Overcoming poverty in China

56760 Overcoming Poverty in China Nicholas Stern Senior VP and Chief Economist The World Bank1 Delivered at Beijing University June 14, 2001 1. Introduction It is a great pleasure for me to be able to speak to you today. Having spent six of the most fascinating months of my life teaching here in Beijing in 1988, I always enjoy returning to the vibrant environment of an elite Chinese university. In those months in China, I found that students combined technical skill, a thirst for learning, and an extraordinary capacity for hard work -- an irresistible combination for a teacher like me. My topic today is poverty: how to understand its dimensions and causes and how to eradicate it. Poverty in a world of plenty is the outstanding challenge of our time. What better place to come to discuss poverty and to learn about how to overcome it than China, which in recent years has established a record of growth and poverty reduction that is unparalleled both across nations and in the last few centuries of China s history? 2. The multiple dimensions of poverty Before engaging on the issue of how best to attack poverty, we must first form an understanding of what poverty is. Traditionally, economists and others have focused heavily on income poverty: those with household incomes below a certain cutoff level are regarded as poor. But income is just one dimension of poverty, albeit a very important one. Poverty is a multidimensional phenomenon, encompassing various types of deprivation that constrain the lives of poor people. 1The speech draws extensively on research carried out by my colleagues in the World Bank research department, Martin Ravallion and Shaohua Chen (together with their collaborators), and on research led by Alan Piazza of the Bank s East Asia region. I would also like to thank Deepak Bhattasali, Robert Crooks, David Dollar, Peter Lanjouw, Tamar Manuelyan Atinc, Halsey Rogers, and Juergen Voegele for their contributions and comments. At the World Bank, we often express this idea using the concepts set out in the World Development Report (WDR) 2000/1 on Attacking Poverty.2 That report drew heavily on developments in our empirical and theoretical understanding of poverty over the ten years since our previous poverty WDR, including interviews with tens of thousands of poor people around the world on their understanding of the fundamental elements of poverty. The WDR of 2000/1 defined poverty as consisting, broadly speaking, of three key features of the lives of people: