Putting Paid to Extreme Poverty

ByJoe Kelly

February 10, 2020

Joe Kelly

There are sufficient resources in the world that the stubborn problem of poverty is unnecessary. However, stable government and a desire to address the issues, as well as the need for adding meaning and dignity to the lives of the poorest – not just giving cash – are key to success. These are the views of Abhijit Banerjee, a professor of economics at Massachusetts Institute of Technology (MIT) who spoke at an event at Huawei’s global headquarters in January 2020.

Myself, Professor Banerjee & Huang Weiwei leading the discussion on extreme poverty

We should take Prof Banerjee’s views seriously. Not only has he dedicated years of his life to studying the topic but – as the most recent of only 51 recipients of the Nobel Prize for Economics in the program’s 125 year history – adds credibility to his years of research. Prof Banerjee shares his Nobel Prize with his wife, Prof Esther Duflo of MIT, and Prof Michael Kremer of Harvard University.

Huawei is not in the business of addressing poverty. However, the company believes the value of its technology development is the access to knowledge, information and opportunities in areas such as education and healthcare it delivers. The digital world helps address societal issues. It is this company belief, rather than the absolute pursuit of maximizing profits, that sees Huawei provide smartphones for as little as US$79 when the cost of a device could be the barrier that keeps the poor offline.

Digital Inclusion with TECH4ALL

The four areas of focus of Huawei’s digital inclusion initiative TECH4ALL

To help define the scale of the challenge of extreme poverty, the world’s richest 2,135 people controlled more money than the poorest 4.6 billion people combined in 2019, according to a recent report issued by Oxfam, a global charity established to tackle the problem of poverty. “The concentration of wealth today is so extreme that the world’s wealthiest could spend US$10,000 each day and their net wealth would still continue to rise,” says Banerjee.

“Extreme poverty is defined as living on less than the local purchasing power of US$1.90 per day, adjusted for each market,” Banerjee says, adding: “If we could find a way to transfer 40 cents per day from the world’s most advanced countries to the people in Liberia, in west Africa, for example, we could really change lives.”

Over the last 30 years, the number of people living in extreme poverty has halved, a significant achievement given that the world’s population has risen by over 30% over the same period. Reduction in extreme poverty has also delivered associated improvements in, for example, child mortality rates and malaria-related deaths. Prof Banerjee remains restless to see further improvements in eradicating extreme poverty.

People walking by an open sewer in Africa (Source: Shutterstock)

Governments Must Act

 “Government’s are critical,” Banerjee believes. “If the market could solve poverty on its own, we wouldn’t need governments, but we know that there is no obvious market price for eliminating social issues, though clearly there is also a role for the market.”

Banerjee is clear that we cannot consider extreme poverty as just an ‘emerging economy’ problem. “Data from the US shows mortality rates among white men and women in the US has risen over the last four years, the first time we have seen such a trend since 1919 when an influenza pandemic swept the US. Even the second world war saw no such rise. Today we have suicides, opioids, and alcohol as the core causes. We need to consider restructuring our advanced economies to create more meaningful jobs for people when new technologies like AI and competition from abroad threaten taking jobs away.”

The Critical Role of ICT

Banerjee remains optimistic for the contribution of advanced technologies: “I think when we consider the role that information and communication technology has played in addressing poverty, we often underestimate the impact of simply providing entertainment to people. We can be too prudish and we want to say only good things that make you healthier or educated but I think entertainment – like young boys in small town and villages in India watching football – is very important. This contribution by your industry has changed the world in very substantial ways.”

Prof Banerjee also points to other technical advances like digital payment structures. “When your child falls sick and you need money to bring them to the hospital, a cousin can send you money from somewhere in seconds. That’s extremely useful, as is the ability to simply communicate with family. One of the issues why some people don’t migrate from rural areas is because they worry about staying in touch while being able to send money back and forth.”

  Banerjee also calls out the advent of digital reporting structures for complaints against government officials: “That’s another very good innovation. If the street in front of your house has a pothole in it, you can report it. And there’s evidence that those things work.”

Professor Banerjee’s latest book is titled Good Economics for Hard Times.

Click the link to read more about Huawei’s digital inclusion initiative TECH4ALL, which aims to ensure everyone, everywhere benefits from technology.


Disclaimer: Any views and/or opinions expressed in this post by individual authors or contributors are their personal views and/or opinions and do not necessarily reflect the views and/or opinions of Huawei Technologies.

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