The Proximate Causes of Persistently Low Growth in Parts of the Developing World

The Proximate Causes of Persistently Low Growth in Parts of the Developing World

Introduction

The first half of new millennium saw reduction in the number of person surviving on less than USD 1.25 per day, in developing countries. These numbers were 1.8 billion prior to 1995, and 1.38 billion in 2005. During the same time poverty rate reduced to 27% from 46%. The new millennium was hit by financial crisis in 2008, which resulted in decline in investment, trade and commodity prices, and eventually economic growth was slashed around the world. Poverty is a direct result of lack of economic development in a country, and most of the poverty is found in developing country, highlighting low economic growth in these countries.

However, the current trends in developing countries suggest that these countries have successfully absorbed the impact of global financial crises and continued momentum of growth to sustain poverty goals. According to the World Bank, the current poverty rate is expected to decline below 15% by 2015. However, African countries are still lagging behind rest of the world.

Discussion

The World Bank has identified few new challenges to attain 2015 projections. These include new projections of growth in per capita consumption, revision of past consumption per capita from nationwide accounts, and attaining supplementary data from sample of around 50 new household surveys. These estimates will allow obtaining information on changes in income distribution. The new research should include the effects of fuel price shocks and economic crises (U.N, p.12). However, development problems in developing countries are deep rooted, and accomplishing these goals will be challenge.

The current situation of poverty in Nigeria is one of the worst in African region, especially the extreme poverty in sub-Saharan Africa, where 47 percent of the population lives below $ 1 a day, a standard of extreme poverty (Arthur, p.49). All 11 countries with more than 50 percent of the population are consumers spending less than $ 1 a day in sub-Saharan Africa, including Uganda, a country with the greatest poverty in the world (84 percent of the population live in abject poverty). Nigeria is also facing similar situation with majority of people living under $1.25 a day.

Persistent Low Growth in Developing World

The major reasons for lack of development in developing world are often viewed as corruption, and poor governance. Other factors include lack of education, financial stability, and ...