Once we accept the World Bank’s population projections, even if all countries grow at 4.5 percent, the poverty rate of the developing world in 2027 is no longer 3 percent, but 3.7 percent.<sup>8</sup> This increase in the poverty rate is caused mainly by increasing the population share of the poorest region in the developing world, i.e., SSA, from 14.1 percent to 18.7 percent between 2010 and 2027. To achieve a 3 percent poverty rate by 2027, all countries must grow faster than 4.5 percent. Note that this analysis does not take into account the full effects of country-specific population growth rates, which will be done in Section IV.

**Table 2: Average Annual Growth Rates of Mean Household Expenditures** **<u>by Region (2002–2010)</u>**

|**Region **|**Growth rates (%)**|
|---|---|
|East Asia & Pacific|6.4|
|Europe & Central Asia|6.5|
|Latin America & Caribbean|5.0|
|Middle East & North Africa|1.6|
|South Asia|2.3|
|Sub-Saharan Africa|2.1|
|Developingworld|4.7|

Source: Authors’ estimations using PovcalNet (October 2013)

**Table 3: Changes in Gini Coefficients for Select** **<u>Countries</u>**

|**Country**|**Year**|**GiniCoefficients (%)**|
|---|---|---|
|Brazil|2009|54.69|
||1999|59.78|
|China|2009|42.06|
||1999|39.23|
|India|2009.5|33.90|
||1993.5|30.82|
|Indonesia|2010|35.57|
||2002|29.74|
|Russian|2009|40.11|
|Federation|2002|35.70|

Source: PovcalNet (October 2013) Second, the assumption of uniform growth of mean household expenditure (or income) is unlikely to hold. In fact, our estimation of annual growth rates of household expenditure per capita indicates there is a significant variation across regions. We estimate these growth rates by first calculating country-level mean expenditures from PovcalNet for 2002 and 2010, then estimating the population weighted mean for all regions for both years, and finally calculating the global growth rate from the regional mean. As mentioned before, the average growth rate in the developing world is 4.7 percent, which is higher than the required growth rate of 4.5 percent under the distribution-neutral assumption in Ravallion (2013). However, Table 2 shows East Asia and the Pacific (EAP), Europe and Central Asia (ECA), and Latin America and the Caribbean (LAC) regions exhibit much faster growth than Middle East and North Africa (MNA), South Asia (SAR), and SSA. The biggest concern is the slow growth of SSA, the poorest region, which certainly slows down the pace of poverty reduction at the global level.

Third, the distribution-neutral assumption does not hold not only because countries and regions grow at different paces, but also because inequality within a country might be changing. It is often the case that inequality increases as a country becomes richer, although recent experiences in LAC where many countries show a significant reduction in inequality in recent years present exceptions. Table 3 shows trends of Gini coefficients for select countries. The durations are selected based on data availability and comparability. Brazil shows a significant reduction in Gini coefficients between 1999 and 2009, while China, India, Indonesia, and Russian Federation all showed some increases in Gini coefficients for the select durations.

Both differences in growth rates across countries and changes in inequality within a country likely have a huge impact on projection of the global poverty rate in 2030. For example, Ravallion (2013) compares growth rates required to achieve the 3 percent target if the global distribution of household expenditure per capita changes. According to Ravallion (2013), the global distribution of household expenditure per capita is most equal in 1999. As mentioned before, the growth rate needed to achieve 3 percent by 2027 is

> 8 World Bank’s population projections are not available for 2027. The authors projected the 2027 populations using population projections of 2025 and 2030 assuming annual regional population growth rates are constant between 2025 and 2030.

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