Poverty in Saudi Arabia

Poverty in Saudi Arabia

Introduction

By international standards, the low and middle-income countries of the Middle East and North Africa (MENA) entered the 21st century with levels of income poverty that were strikingly low. Table 1 presents estimates of poverty using international purchasing power standards of $1.00 per person per day for six developing regions during 1987-98. MENA stands out as the developing region with the lowest incidence of poverty using the International Development Goal definition of $1.00 per person per day throughout the 1990s. While the transitional economies of Eastern Europe and Central Asia began the decade with a lower poverty incidence, the extreme contraction in incomes following the fall of communism more than doubled the proportion of the poor living in that region by 1998.

Table 1. Poverty, inequality and growth data by region

Source: [World Bank, 2002a], Global Poverty Monitoring database.

The purpose of this paper is to examine what lies behind MENA's success at poverty reduction. To address this question we combine two approaches:

We should emphasize that each of these approaches--international and national poverty lines--has their strengths and limitations. For poverty analysis, international poverty lines are useful because they permit comparisons between countries and over time ([Chen and Ravallion, 2000]). But, these international poverty lines--set at $1.00 per person per day--are inevitably arbitrary; it is not clear why poverty should be defined in all developing countries on the basis of $1.00 per day. To understand poverty dynamics at the national level, country-specific poverty lines may be more useful. Such poverty lines are, after all, more closely tailored to the actual costs of specific food and nonfood items in individual countries. But, even these national poverty lines have their limitations. In many developing countries (including MENA), nutritional data are so sparse that it is difficult to set “nutritional requirements” accurately, and in all countries it is even more difficult to specify the cost of “nonfood needs” precisely. For the sake of robustness, the best strategy is to use each of these approaches to complement the other.

We should also stress at the outset that it is not easy to analyze trends in poverty reduction in the MENA region. Of the 20 countries included in the MENA region, only seven--Algeria, Egypt, Iran, Jordan, Morocco, Tunisia and Yemen--appear in the new, crosscountry data set developed in this paper. The reason for this is simple: these seven countries are the only ones which have conducted nationally representative household surveys since 1980. Of these seven countries we will focus on five--Egypt, Jordan, Morocco, Tunisia and Iran--in our country-case studies. While these five countries have conducted a total of 18 household budget surveys, only two of these surveys--the 1997 surveys in Egypt and Jordan--are accessible to the public. With such limited access to household survey data, we are forced to rely upon poverty figures produced by government statistical offices and international agencies, and this makes it difficult to explain the reasons for different poverty outcomes over time.

Poverty, inequality and growth in international context

Using available World ...