (ILO) estimated that globally the number of jobless persons is estimated to have reached 210 million in mid-2010, up from 178 million in 2007. High unemployment levels directly affect income and social integration. Adequately remunerated jobs provide income security, access to social protection, better health and educational status and, ultimately, a way out of poverty. Even though the current economic situation has slightly improved, lack of job recovery continues to hinder poverty reduction.

Today, people living in poverty are not only left out of the job market and of the economic growth process, but they are also often excluded from social and political opportunities, a situation that further increases inequalities at every socio-economic level. Furthermore, poverty and inequality are often passed on from one generation to the next, and the deprivations children suffer at birth and throughout childhood often lead to an adulthood constrained by similar circumstances. Children in families at the lower end of the income distribution scale tend to have poorer health, shorter life expectancy and less education translating into lower income in adulthood.

Additionally, countries affected by conflict, weather-related disasters and other impacts of climate change are even less likely to experience economic growth. For example, it has been estimated that civil war reduces economic growth by at least 2 per cent a year, and thus, a seven-year war could reduce a country’s wealth by 16 per cent. Also, the effects of climate change are impacting the less fortunate at a greater rate than those living in developed nations.

People living in poverty, especially in marginal environments and areas with low agricultural productivity, depend directly on genetic, species and ecosystem diversity to support their livelihoods. If these natural resources become scarce due to changes in climate, they will be unable to satisfy their basic needs reducing their chances of getting out of poverty.

Evidently, polices and measures that were considered effective to eliminate poverty a few years ago do not necessarily take into consideration the impacts that the aforementioned challenges are having on poverty. With less than five years remaining before the target date of 2015, there is the imminent need to create an effective response plan based on national and international renewed efforts that consider poverty as a multi-dimensional issue.

Uniting efforts to eliminate poverty

Despite advances in poverty reduction, the global community continues to recognize that eradicating poverty is the greatest global challenge that the world faces today, and a core requirement to achieve sustainable development. As a consequence, in December 2007 the General Assembly proclaimed the Second United Nations Decade for the Eradication of Poverty (2008-2017).

This second decade aims at supporting the internationally agreed development goals related to poverty eradication and stresses the importance of reinforcing the positive results that some countries have achieved with regard to poverty reduction while it recognizes poverty as a multi-dimensional issue; in 2008, the General Assembly decided “full employment and decent work for all” as a theme for the decade. To achieve the expected objectives of this decade, the UN called for a more coherent and integrated UN system-wide response and is working closely with social partners, NGOs, civil society, and other actors in order to support national governments to implement internationally agreed development goals.

Continuing with the efforts to make the decade an important element to aid the process of poverty eradication, the United Nations Economic and Social Council decided that the priority theme of the Commission for Social Development for the 2011-2012 review and policy cycle would be poverty eradication taking into consideration its relationship with social integration and, full employment and decent work for all.

During the forty-ninth session of the Commission for Social Development, taking place from 9 to 18 February 2011, Member States will gather to evaluate and assess the implementation process of the Copenhagen World Summit for Social Development and other further initiatives adopted since then and provide the necessary recommendations. The commission is also intended to review and consider issues affecting the most vulnerable groups including persons with disabilities, youth and older persons, and discuss emerging challenges with a special emphasis on social protection.

The Second United Nations Decade for the Eradication of Poverty and the forty-ninth session of the Commission for Social Development are important UN led actions to reiterate the urgency of eliminating worldwide poverty. However, to win the battle against poverty, all relevant stakeholders, including member states, civil society and non-governmental organizations must come together and take definite actions.

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Measuring global trade – getting the right numbers?


In today’s global economy, no nation is self-sufficient. They rely on one another to complete a wide range of international transactions including selling, buying or exchanging of goods and services. Global trading has become a key pillar of today’s economy and its fluctuations can impact national and international policies and processes. As a result, having the right numbers on global trade has become a decisive need for the world’s economic growth and development.

Recognizing the need to discuss the best ways to meet the ever rising information demand of global trade statistics of different stakeholders and to adapt to the changes in the global landscape, key policy makers, economists and statisticians will convene from 2 to 4 of February in Geneva at the Global Forum on Trade Statistics.

The importance of global trade statistics

Growth and setbacks shown in international trade statistics will be accompanied by corresponding changes in economic growth, economic and social development, and employment levels. Decision makers, therefore, rely upon this trade information to set policies and make informed decisions. In fact, based on trade data projections, business leaders change market strategies, political decision makers modify their agenda, and nations re-negotiate multilateral agreements.

In the last forty years, the world has witnessed changes in almost every socio-economic aspect. Developing countries, such as China, Brazil and India, have become major superpowers leading to a change in global production, consumption and investment. The digital revolution is virtually erasing national boundaries, facilitating information and knowledge exchange among countries, people and communities. Trade statistics reflect these developments in the transaction of goods and services, evidencing some of the most important changes in modern history.

Changes and trends

Today, it’s very common for business operations related to production of goods or delivery of services to move to lower wage countries across the globe in order to reduce costs. Such business models have led to the creation of the global value chain research, which explains global manufacturing from the chain of the various business operations. The new concept has gained attention and importance in recent years.

Such research shows that business decisions are not only influenced by the objective of lowering production costs, but also by, for instance, moving the assembly of the final product closer to the consumer market. Due to the emergence of the global value chains, a particular issue affecting statistical data compilation arose, namely a significant increase of international transactions of intermediate goods, such as product parts. Inside current global chains, unfinished products may cross several borders several times during the production process inflating, to a certain extent, the volume of international recorded transactions.

This resulted in a higher volatility of the observed global trade. In other words, in times of economic growth, trade was increasing two or three times as fast as GDP, while during the last economic crisis, global trade contracted by about 12.5% whereas the global level of GDP decreased only by about 2.5%.

The recent global economic crisis led to a significant decline in imports by developed countries. With the value chain-dominated production structure, changes in orders and inventories spread rapidly from one market to another, also affecting the developing countries.

In fact, the crisis was a clear testament of the global nature of production and services delivery. For instance, according to the publication “Global Value Chains in a Post-Crisis World” the fall in U.S. demand for Japanese final goods was accompanied by a significant drop in demand for intermediate goods in China and South-East Asia.

These changes and developments have created a world economy that is integrated, interdependent, and specialized where tracking inputs, outputs, exports and imports is becoming more challenging.

The international trade data shows the huge increase of trade in intermediate goods, yet it does not give information over the business practices and underlying strategic decisions as the link to the enterprise statistics is mostly missing. A few countries have started linking trade and business statistics including the Netherlands, Italy, Canada and Austria and can serve as models for other countries to apply these practices.

Towards a trade information system

The international statistical community recognized the need to adjust both international merchandise trade statistics (IMTS) and statistics of international trade in services (SITS), and adopted new international recommendations during the UN Statistical Commission at its 41st session in 2010. These new recommendations (IMTS 2010 and SITS 2010) encompass robust elements that aim at providing more information on trade transactions, such as the better utilization of customs procedure codes and the separate recording of special transactions.

IMTS 2010 also mentions the application of trade by enterprise characteristics which would allow examining the impact of globalization on businesses and recommends countries to integrate their trade register with their business register and to take steps towards an integrated system of economics statistics for data compilation and analysis.

The ultimate objective of the Global Forum on Trade Statistics is to stress the importance of implementing the 2010 recommendations and establish a shared vision that enhances the current national statistical systems on three different fronts including institutional arrangements, statistical data production, and data dissemination and analysis.

To achieve the new vision by 2020, countries must overcome some challenges such as the tendency by national institutes to preserve the status quo, the lack of adequate resources to develop or upgrade the required business registers and enterprise surveys, and the confidentiality issue of micro-level business data.

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Zambian envoy elected to ECOSOC for 2011


H.E. Lazarous Kapambwe, Permanent Representative of Zambia to the UN was elected on 18 January to serve as the next President of the UN Economic and Social Council (ECOSOC).

“I represent the region that is lagging behind the most in terms of development in all socio-economic sectors and I pledge to do my best to ensure that Africa’s challenges as well as all other regions are tackled in the best way possible by the Council,” Mr. Kapambwe told ECOSOC.

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