What the Latest Poverty Index Reveals About Global Inequalities?

Poverty and global inequalities go hand in hand, both having a direct impact on one another. While multitudinous and distributed factors drive poverty, inequalities arise due to differences in policies, response plans, and financial gaps. The differences have become so prominent amongst certain communities that significant changes or action strategies might be required to bridge the gaps and impart a sense of equality amongst all classes. However, per the latest multidimensional poverty index, 1.1 billion people have been categorized in the poverty zone, with poor finances, reduced access to financial help, or no occupation source. 

The index plays a significant role in shedding light on the existing inequalities across the world, be it in the financial policies implemented or access to monetary assistance from different sources. That’s why we have crafted a detailed guide explaining the relationship between the poverty index and the inequalities that can be determined using the data. 

Overview of the Latest Poverty Index

Launched as a part of the Oxford Poverty and Human Development Initiative in 2010, the latest multidimensional poverty index or MPI is one of the key metrics to quantify poverty in multiple dimensions across 100 developing countries. It focuses on three major domains, namely education, health, and the standard of living. Together, these three domains sum up to 10 indicators for measuring the poverty index of a regular household or person. If the score is below or equal to one-third of the index rating, the household or concerned person is said to suffer from acute poverty. 

Some of the major factors included in the poverty index are:

• Death of a child in the past five years
• Child not attending the school, at least not till the mandatory year
• Household is deprived of electric supply
• Household doesn’t have proper sanitation arrangement
• Household lacks an improved drinking water source

All the ten factors have the same weightage, which further sums up to provide the ultimate weightage to the three dimensions. In other words, both education and health domains have a weightage of 1/6 each while standard of living has a total weightage of 1/18 each. A deprivation score below 1/3 means that the person or household can be considered substantially poor. 

Analysis of Global Inequalities

It is no longer a hidden fact that poverty has led to significant global inequalities, which if not addressed at the earliest will create major gaps and imbalances in government laws, administration, sustainability, and growth and development of a community or a nation. That’s why UNDP focuses on the annual report drawn based on latest multidimensional poverty index, ensuring all the inequalities and gaps can be identified without fail. 

As per the latest poverty index report of 2024, the following are some of the findings which need to be handled at the earliest. 

1. Amongst the total population of 6.3 billion in 112 developing countries, 1.1 billion people are in the poverty zone. 
2. 48.2% of the 1.1 billion poor people are residents of Sub-Saharan Africa, which accounts for 553 million people. 
3. 35% of the population lives in southern parts of Asia, accounting for 402 million people as per the poverty index. 
4. Amongst the rest, 9.1% (104 million) live in the Pacific region and eastern Asia, 4.6% (53 million) live in the Arab region, 3% (34 million) are habitants of Latin America and the Caribbean, while the rest 0.2% (2 million) lives in Europe and Central Asia. 
5. Countries having a higher MPI are considered to have low Human Development Index (HDI), including Niger, Chad, the Central African Republic, Madagascar, Burkina Faso, the Democratic Republic of Congo, and Mali. 
6. According to the latest multidimensional poverty index, five countries that have the highest number of poor people in terms of headcount are India (234 million), Pakistan (93 million), Ethiopia (86 million), Nigeria (74 million), and the Democratic Republic of Congo (66 million). 
7. Also, the distribution of poor people in rural and urban settlements is quite far-fetched and uneven, with 28% of the rural population living in poverty while for the urban population, it is only 6.6%. 
8. One of the major global inequalities observed is that 584 million children are affected due to poverty, which is significantly higher than the 13.5% of adults accounted for being poor. 

Contributing Factors to Inequality

Several factors have been identified to lead to global inequalities around the world, like:

1. Several countries in the African and South Asian regions have been the victim of colonialization. During those times, the local communities were suppressed to an extent where the economy took the maximum hit, especially due to increased poverty and over-utilization of resources. Although colonialism doesn’t exist in today’s time, the impact has been so severe that disparity still thrives with dominance. 
2. Global trade policies are not the same for all countries. In fact, most policies and laws are made in favor of economically stable and developed countries, which puts developing and poor countries at a huge disadvantage. For instance, poorer nations are on the poverty index due to the imbalance in import-export trade relations on the global platform. 
3. The economic development in developing countries has been stunned due to huge financial debts on the global platform. Furthermore, the imbalance in taxation rules, poor trade relations, and other interim factors have led to a poor poverty index as per the latest reports. 
4. Poorer countries, especially in Latin America and Sub-Saharan Africa, do not have access to high-quality education. This automatically increases the deprivation rate in the education domain of MPI, causing significant global inequality.

Implications for Policy and Action

Since the latest multidimensional poverty index report has revealed the major gaps on the global platform, proper policies and strategic actions need to be implemented. From reforming the trade rules between different countries to practising higher living standards, there are several ways in which governments can take action for the social, cultural, and economic development of individuals. 

Conclusion

In this discussion, we have illustrated the major role of the poverty index in determining global imbalances and inequalities. Although disparities are hard to overcome overnight, proper policies and government laws can kickstart the bridging of financial and economic gaps between developed and developing countries. Apart from this, the government also needs to focus on the ten major factors used in MPI to determine the poverty rate and the affected population. 

FAQs

Which regions are most affected by poverty according to the latest index?

As per the latest poverty index, southern parts of Asia and Sub-Saharan Africa are the most affected by poverty. 

What steps are being taken to reduce global poverty and inequality?

Several steps have already been implemented to reduce global inequality and poverty, like reformation of trade rules, reduction in conflicts, resource accessibility in poorer countries, and accessibility to proper education.

How often is the Poverty Index updated?

The multidimensional poverty index is updated annually under the supervision of UNDP and OPHI. 

Who uses the Poverty Index data?

The poverty index data has proven to be of great use for UNDP and OPHI in determining the global inequalities, factors leading to increased financial gaps, and the implications for policy.