Originally published: August 27, 2008
Source: Asian Development Bank (ADB)
The Asian Development Bank (ADB) has released a report that offers a new way to measure poverty in the Asia and Pacific region. It calculates the Asian Poverty Line at around US$1.35 a day. The report, published in a special chapter of Key Indicators 2008 describes important methodological issues involved in generating internationally comparable estimates of poverty. A special chapter, titled Comparing Poverty Across Countries: The Role of Purchasing Power Parities, also provides comparable rates of poverty using price data specific to the Asia and Pacific region, and, critically, to the poor.
Ifzal Ali, ADB Chief Economist says, “While the US$1-a-day poverty line remains an appropriate benchmark for counting the extent of extreme poverty in Asia, and the developing world more generally, in a region that has witnessed rapid economic growth it might also be time to evaluate poverty incidence using a benchmark that reflects the region’s dynamism.”
A major contribution of the report is to examine the sensitivity of poverty estimates to different methods for evaluating purchasing power parities (PPP). PPPs are conversion factors that ensure a common purchasing power over a given set of goods and services. Using consumption PPPs, the report estimates that in the 16 countries that participated in the study 1.042 billion people would have been living below US$1.35 a day in 2005. Under the more robust poverty PPPs, this estimate would drop to 843 million people.