Recent scholarly work has considered the question of income convergence between poor and rich countries, when measured in household terms. Lakner and Milanovic (2013) track the evolution of individual country-deciles to find what is driving the changes in the global income distribution. They find that the fastest growing deciles were country-deciles that in 1988 were around the median of the global income distribution – mostly located in Asia, while the country-deciles that in 1988 were around the 85<sup>th</sup> percentile – mostly population in mature economies – had a sluggish growth. While this improving situation for the groups close to the median is encouraging, it is the poorest deciles where lack of progress is most evident.

# 3. Implications of divergence for the future

## Poverty projections

The world has seen a remarkable decline in extreme poverty, from around 1.9 billion in 1990, to around 690 million by 2017.<sup>7</sup> However, the COVID-19 crisis, inflationary pressures, and the Ukraine conflict have pushed more than 100 million people back into extreme poverty around the globe since 2020, compared to pre-pandemic projections.<sup>8</sup> This marks remarkable success over this 30-year period, with the reversal of fortunes hoped to be a short-term blip. Extending the projections forwards, by 2030, 8 in 10 of the extreme poor will reside in Sub-Saharan Africa (World Bank 2023b) and similarly 8 in 10 in the Bottom Billion (Figure 13).

This situation, when combined with relatively high rates of population growth in the bottom billion, means that the headcount of those in extreme poverty will actually begin to rise again by 2035.

It is worth noting the conservative nature of extreme poverty measures. While an important marker of wellbeing and basic survival, living just above the extreme poverty line tells us little about people’s ability to participate in global prosperity. There is a shift towards broader and more relatively defined poverty measures, including measures referring to within-country inequities, as more relevant to the policy stakes – are people being left behind by global economic growth, or made able to meaningfully participate and benefit from it?

> <mark>between the first and last income per capita value for each period and country.  This value is multiplied by the country population weight. The country population weight is the result of dividing the country population of the year when the first available income per capita data point by the world’s total population.  We obtain the sum of the weighted CAGR of each country and period and the sum of the weights by group (BB, EM, OECD). Finally, we obtain the average population-weighted annual income per capita growth by dividing the sum of the weighted CAGR by the sum of the weights.</mark>

> 7 As reported in World Bank’s September 2020 PovcalNet update:

> https://blogs.worldbank.org/opendata/september-2020-global-poverty-update-world-bank-new-annual-povertyestimates-using-revised

> 8 Calculations based on Mahler et al (2021) updated poverty estimates accounting for the impact of COVID-19 but without including the effect of the 2022 global high inflation and the Ukraine conflict: https://blogs.worldbank.org/opendata/updated-estimates-impact-covid-19-global-poverty-turning-cornerpandemic-2021

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