Good news from abroad: living standards improve

The unheralded good news of the early 21st century is that in most parts of the developing world the living standards of ordinary people have risen steadily, and in some cases quite rapidly, over recent decades.

Economist William Easterly illustrates this progress in his account of Jade, a woman born in 1958 in a small village in South Korea. Jade’s mother had to carry laundry down to the river to wash, and the villagers carried firewood on their backs for sale in a near-by town. Now the village roads are paved and houses have TV antennas, electricity and telephones. In Jade’s lifetime, the average income of Koreans has increased eight times.

This progress has been largely ignored by the U.S. media. Instead, our newspapers and television programs present images of the developing world that, while factually correct, are seriously skewed. The media call attention to tsunamis in Asia, genocides in Rwanda and the Sudan, the persistence of extreme poverty and the horrific spread of HIV-AIDS. We might well conclude that the developing world is characterized simply by growing human misery.

But we would be wrong, and the evidence is there to prove it. Further, more is at stake here than simply being ill-informed about our global neighbors: faulty knowledge may promote faulty judgments about which development policies work and which do not.

First, the evidence, beginning with World Bank studies of household budgets, collected from dozens of countries since 1981.

Average household consumption or household incomes increased in 29 out of 41 countries in East Asia, South Asia, the Middle East and North Africa, and Latin America. Consumption or income rose in the majority of countries in each of these regions, and in all of the 6 most populous countries in the developing world, China, India, Indonesia, Pakistan, Bangladesh and Brazil. These studies point to higher living standards in all developing regions other than sub-Saharan Africa, the only large region where living standards have not improved.

Still, a skeptic might ask for additional evidence. Fortunately, information on nutrition and health can be used as a check on the household budget evidence – and this information demonstrates marked improvement in well-being. Data from United Nations agencies show that:

?Life expectancy has risen in every region of the developing world since 1970.

?Mortality rates for infants and for children under 5 have dropped dramatically in every region in the developing world since 1960. In China the drop in under-5 mortality was an astounding

84 percent, from 225 per 1,000 to 37.

?The number of calories available per person per day in developing countries has risen from an average of about 2100 in 1970 to well over 2600.

Finally, for many countries the best available single indicator of changed living standards is the growth or decline of output per person. A country’s output is best assessed by its gross domestic product – GDP, after all, furnishes the material means of living for a country’s citizens. When GDP grows more rapidly than population, countries can, and usually do, provide greater amounts of goods and services for their people.

In 16 Asian countries GDP per person rose by 170 percent from 1970 to 2001, according to a major study by the economist Angus Maddison. The increases in the Middle East (31 percent) and Latin America (46 percent) were less striking but still substantial, especially compared to preceding centuries of stagnation. The exception again was sub-Saharan Africa.

These remarkable regional changes are reflected in data for specific countries. GDP per person has increased substantially in each of the six largest developing countries. In China and India, the two largest, output per person rose by 360 percent and 125 percent, respectively.

Do the recent improvements in average living standards in developing countries imply that poverty has been eliminated? Certainly not. World Bank studies indicate that while the proportion of the population in poverty has declined substantially in the developing world, the total number of poor people has dropped more slowly. Over a billion people continue to suffer the direst poverty. Still, we should welcome the continuing improvement in average living standards, especially because in all of human history such widespread, sustained improvement has never before occurred.

A failure to recognize this improvement may lead to the faulty conclusion that progress can be achieved only by scrapping current policies. Higher living standards have been achieved under policies strongly influenced by the Western economies and international organizations such as the World Bank and the International Monetary Fund.

Certainly we can and should do more than we have done. But we may choose to do the wrong things if we fail to recognize that in recent decades living standards have improved substantially for many millions of people, and in most parts of the developing world. And clearly, the current international institutional arrangements have not blocked this progress.

So if you care about the fate of people in other countries, you may celebrate two types of good news. First, living standards are rising in all regions of the world, with the sad exception of sub-Saharan Africa. And second, current international economic policies are compatible with this remarkable progress.

Edwin Dean, a seasonal resident of Vinalhaven, writes monthly about economic issues.