Expert Commentary

Comparative perspective on poverty reduction in Brazil, China and India

2011 report by the World Bank on how three of the fastest-growing economies in the developing world are approaching poverty reduction.

The economies of Brazil, China and India are growing faster than many of their counterparts in the developing world. Despite this rapid growth, large portions of the populations in all three nations continue to live in conditions of poverty. Each country has had some success in reducing the numbers of impoverished citizens. But these achievements have come through very different approaches, with each employing a distinctive mix along two basic dimensions: pro-poor growth and pro-poor social policies.

A 2011 World Bank research report, “A Comparative Perspective on Poverty Reduction in Brazil, China and India,” looked at the nations’ strategies and their relative challenges and successes. The report used a common poverty line of $1.25 per person, per day, at purchasing parity power for consumption in 2005.

The study’s findings include:

  • All three countries had a drop in the percentage of their populations living below the poverty line in the period between 1981 and 2005. China dropped from 84% to 16%; India from 60% to 42%; and Brazil from 17% to 8%.
  • Over that period, the rise in inequality, as measured by the Gini index, was far greater in China than in India; however, inequality fell in Brazil.
  • China’s approach can be characterized as follows: “Direct redistributive interventions have not been prominent in China’s efforts to reduce poverty. Enterprise-based social security remained the norm, despite the dramatic changes in the economy, including the emergence of open unemployment and rising labor mobility. However, there are signs that this is changing. The Minimum Livelihood Guarantee Scheme, popularly known as Dibao, has been the Government of China’s main response to the new challenges of social protection in the more market-based economy.”
  • Brazil’s history, however, is different: it “clearly has a larger capacity for using redistribution to address its poverty problem than China … In attempting to reduce poverty through redistribution, an important role was played by various cash transfer programs. These included both noncontributory, unconditional transfers as well as Conditional Cash Transfers (CCTs) targeted to poor families, which have played an important role from the late 1990s onwards.”
  • Because of the scope of its poverty and the massive amounts of money required for potential state interventions to make a difference, the case of India can be distinguished from the other two countries: “The potential for using income redistribution to address India’s poverty problem is far more limited than in China or (especially) Brazil.” Still, there is “much hope for the new National Rural Employment Guarantee Scheme (NREGS). This promises to provide up to 100 days of unskilled manual labor per family per year, at the statutory minimum wage rate for agricultural labor, to anyone who wants it in rural India.”

The report concludes by sketching an overall scorecard: “China clearly scores well on the pro-poor growth side of the card, but neither Brazil nor India do; in Brazil’s case for lack of growth and in India’s case for lack of poverty-reducing growth. Brazil scores well on the social policies side, but China and India do not; in China’s case progress has been slow in implementing new social policies more relevant to the new market economy (despite historical advantages in this area, inherited from the past regime) and in India’s case the bigger problems are the extent of capture of the many existing policies by non-poor groups and the weak capabilities of the state for delivering better basic public services.”

Tags: poverty