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International Policy

World Bank Wrong: Poor Countries Are Richer

Observers say the World Bank's "1997 World Development Report" makes the misleading claim that incomes are declining in poor countries around the world. The bank's new report shows incomes declining in "low-income countries" -- on average by about 1.4 percent per year from 1985 to 1995. And in "lower-middle-income countries" it reports incomes declined by about 1.3 percent per year over the same decade. But India and China are not included in either of these two groups, which skews the figures: they have almost as many people as the low-income and low-middle income countries combined, and their economies grew at over 6 percent per year. Furthermore, if one divides the two groups of countries with declining incomes into "ordinary countries" and "former Communist countries," it turns out the incomes of ordinary poor countries grew at an average of 2 percent a year from 1985 to 1995, while incomes in the former Communist countries dropped by 5.4 percent per year. Even the drop in the former Communist countries isn't so bad, say analysts, keeping in mind they had centrally planned economies over most of the decade, and incomes in the Communist countries for 1985 were overestimated. Thus GDP per capita in most of the world's poor countries is growing: in the 59 ordinary poor countries by 22 percent from 1985 to 1995, and India and China by 80 percent. Source: Max Singer, "The World's Poor Are Richer," Weekly Standard, December 15, 1997.

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