IB Geography 3.1.1 Poverty Reduction and the New Global Middle Class Notes

Absolute Poverty Uses a Fixed Real Threshold, Relative Poverty the National Median

1. Absolute poverty
   1. An absolute line is fixed in real purchasing power, so it compares material welfare across countries even though households do not buy identical baskets.
2. Relative poverty
   1. A relative line is set against the distribution of the country the household lives in, so the line climbs as that country gets richer.
   2. Most national statistical offices draw that line at 50 or 60 percent of median household income, so the threshold moves each time the median does.
3. Because a relative line rises with national income, a country can cut absolute poverty for decades while its relative poverty rate barely moves.

The World Bank's Lines Are Median National Lines, and 2025 Raised All Three

1. The World Bank builds its global lines from the median of countries' own national poverty lines within each income group, so the international poverty line is the median of the low-income countries' lines.
2. The three lines in 2021 PPP
   1. The international poverty line is 3.00 dollars per person per day, the lower-middle-income line 4.20 dollars and the upper-middle-income line 8.30 dollars (World Bank, June 2025).
3. The 2017 PPP lines they replaced
   1. The previous set was 2.15, 3.65 and 6.85 dollars, which is the basis of every poverty figure published before mid-2025.
   2. For 2022 the switch moved the global headcount from 713 million to 838 million, and the rate from 9.0 percent to 10.5 percent (World Bank Global Poverty Monitoring Technical Note 44, June 2025).

The Count Now Stands at 847 Million, Against 43 Percent of the World in 1990

1. The World Bank's March 2026 vintage of the Poverty and Inequality Platform puts 847 million people below the 3.00 dollar line in 2024, which is 10.4 percent of world population, and nowcasts 10.0 percent for 2026.
2. The World Bank's World Development Indicators database, table 1.2.2, whose latest year is 2023 and which therefore sits a vintage behind that update, gives the global rate as 43.4 percent in 1990 and 10.6 percent in 2023 on the same 3.00 dollar basis.

Progress Redistributed Extreme Poverty Towards Africa Rather than Only Shrinking It

1. East Asia and the Pacific
   1. Using the World Bank's $3.00-a-day 2021 PPP line, the regional rate fell from 67.0 percent in 1990 to 2.2 percent in 2023, while its share of the world's extreme poor fell from 53.0 to 6.1 percent.
2. South Asia
   1. The rate fell from 49.7 percent to 4.7 percent, taking its share of the world's extreme poor from 21.9 percent to 9.1 percent.
3. Sub-Saharan Africa
   1. The rate fell from 61.5 percent to 45.6 percent, under 16 percentage points, while its share of the world's extreme poor rose from 13.9 percent to 67.2 percent.

The Three Regions That Started From Lower Rates

1. Latin America and the Caribbean
   1. The rate fell from 20.7 percent to 4.6 percent, with its share of the world's extreme poor easing from 4.0 percent to 3.6 percent.
2. The Middle East, North Africa, Afghanistan and Pakistan
   1. The rate fell from 34.2 percent to 13.9 percent, though its share of the world's extreme poor more than doubled from 5.7 percent to 12.9 percent.
3. Europe and Central Asia
   1. The rate fell from 4.0 percent to 0.7 percent, the lowest at both dates, with its share of the world's extreme poor moving from 1.5 percent to 0.7 percent.

Conflict and Instability Now Hold 421 Million of the World's Extreme Poor

1. The World Bank counted 421 million people living on less than 3.00 dollars a day in economies hit by conflict or instability in 2025 (World Bank press release, June 2025).
   1. The rate in those economies is close to 40 percent against about 6 percent across developing economies as a whole, with the release projecting 435 million by 2030, or nearly 60 percent of the world's extreme poor.
   2. Our World in Data names Madagascar, the Democratic Republic of the Congo, Mozambique, Malawi, Burundi and the Central African Republic among the countries where more than half the population lives in extreme poverty (Roser, November 2025).

The Pandemic Pushed Sub-Saharan Africa's Rate up Two Points, Recovered Only in 2025

1. The World Bank projected in October 2020 that the pandemic would raise global extreme poverty for the first time in over 20 years, pushing 88 million to 115 million people below the 1.90 dollar 2011 PPP line then in use.
2. The United Nations SDG Report 2026 records sub-Saharan Africa's extreme poverty rate rising by two percentage points during the pandemic and returning to pre-pandemic levels only in 2025, a date the World Bank's March 2026 update also gives.

Growth Reaches Poor Households Through Wages, Prices and Transfers

1. Employment and wages carry rising national income to poor households where growth happens in sectors that hire large numbers of low-skilled workers.
2. Farm-gate prices and yields carry it where growth raises agricultural productivity in the places poor households farm.
3. Taxes and transfers carry it where growth widens public revenue and governments spend part of that revenue on cash transfers, health or schooling.
4. Wu and colleagues found that a 1 percent rise in GDP per person was associated with a 2.5 percent fall in poverty on the $2.15-a-day 2017 PPP line across their sample.
   1. In sub-Saharan Africa the same one percent went with a fall of only about 1.0 percent, while that growth raised survey-measured household consumption by about half a percent there against about one percent globally.

Nigeria: Falling Inequality With No Fall in Poverty

1. The World Bank's October 2025 Poverty and Equity Brief puts Nigeria's extreme poverty rate at 41.8 percent in 2022/23 on the 3.00 dollar line, with 93.3 million people below it, and 64.0 percent below the 4.20 dollar line in 2022.
   1. The brief records inequality falling in a way that reduced no poverty, because every household became poorer while those at the top lost proportionally more.

China Supplies so Much of the Fall That the Global Total Conceals Everywhere Else

1. The World Bank's Four Decades of Poverty Reduction in China (2022) estimates that nearly 800 million people left extreme poverty over 40 years, close to three quarters of the global reduction on the former $1.90-a-day 2011 PPP line.
2. Our World in Data separates the two, reporting that outside China the extreme poverty rate on the 3.00 dollar line fell from 33 percent in 1990 to 12 percent in 2025.

India: Extreme Poverty Down From 27.1 to 5.3 Percent in Eleven Years

1. The World Bank's October 2025 Poverty and Equity Brief for India puts extreme poverty at 27.1 percent in 2011/12 and 5.3 percent in 2022/23 on the 3.00 dollar 2021 PPP line.
   1. The Bank's April 2025 brief reported the same decade as 16.2 percent to 2.3 percent on the older 2.15 dollar 2017 PPP line, which is where the widely quoted figure of 171 million people leaving extreme poverty comes from.
   2. At the 4.20 dollar line India's rate fell from 57.7 percent to 23.9 percent across the same years, which still left 342 million people below it in 2022.

Every Named Threshold Gives the Global Middle Class a Different Size

No threshold for this category is agreed, so each author's pick sets the size of the class as much as anything happening in the world does.

1. Kharas and Hamel, Brookings Institution, September 2018
   1. They put the middle class and the rich together at just over 50 percent of the world in 2018, some 3.8 billion people, with the middle class itself defined as households spending 11 to 110 dollars per person per day in 2011 PPP.
   2. They projected the middle class alone to reach 5.3 billion by 2030.

1. Kochhar, Pew Research Center, March 2021
   1. Middle income means 10.01 to 20.00 dollars a day in 2011 PPP, a band holding 1.32 billion people, or 17.1 percent of the world, in 2020.
2. The World Bank's income classifications
   1. These thresholds classify economies rather than people: lower-middle income means GNI per person of \$1,176 to \$4,635, while upper-middle income means \$4,636 to \$14,375 under the Atlas method for July 2026 to June 2027.

Two World Bank Studies Set the Threshold by the Risk of Falling Back

1. Ferreira and others, World Bank, 2013
   1. Economic Mobility and the Rise of the Latin American Middle Class sets the band at 10 to 50 dollars a day in 2005 PPP, choosing the lower bound as the point where the chance of falling into poverty within five years drops to 10 percent.
   2. On that measure Latin America's middle class grew from 103 million people in 2003 to 152 million in 2009, which was 30 percent of the region's population.
2. Aspiring Indonesia, World Bank, September 2019
   1. This report sets the middle class at 3.5 to 17 times the national poverty line, chosen so that members face under a 10 percent chance of being poor or vulnerable next year.
   2. That put about 52 million Indonesians, one in five, in the middle class in 2016, with a further 45 percent of the population in an aspiring middle class below them.

Africa's Middle Class Is Mostly a Floating Class Just Above the Poverty Line

1. The African Development Bank's 2011 market brief, The Middle of the Pyramid, sets the middle class at 2 to 20 dollars a day in 2005 PPP and splits it into three tiers.
   1. A floating class spends 2 to 4 dollars, a lower middle class 4 to 10 dollars and an upper middle class 10 to 20 dollars.
   2. On that band the middle class reached 34 percent of Africa's population by 2010, nearly 350 million people, up from about 126 million and 27 percent in 1980, on the brief's Key Messages, whose section 3.1 gives the slightly lower 326 million and 115 million.

Clearing the Extreme Line Leaves a Household Far Below Any Consuming Class

1. The 3.00 dollar international poverty line in 2021 PPP and the 12 dollar consumer-class threshold in 2017 PPP are roughly a factor of four apart, which is a gap no PPP restatement narrows even though the two vintages are not strictly comparable.
   1. Leaving extreme poverty and joining a consuming class therefore stay separate events.
   2. India shows the distance directly, because 5.3 percent of its people were below 3.00 dollars in 2022/23 while 23.9 percent were below 4.20 dollars, leaving 18.6 percent of the population stacked between the two lines and nowhere near 12 dollars.
   3. Even the World Bank's 8.30 dollar upper-middle-income line sits below the 10, 11 and 12 dollar thresholds Ferreira, Kharas and Fengler use.
2. Indonesia's vulnerable and aspiring bands and the African Development Bank's floating class were both invented to name households above the extreme line and below any secure middle class.

Asia Passed Half the World's Consumer Class in 2020 and South Asia Supplies the Next Wave

1. Fengler, Kharas and Caballero-Reina define the consumer class as anyone spending at least 12 dollars a day in 2017 PPP, and put Asia's share of it at 50 percent by 2020 (Brookings Institution, June 2022).
   1. Asia holds about two thirds of the world's people in the 12 to 40 dollar band, 40 percent of the 40 to 120 dollar band and 14 percent of those above 120 dollars, so its dominance is largest at the entry level.
   2. East Asia, and China in particular, supplied most of the entrants between 2000 and 2020, while the same authors expect South Asia to supply about 40 percent of new middle-class consumers to 2030.

Two Middle Classes That Shrank After 2019

1. Kochhar put the global middle-income tier at 1.34 billion people in 2019 and 1.32 billion in 2020, which is 54 million fewer than the pre-pandemic projection (Pew Research Center, March 2021).
2. Carnegie reported that Indonesia's middle class rose from 5 percent in 2003 to 21.5 percent in 2019, then fell to 17.1 percent by 2024, using national poverty-line multiples and Statistics Indonesia data.

Multidimensional Poverty Counts Deprivations, so It Ranks Countries Differently

1. The Global Multidimensional Poverty Index weights health, education and standard of living equally at one third each, with the two health and two education indicators at one sixth apiece and the six standard-of-living indicators at one eighteenth apiece.
   1. A person counts as multidimensionally poor at a deprivation score of one third or more.
2. OPHI and UNDP find 1.1 billion of the 6.3 billion people in 109 countries living in acute multidimensional poverty, which is 18.3 percent (Global Multidimensional Poverty Index 2025, October 2025).

India: 5.3 Percent or 16.4 Percent, Depending on the Measure

1. The UNDP and OPHI country profile for the 2025 Global MPI puts India's multidimensional poverty incidence at 16.4 percent, or 235,740 thousand people against a 2023 population, from a survey conducted in 2019/2021.
   1. The World Bank puts India's extreme income poverty at 5.3 percent in 2022/23 on the 3.00 dollar line.
   2. The two figures do not conflict, because a household can clear a consumption threshold while a child in it stays out of school or the home stays without clean cooking fuel.
   3. Treating the index as a corrected income poverty rate collapses two measures into one ranking they do not support.