A review on Global Poverty

By Mr Lin(Investment Banker)

Poverty entails far more than insufficient income; it consists of the comprehensive deprivation of survival resources, education, healthcare, social security and the right to development. It is categorized into two types: absolute poverty (extreme poverty) and relative poverty. To this day, the global poverty reduction agenda has been severely set back by cascading shocks including the COVID-19 pandemic, geopolitical conflicts, inflation and the climate crisis. Eradicating poverty in all its forms remains humanity’s most arduous shared undertaking.

The Current State of Global Poverty: Authoritative International Core Data (2024–2026, World Bank & UN Sustainable Development Programme)

(I) Global Standard Poverty Thresholds (Three Internationally Adopted Poverty Lines)

Extreme Poverty Line (for low-income countries): Less than $2.15 per day (2017 purchasing power parity)

This is the minimum survival threshold covering only basic food security, safe drinking water and essential nutritional needs. The United Nations Sustainable Development Goals (SDGs) aim to completely eradicate extreme poverty defined by this benchmark by 2030.

Poverty Line for lower-middle-income countries: Less than $3.00 per day (latest revised standard issued in 2021)

Relative Poverty Line for upper-middle-income countries: Less than $6.85 per day

(II) Key Aggregate Statistics

In 1990, the global population living in extreme poverty stood at 2.3 billion. After three decades of growth driven by globalization, the figure fell to approximately 700 million by 2025. However, the COVID-19 pandemic pushed an additional 100 million people into extreme poverty in 2020, breaking the decades-long downward trend in global poverty.

By the end of 2025:

Population living on under $2.15 a day (extreme poverty): 698 million, accounting for 8.5% of the global population, meaning 1 in every 11 people worldwide suffers from extreme poverty;

Population living on under $3 a day: 83.1 million, with a poverty rate of 9.9%;

Population living on under $6.85 a day: 3.7 billion, nearly half the world’s total population, classified as the broadly poor group.

Highly Concentrated Geographical Distribution

75% of people in extreme poverty reside in sub-Saharan Africa; fragile and conflict-affected states are home to over 70% of the world’s extreme poor population.

Nearly three-quarters of the poor live in remote rural areas, where inadequate infrastructure constitutes the primary bottleneck.

Child poverty constitutes a prominent crisis: more than half of those in extreme poverty are children and adolescents under 18. The extreme poverty rate among children is twice that of adults. A total of 412 million children survive on less than $3 per day, leading to deeply entrenched intergenerational poverty transmission.

Massive Shortfalls in Global Social Protection

Only 52.4% of the world’s population has access to any form of social security (pensions, unemployment benefits, subsistence allowances, child support payments), leaving 3.8 billion people entirely without social safety nets. Building a universal basic social security system across low-income countries would require an extra annual investment of $1.4 trillion, a funding gap that has persisted unresolved for years.

II. Six Root Causes of Poverty (Hierarchical Breakdown: Individual → Societal → National → Global Systemic Level)

(I) Individual Level: Inadequate Capabilities and Intergenerational Poverty Cycles (Endogenous Root Cause)

Amartya Sen’s Capability Approach theorizes that poverty is essentially the deprivation of substantive freedoms and capabilities, rather than merely a lack of monetary income.

Lack of educational access: Impoverished households cannot afford schooling expenses, resulting in 260 million school-age children out of school globally. Illiterate populations are confined to low-wage manual labor with an income ceiling. Parental educational attainment directly shapes children’s future earnings, locking families into cycles of inherited poverty.

Disadvantaged health endowments: Shortages of clean water and primary healthcare expose communities to malaria, HIV/AIDS and chronic illnesses that drain household savings entirely. A single severe illness can plunge ordinary families back into poverty permanently. Childhood malnutrition causes irreversible damage to cognitive and physical development, eroding lifelong employability and earning potential.

Financial exclusion: Poor households are denied access to bank loans and microcredit. Without startup capital for productive activities, they are trapped in subsistence agriculture with no means of wealth accumulation.

(II) Societal Level: Inequality and Social Exclusion Widening Wealth Disparities

Uneven income and wealth distribution: The richest 1% of the global population owns over 45% of total global wealth. Tax systems overwhelmingly favor capital owners while imposing excessive burdens on wage earners. Relative poverty prevails even within developed nations, where low-income groups struggle with exorbitant housing and healthcare costs and chronically live beyond their means.

Systemic identity-based discrimination: Women, ethnic minorities, persons with disabilities and refugees face widespread discrimination in employment, land acquisition and access to public resources. Statistics indicate women earn roughly 20% less than men for equivalent work, with markedly higher poverty rates among females.

Urban-rural dualism: Premium education, medical services and employment opportunities are concentrated exclusively in cities. Rural regions suffer from limited income streams, youth labor migration and sustained rural decline.

(III) Domestic Institutional and Governance Deficits within Nation-States

Governance failure and rampant corruption: Many less developed countries suffer from inefficient public administration and embezzlement of fiscal funds, leading to underinvestment in infrastructure and public welfare. Erratic policy shifts and hostile business environments deter domestic and foreign investment, stifling job creation.

Overly simplistic industrial structures: Most low-income economies rely heavily on exporting raw minerals and agricultural commodities, lacking complete industrial chains for deep processing. Low-value primary goods leave national economies highly vulnerable to volatile international commodity prices.

Unbalanced demographic structures: High fertility rates paired with sluggish economic expansion result in population growth outpacing increases in food supply and employment opportunities. Per capita land and resource endowments keep shrinking, preventing sustained rises in average household income.

(IV) Natural Geography and Climate Disasters

Unfavorable geographical endowments: Landlocked territories, arid desert zones and humid disease-prone regions incur prohibitive costs for transportation infrastructure, hindering cross-border trade. Tropical illnesses such as malaria and dengue fever continuously undermine public health.

Adverse impacts of climate change: Recurrent extreme droughts, floods and typhoons destabilize agricultural production. Small island nations and the Sahel region of Africa bear the brunt of climate shocks, with tens of millions pushed into poverty annually by climate-related disasters. World Bank projections show that without robust climate action, an additional 100 million people will fall into climate-induced poverty by 2030.

(V) Armed Conflict, Turmoil and Geopolitical Tensions (The Primary Contemporary Driver of Poverty)

A vicious cycle persists: conflict breeds poverty, and poverty fuels conflict.

Wars demolish farmland, roads, hospitals and factories while displacing labor populations. Military spending diverts fiscal resources away from livelihood programs, bringing economic activity to a halt. Over half of the world’s extreme poor currently live in conflict-ridden and politically unstable countries including Yemen, Somalia, the Democratic Republic of the Congo and Afghanistan. The Russia-Ukraine conflict and ongoing Middle East tensions have driven up global food and energy prices, exacerbating inflation and food insecurity across developing economies.

(VI) Unfair Old International Economic Order (Deep-Rooted Global Structural Cause)

Terms-of-trade scissors gap: Developed nations sell finished industrial and high-tech goods at premium prices while suppressing prices for primary agricultural and mineral exports from developing countries, extracting persistent trade surpluses from the Global South. Meanwhile, tariff and green trade barriers restrict manufactured exports from developing economies, costing African nations over $20 billion in annual export revenues.

Debt traps: Many low-income countries accumulated massive external debt to finance infrastructure construction. U.S. dollar interest rate hikes have since ballooned debt servicing costs, forcing governments to slash spending on education and healthcare to repay creditors and surrender economic autonomy.

Unilateral sanctions and geopolitical rivalry: Coercive economic sanctions imposed by major powers sever trade links for targeted nations, triggering commodity shortages, hyperinflation and sustained deterioration of living standards.

III. Mainstream Global Anti-Poverty Solutions: National Domestic Policies & Multilateral International Collaboration (With Practical Case Studies)

(I) Localized Poverty Alleviation Policies Implemented by Sovereign States (Core Foundational Measures)

Universal Investment in Human Capital: Breaking Intergenerational Poverty (Long-Term Most Effective Strategy)

Free basic education paired with vocational skills training: Universal compulsory schooling eliminates child labor; agricultural techniques, handicraft and service industry training programs are provided to farmers and unemployed workers to boost household earning capacity.

Universal primary healthcare systems: Rural clinics are constructed to deliver free routine vaccinations and treatment for common illnesses, alongside catastrophic medical relief funds to guard against poverty triggered by severe disease.

Establishing Social Safety Nets to Mitigate Emergent Risks (Four Universal Global Social Protection Instruments)

① Unconditional cash transfers: Regular living stipends are provided to low-income households, single mothers and the elderly (Brazil’s Bolsa Família, Mexico’s conditional cash transfer program cover tens of millions of poor people and reduced national extreme poverty rates by over 25%).

② Conditional welfare support: Benefits are disbursed on the prerequisite that children attend school and receive regular health check-ups, incentivizing families to prioritize education and healthcare.

③ Public works programs: Governments fund water conservancy, road and infrastructure projects to absorb surplus rural labor into formal employment.

④ Inclusive microcredit: Pioneered by Bangladesh’s Grameen Bank, interest-free entrepreneurial microloans tailored exclusively for impoverished rural women have lifted millions out of poverty, emerging as a global benchmark for rural inclusive finance.

Redistributive Institutional Reforms to Narrow Wealth Gaps

Progressive taxation is adopted to levy higher taxes on high earners and wealth holders, redirecting fiscal revenues toward public welfare. Statutory minimum wages are enforced to guarantee basic livelihoods for wage workers, while women are granted equal land ownership and inheritance rights to close the gender pay gap.

Building Industrial Capacity and Infrastructure to Stimulate Endogenous Economic Growth

Rural highways, power grids and irrigation systems connect urban and rural markets. Local specialty agriculture, handicrafts and cultural tourism are developed to break reliance on single primary commodity exports.

Small and medium-sized enterprises (SMEs) receive targeted support to generate local employment, ensuring economic growth benefits marginalized populations.

Climate-Resilient Ecological Development

Drought-resistant farmland and flood control infrastructure are built alongside drought-tolerant crop varieties. Green low-carbon industries are fostered to cushion agricultural production against climate disasters and build climate-resilient rural communities.

(II) Multilateral Global Governance Solutions (Led by the United Nations and World Bank)

Advancing the UN 2030 Sustainable Development Goals (SDG 1: No Poverty)

A unified global timeline for poverty reduction is established; all nations formulate national anti-poverty strategies prioritizing remote and vulnerable communities. Developed countries fulfill their long-unmet commitment to allocate 0.7% of annual GDP to official development assistance, providing low-income countries with grant funding for infrastructure, healthcare and education.

Reforming the Unfair International Economic Order

Unwarranted trade barriers are abolished, and global commodity prices are stabilized. External debts of heavily indebted poor countries are cancelled or deferred to halt predatory debt collection, while a fair multilateral trading system is constructed to safeguard the commercial interests of developing nations.

Conflict Mediation and Post-Conflict Peacebuilding

United Nations peacekeeping missions intervene in conflict zones to end armed hostilities. Post-war reconstruction of infrastructure, refugee resettlement and economic revival restore livelihoods, eradicating conflict-induced poverty at its source.

Collective Global Climate Governance

Developed nations assume historical responsibility for cumulative carbon emissions and provide climate finance and low-carbon technology transfers to climate-vulnerable countries to curb poverty risks stemming from extreme weather events.

(III) Exemplary Successful Practices Worldwide

China’s Targeted Poverty Alleviation Campaign: Integrating overall economic expansion, rural infrastructure construction, industrial poverty alleviation, relocation for ecological preservation and comprehensive social security safeguards, China lifted nearly 100 million rural residents out of absolute poverty within a decade. This constitutes the largest-scale poverty reduction endeavor in human history and offers a comprehensive replicable model for developing countries globally.

Brazil’s Universal Cash Transfer Program: Over two decades, Brazil cut its domestic extreme poverty rate from 28% to 7%, demonstrating that targeted social welfare policies can effectively alleviate both urban and rural deprivation.

Bangladesh’s Rural Microcredit System: By resolving the lack of collateral that barred poor populations from formal financing, the model drastically reduced female poverty across rural Bangladesh.

Conclusion

Poverty arises from overlapping contradictions spanning individual capability deficits, unequal social distribution, national governance shortcomings, adverse natural conditions and inequitable global systems. In the short term, social security safeguards secure basic survival needs; in the medium term, investments in education and employment raise people’s income-generating capacity; in the long run, collective global action is required to overhaul the unjust international economic order, eliminate armed conflicts and jointly tackle the climate crisis. Poverty eradication cannot be accomplished overnight. Only by balancing growth and equity, and coordinating domestic governance with international solidarity, can humanity gradually free all people from deprivation and hardship.