Poverty

Poverty refers to the condition of lacking basic human needs such as nutrition, clean water, healthcare, clothing, and shelter because of the inability to afford them. This is alternatively referred to using the terms absolute poverty or destitution. Relative poverty, in contrast, is the condition of having fewer resources or less income compared with others within a society or a country.

The United Nations Development Institute has reported that the world's richest 2 percent control more than half of all the wealth, whereas the poorest half possesses just 1 percent of the global wealth. Moreover, only a small number of developed countries account for most of the wealthiest 10 percent of the world, with just 11 countries contributing to over 90 percent of the wealthiest 1 percent of individuals. In addition, a staggering 86 percent of the global population lives in countries with a gross national product per capita of $10,000 or less, with these numbers likely to increase in the near future.

Although modern economic growth and prosperity have been achieved by the European countries, the United States, Canada, Australia, and Japan over the last two centuries, other parts of the world have lagged in achieving economic growth. Some regions of the developing countries, for example, were trapped in extreme poverty. Thus, the uneven distribution of wealth over two centuries resulted in two-thirds of the world population being poor, earning $2 or less per day.

The World Bank uses purchase-power parity to measure poverty. A person with $1 to $2 per day income is considered moderately poor, whereas a person with an income of $1 or less is regarded as extremely poor. The uneven wealth distribution is best described in a pyramid model of world population versus people purchasing power. The top 0.1 billion of the world population have annual income of more than $20,000. Approximately 1.5 – 1.75 billion people belong to the middle annual income range of $1,500–$20,000. The remaining 4 billion poor people earn $1,500 or less per year. According to data from the World Bank, the upper-income group constitute the citizens of the United States, Canada, Western Europe, Japan, Australia, and New Zealand. The middle-income groups live in East Asia (such as Korea and Singapore), Central Europe, the former Soviet Union, and Latin America. The moderately and extremely poor people are living in parts of South America, South and East Asia, and sub-Saharan Africa.

The 2005 UN Millennium Project report further categorized human poverty on the basis of three criteria: income poverty, relating to a lack of insufficient household income; social service poverty, including deficiencies in basic public services (e.g., education, health, [Page 356]water, and other services); and environmental poverty, concerning dilapidation of environmental resources needed for adequate quality of life. Linking the three criteria also yields further distinguishing between the overall “extremely poor” and “moderately poor” countries. Rather than viewing the poor in aggregate as a homogenous segment, customized programs of assistance for each group enable the international institutions and firms, as well as governments, to cater to their specific needs.

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