Where Will the World's Poor Live? An Update on Global Poverty and the New Bottom Billion - Working Paper 305

Most of the world’s extreme poor do not live in the world’s poorest countries; they live instead in countries classified by the World Bank as middle-income countries. This apparent “poverty paradox” has important implications. For one, middle-income countries have substantially more domestic resources available to fight poverty than low-income countries do. As a result, donors will need to adapt to changing contexts and rethink their aid objectives, allocations, and instruments to meet the new geography of global poverty.

In this paper, Andy Sumner updates the data on the distribution of global poverty and provides projections through 2020. New estimates for global poverty in 2008 confirm that middle-income countries are home to most of the world poor, 74 percent of those living on less than $1.25 a day and 79 percent of those on less than $2. The 2020 projections show that most of the world’s poor will live in countries that have the financial ability to end at least extreme poverty. Sumner argues that global poverty is becoming more and more an issue of domestic income distribution and that traditional aid (the transfer of resources from rich countries to poor) is becoming less relevant.