In current debates about the world economy, “growth is good” often appears as a truism. Growth leads to wealth, it is said, and greater wealth is surely desirable, especially for the poorer developing countries. Closer inspection, however, leads to a far more nuanced assessment.

Legend has it that there was a time when economists celebrated economic growth, regardless of its distribution. Such economists would have judged alternative economic practices and policies exclusively by their relative impact on the inflation-adjusted (per capita) social product. I am not sure such economists were ever dominant. Economists have long seen the point of income and wealth in the satisfaction of human preferences and understood that, insofar as such satisfaction increases with rising income or wealth, it does so at a declining rate. At any rate, the legend of the growth-only economists is useful because it allows real economists to stress that they are different, that they favor pro-p...

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FOOTNOTES:

• [1] From devdata.worldbank.org/dataonline (accessed June 15, 2007). This database does not provide inflation-adjusted GNI data. Nonetheless, the ratios of these nominal $-figures (in the right-hand column) are comparable across years.
• [2] Footnote in Table 1: Calculated by dividing the two residuals: (world GNI minus high-income country GNI) divided by (world population minus high-income country population). Data from devdata.worldbank.org/dataonline (accessed June 15, 2007).
• [3] Derived from Table 1 in the World Bank’s World Development Reports for the years 1982, 2002, and 2007, respectively, and market exchange rates in the relevant years. Again, the ratios among these nominal $ figures are comparable across years.
• [4] Branko Milanovic, Worlds Apart: Measuring International and Global Inequality (Princeton University Press, 2005).
• [5] See, for example, Kevin Danaher, ed., 50 Years Is Enough: The Case Against the World Bank and the International Monetary Fund (South End Press, 1994); Thomas Pogge, World Poverty and Human Rights (Polity Press, 2002); Peter Singer, One World (Yale University Press, 2002); Joseph Stiglitz, Globalization and Its Discontents (Norton, 2002); and George Monbiot, Manifesto for a New World Order (New Press, 2004).
• [6] See www.wider.unu.edu/wiid/wiid.htm (accessed June 10, 2007).
• [7] David Leonhardt, “Larry Summers’s Evolution,” New York Times Magazine, June 10, 2007, www.wider.unu.edu/wiid/wiid.htm (10 June 2007), and Maya Roney, “The Global Millionaire Boom,” Business Week, October 18, 2007.
• [8] Ibid. and note 6.
• [9] Footnote in Table 3: World Bank, World Development Report 2007 (Washington: World Bank, 2006), Table 1 (pp. 288-9), using purchasing power parities (PPPs) to convert into $s.
• [10] Footnote in Table 3: United Nations Development Programme (UNDP): Human Development Report 2006 (Houndsmills: Palgrave Macmillan, 2006), Table 15 (pp. 335-8) as updated from devdata.worldbank.org/dataonline (accessed August 2, 2007).
• [11] See note 9.
• [12] See note 10.
• [13] Distributing each country’s entire GNI over its ten deciles, my calculations of the bottom decile absolute share ignore that a large fraction of GNI goes for government expenditures. My figures therefore substantially exceed both the average income and the average consumption expenditure of the poor.
• [14] Unlike the previous table for affluent countries, where economic position was calculated giving equal weight of one half to the relative and absolute shares of the poor, this table for poorer countries gives three quarters weight to the absolute and one quarter weight to the relative share of the poor. As a consequence, the figures under “economic position” are not comparable across tables. Moreover, problems with the use of general consumption PPPs in assessing consumption expenditures of very poor households (see notes 16 and 25) suggest that even within this table comparisons in the second, fourth, and fifth columns should be made with caution.
• [15] Calculated from China’s population and poverty head count index as provided at devdata.worldbank.org/dataonline and iresearch.worldbank.org/PovcalNet/jsp/index.jsp (accessed June 11, 2007).
• [16] See Sanjay Reddy and Camelia Minoiu, “Chinese Poverty: Assessing the Impact of Alternative Assumptions” (2007), at www.columbia.edu/~cm2036/china.pdf (accessed June 11, 2007). See also Albert Keidel, “The Limits of a Smaller, Poorer China,” Financial Times, November 13, 2007 (www.ft.com), reporting on a recent PPP assessment exercise conducted by the Asian Development Bank (ABD). Judging that the purchasing power of the Chinese currency has been overestimated by 67 percent, this study concludes that China’s economy is 40 percent smaller than assumed heretofore. The impact of this PPP revision on the poverty statistics is staggering: “The number of people in China living below the World Bank’s dollar-a-day poverty line is 300m—three times larger than currently estimated. … The ADB’s announcement also indicates that the number of dollar-a-day poor in India is closer to 800m than the current estimate of 400m” (ibid.). The revision of China’s and India’s PPPs thus entails that there are 600 million more human beings living below $1 a day than the 950 million reported by the World Bank (iresearch.worldbank.org/PovcalNet/jsp/index.jsp, accessed June 11, 2007) — a 63 percent error deriving from the PPPs of just two countries. The same revision entails a similar percentage increase in the number of people living below $2 a day, which was recently reported at 2,533 million (ibid.).
• [17] Second-column figures are calculated by dividing each year’s GNI (in current yuan) by China’s population that year, then using China’s GDP deflator to convert into constant 2005 yuan, then multiplying by China’s 2005 PPP (2.077 Yuan to the U.S.$). All inputs are from devdata.worldbank.org/dataonline, except pre-2004 third-column data are from Reddy and Minoiu 2007. Because assessments of China’s PPP vary widely and general consumption PPPs are, at any rate, a poor indicator to what basic necessities the poor can buy (note 25), figures in the fourth and fifth columns are only roughly comparable to those in the corresponding columns of the preceding table.
• [18] See note 10.
• [19] The number of people outside China living below $2/day is reported to have increased from 1,583 million in 1981 to 1,828 million in 1990 and to 2,081 million in 2004—as calculated from data at iresearch.worldbank.org/PovcalNet/jsp/index.jsp and devdata.worldbank.org/dataonline (accessed June 15, 2007).
• [20] Milanovic 2005, 108.
• [21] See devdata.worldbank.org/dataonline (accessed June 10, 2007).
• [22] Table 6: Data from iresearch.worldbank.org/PovcalNet/jsp/index.jsp (accessed June 10, 2007). Full calculations are on file with the author.
• [23] See devdata.worldbank.org/dataonline (accessed August 4, 2007).
• [24] Calculations based on data from iresearch.worldbank.org/PovcalNet/jsp/index.jsp (accessed June 15, 2007), showing that in 2004 the bottom quintile topped out at $458 PPP 1993 with an average income of $319 PPP 1993, while the bottom two quintiles topped out at $792 PPP 1993 with an average income of $465 PPP 1993. Annual consumption expenditure is here measured in terms of the purchasing power that U.S.$s had in the United States in 1993.
• [25] See James Davies, Susanna Sandstrom, Anthony Shorrocks, and Edward Wolff, The World Distribution of Household Wealth (WIDER, 2006), Appendix 1, Tables 10a and 11a. PPP conversions probably overstate the true purchasing power of the poor, because PPPs are calculated as a kind of weighted average price ratio, weighting all commodities according to their prominence in international consumption expenditure. Services and other nontradables raise the assessed purchasing power of poor countries’ currencies far above their market exchange rate. But the cheapness of services is no boon to the local poor, who must concentrate their meager funds on a narrow band of basic necessities, which are not as much cheaper in poor countries as PPPs would suggest. For full elaboration of this and related points, see Sanjay Reddy and Thomas Pogge, “How Not to Count the Poor,” forthcoming in Sudhir Anand and Joseph Stiglitz, eds., Measuring Global Poverty (Oxford: Oxford University Press, 2008; also at www.socialanalysis.org).
• [26] UNDP 2006 (note 10), pp. 174 and 33.
• [27] See www.fic.nih.gov/about/plan/exec_summary.htm (accessed June 16, 2007).
• [28] UNDP: Human Development Report 1998 (New York: Oxford University Press, 1998), p. 49.
• [29] See www.uis.unesco.org.
• [30] International Labour Office (ILO): The End of Child Labour: Within Reach (Geneva: ILO Publications, 2006), p. xi and Table 1.1.
• [31] In 2002, there were about 57 million deaths. The main causes highly correlated with poverty were (death tolls in thousands): diarrhea (1,798) and malnutrition (485), perinatal (2,462) and maternal conditions (510), childhood diseases (1,124—mainly measles), tuberculosis (1,566), malaria (1,272), meningitis (173), hepatitis (157), tropical diseases (129), respiratory infections (3,963—mainly pneumonia), HIV/AIDS (2,777) and sexually transmitted diseases (180). See World Health Organization: The World Health Report 2004 (Geneva: WHO Publications, 2004), pp. 120–25.
• [32] Rome Declaration on World Food Security, www.fao.org/wfs.
• [33] Ibid., Final Report of the World Food Summit, Part I, Annex II.
• [34] See www.un.org/millennium.
• [35] In 1990, the number of extremely poor was 1,247.7 million or 23.66 percent of the population of the developing countries; 905.2 million is 11.83 percent of the projected population of these countries in 2015. For a more detailed discussion, see my World Poverty and Human Rights, second edition (Polity Press, 2008), pp. 11-13.
• [36] UNDP, Human Development Report 1996 (New York: Oxford University Press, 1996), p. 20, and UNDP 2006 (note 10), p. 174.