Prompted by Bill Gates’s annual letter and the response from the Overseas Development Institute I thought I’d list some of the things that in my experience seem to be less understood about poor countries. (I wanted to list 23 things like Ha-Joon Chang on capitalism but I couldn’t think of another two). I use the word poor on purpose because although the word risks sounding patronising or dismissive, euphemisms like developing and less-developed can be worse. Thoughts are welcome.

2. Most countries aren’t well-off. The following graph using World Bank datashows that most countries have a relatively low level of national income per capita. 120 nations earn less per person than the world average. When you reach an income per capita of about US$20,000, about half that of the UK, there’s a big jump. Bermudan national income per person is US$104,590, 455 times that of the Democratic Republic of the Congo.
3. More poor people live in Asia than in Africa. Everybody seems to be wittering on about the Asian Century these days – and Asian development has been miraculous. But about 69% of Indians live on less than US$2 per day: 850 million people. A third of Chinese, 400 million, remain similarly poor despite the country’s amazing success in reducing poverty. Together those two countries contain more poor people than there are Africans.
4. The distinction between “developed” and “developing” countries is meaningless. What’s Brazil got to do with Liberia? Not much, apart from an Atlantic coast. One is a newly-industrialising behemoth with an average income near the world average. The other is one of the world’s poorest, emerging from war. Yet both are officially considered developing. China, Turkey, Russia, Indonesia, Mexico and India are all big and relatively dynamic even if they also contain a lot of poor people. Millions of people in those countries live just like Europeans, and the emergence of these nations is one of the biggest reasons why poverty will continue to drop in the coming decades. Yet plenty countries also called developing are being left behind. I count 41 supposedly developing nations which in 2012 on some criterion had real incomes that were lower than a decade earlier. They’re probably better described as undeveloping.
5. Lying on the beach in Thailand or Gambia doesn’t tell you much about poverty. We still don’t know as much as we should about poverty and we try to ignore poor people. Most people’s experience of the global poor is the waiter at their table or the pool attendant, the ones lucky enough to have jobs. Only by direct experience and immersion in local circumstances is it possible to have a vague inkling of what it might be like to be genuinely destitute. There’s no obligation on holidaymakers to go wandering around in slums, but anybody who claims knowledge about deprivation should experience or observe it first-hand for themselves, ideally for a long time.
6. Our main tool for understanding poor countries – mainstream economics – is woefully inadequate and all about the rich world. A sample of 76,000 economics journal articles published between 1985 and 2005 shows that more papers were published about the United States than on Europe, Asia, Latin America, the Middle East and Africa combined. Like I said in this blog post, that’s as ridiculous as if biologists researched only flowers, or physicists only outer space. It’s no wonder that the mainstream model of human beings bears no resemblance to most people on the planet. Economists start from the assumption that humans are individualistic, utility-maximising and strictly rational in a narrow sense. Actually many people are communitarian, social, non-calculating, uncertain about the future and often act according to sentiment or whim. Mainstream economics allows no theory of power or politics and can’t see the world economy as a system.
7. The economic statistics on poor countries are awful. Which undermines my first four points. As Morten Jerven says in his book Poor Numbers: How We Are Misled By African Development Statistics And What To Do About It, “the most basic metric of development, GDP, should not be treated as an objective number but rather as a number that is a product of a process in which a range of arbitrary and controversial assumptions are made.” Jerven finds that the discrepancy between different GDP estimates is up to a half in some cases. This supports my experience from working in the least developed countries, where statistics offices are usually underfunded and don’t have the resources to collect data often or well enough. There’s a kind of false scientism: foreign academic economists spend ages refining complicated econometric models despite the raw material being rubbish. In the absence of good numbers, the only immediate alternative is to live in a country, to use good theory and to rely where necessary on case studies and even anecdote.

9. Inequality matters at least as much as poverty. A report from Oxfam last month pointed out that 85 people, about as many as would fit on a double-decker bus, own as much wealth as the bottom half of the world’s population. The Spirit Level by Kate Pickett and Richard Wilkinson shows that equality is good for everyone. Redistribution reduces poverty and makes life better for the rich in the form of less crime, better education and a more cohesive society. Global inequality is getting worse, not better. If we don’t radically reduce inequality the poor will eat us, so aid isn’t an option, and it’s not about the rich world “saving” the poor. It’s essential for everyone.
10. Africa isn’t a country. Although sub-Saharan Africa’s economy is still much smaller than Britain’s, some Africans are fat, go to the supermarket and drive cars. Many are very poor. The rise of the African middle class is one of the most under-reported stories of our times. If people in the UK think about the continent at all they think of the Ethiopian famine of the 1980s. Partly this is the fault of the major news media, which have cut back on foreign coverage so much that all they report on is Big Events – a bomb, a famine, a war. Reporters who occasionally fly in from abroad miss the cumulative series of small happenings that amount to a trend. To show only negative TV stories about Africa smears the whole continent. The Central African Republic isn’t Botswana, which isn’t Namibia. Within countries the divide between urban and rural populations is increasingly stark.

12. Money doesn’t make you happy. Up to about US$75,000 a year it does – and most people aren’t anywhere near that level – but beyond that it doesn’t have any effect, according to Nobel prize-winning psychologist Daniel Kahneman. “The four basic needs: food, housing, clothes and medicine must be cheap and easy for everybody. That’s civilisation”, says Jon Jandai, a farmer from northeast Thailand. I’d add primary, secondary and tertiary education, too.
13. Poor countries can learn from the mistakes of the rich on the environment and life satisfaction. Lower income countries have leapfrogged some technologies. For example many will never install fixed telephone lines because mobile coverage is so good. Vast numbers of people will never touch a PC, doing all their computing on a smartphone or tablet. The governments of poor countries should be more adventurous, leapfrogging ideologies too. Some proponents of economic growth argue that environmental sustainability and a focus on happiness will handicap poverty reduction. But it could enable some countries to prioritise the important things in life. Endless growth is impossible and undesirable. Beyond a certain point rich inefficiency is the real problem. Why do developing countries ape the development paths and economic structures of the West? We are wage slaves who perform bullshit jobsso that we can service our mortgages. The advance of the car ruined everyone’s quality of life so that a minority can sit in air-conditioned metal boxes in jams. Clever though-leadership in the majority world could lead the way for the rich. Bhutan’s idea of Gross National Happiness is an example.
14. The world isn’t overpopulated. There’s plenty of food to go round. World agriculture produces 17% more calories per person today than it did 30 years ago despite a 70% population increase, due to rising yields, higher farming intensity and more use of land. The real problems are the system of distribution and energy use. If the rich world didn’t hog all the food and produce it inefficiently there’d be enough for everyone.
15. Governments often do things better than markets. Market fundamentalism is the new global creed, and yet most countries that developed successfully did it initially via heavy government intervention. Markets suffer from serious coordination failure. The global free-flow of capital and trade renders poor countries more vulnerable. As the United Kingdom has proven, natural monopolies like the railways, post office and water and electricity utilities are better off in public ownership. In poorer countries the case for government ownership is even stronger.
16. Most countries that successfully reduced poverty didn’t directly try to reduce poverty. They aimed at economic transformation. A fall in poverty was an indirect result of an increase in productive capacity. Investment rates and capital accumulation were high and aimed at enterprise development and technological improvement, as well as structural change toward developing the non-traditional sectors, including linkages to agriculture and the wider economy. This sort of obliquity is what John Kay talks about in his book of the same name. If you try to target things directly you often fail.

18. Just give them the f-ing money, as Bob Geldof sort-of said. Daily Mail readers seem to think that the world has already given enough aid, but in reality an enormous amount remains to be done, as should be clear from points 1 and 9. More aid should be in the form grants rather than loans. Cash transfers are the best way of delivering some help. For example the British Department for International Development works with Unicef and the Kenyan Government in Korogocho, Nairobi, to improve the lives of orphans and vulnerable children through a cash transfer scheme which gives very poor families 3000 Kenyan shillings (about £25) every two months for help with basic household expenses. It cuts out the middleman and it’s been proven through robust testing to reduce poverty, hunger and inequality.
19. Rich countries don’t spend much on aid. The amount officially spent on each poor person globally is US$20 a year, according to the World Bank. The amount has doubled in the last decade following a dip in the late 1990s. But several opinion polls show that rich country inhabitants think they’re much more generous than they really are. Americans think that their government spends 28% of the budget on aid when it’s really about 1%. Brits are almost as bad. The result of this widespread overestimation of generosity is that many people in rich countries want to cut aid.

21. Charity sometimes isn’t the best way of tackling poverty.Sometimes it is. Just because a service is provided freely or from donations doesn’t mean it is better. Often governments are better-placed to deliver assistance because they have better expertise, economies of scale and political access. Taxation places a similar burden on everyone and makes aid revenues more predictable. Sometimes, though, charities have better access and niche skills. Volunteer organisations often have a long history in certain locations and they can avoid accusations of political interference.
Dan Gay works as an advisor on the Least Developed Countries. He previously worked as a consultant for the United Nations, The World Bank, and other development agencies in the South Pacific, Caribbean, East Asia, Central Asia and Africa.
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