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Emerging Trends of Urban Poverty in Asia and the PRC Guanghua Wan Principal Economist, ADB Disclaimer: The views expressed in this document are those of the author, and do not necessarily reflect the views and policies of the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this document, and accept no responsibility for any consequence of their use. By making any designation or reference to a particular territory or geographical area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

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Page 1: Emerging Trends of Urban Poverty in Asia and the PRC

Emerging Trends of Urban Poverty in Asia and the PRC

Guanghua WanPrincipal Economist, ADB

Disclaimer: The views expressed in this document are those of the author, and do not necessarily reflect the views and policies of the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADB does not guarantee the accuracy of the data included in this document, and accept no responsibility for any consequence of their use. By making any designation or reference to a particular territory or geographical area, or by using the term “country” in this document, ADB does not intend to make any judgments as to the legal or other status of any territory or area.

Page 2: Emerging Trends of Urban Poverty in Asia and the PRC

Asia's Urban Poverty Trend (%)

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 20100

10

20

30

40

50

60

70PRC IndonesiaIndia Average

Hea

dcou

nt R

atio

(%)

Note: PRC= People’s Republic of China

Page 3: Emerging Trends of Urban Poverty in Asia and the PRC

Asia's Urban Poverty Trend (in million)

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 20100

50

100

150

200

250PRC IndiaIndonesia Total

No.

of P

oor (

mill

ion)

Note: PRC= People’s Republic of China

Page 4: Emerging Trends of Urban Poverty in Asia and the PRC

Asian Urban Poverty: Latest ($1.25 a day)

Country YearHCR (%)

No. of Poor(million)

Armenia 2010 5.08 0.10 Bangladesh 2010 20.97 8.18 Cambodia 2009 2.08 0.06 China, People’s Rep. of 2010 0.64 3.85 Georgia 2010 6.85 0.49 India 2010 28.97 106.64 Indonesia 2010 18.33 23.61 Nepal 2010 8.88 0.47 Pakistan 2011 7.51 3.25 Papua New Guinea 2009 8.77 0.06 Philippines 2009 6.18 2.67 Sri Lanka 2010 2.73 0.08 Thailand 2009 0.02 0.00 Viet Nam 2010 1.28 0.33 Total 11.61 149.79

The 14 DMCs account for 92% of developing Asia’s total population

Urban extreme poor in Asia is about 12.3% of World’s total poverty

11.6% of Asia’s urban population is extremely poor

Page 5: Emerging Trends of Urban Poverty in Asia and the PRC

Urban Poverty in Total Poverty ($1.25 a day)

Country YearUrban Poor/ Total Poor (%)

Armenia 2010 65.67 Bangladesh 2010 12.60 Cambodia 2009 3.79 China, People’s Rep. of 2010 2.47 Georgia 2010 40.82 India 2010 26.65 Indonesia 2010 54.50 Nepal 2010 5.93 Pakistan 2011 17.20 Papua New Guinea 2009 3.59 Philippines 2009 17.82 Sri Lanka 2010 8.79 Thailand 2009 2.80 Viet Nam 2010 5.00 Total 20.86

Page 6: Emerging Trends of Urban Poverty in Asia and the PRC

Urban Poverty in Total Poverty: Trend

1981 1984 1987 1990 1993 1996 1999 2002 2005 2008 20100

10

20

30

40

50

60

PRC IndiaIndonesia Average

Shar

e in

Tot

al P

oor (

%)

Note: PRC= People’s Republic of China

Page 7: Emerging Trends of Urban Poverty in Asia and the PRC

PRC Urban Poverty by Region (%)

19901992

19941996

19982000

20022004

20062008

20100

2

4

6

8

10

12

14

16

18

20

Central Eastern Western

Hea

dcou

nt R

atio

(%)

Page 8: Emerging Trends of Urban Poverty in Asia and the PRC

Growth vs. Distribution (Urban PRC)

-0.17

-0.14

-0.11

-0.08

-0.05

-0.02

0.01

0.04

0.07

0.1

Inequality Growth

Chan

ge in

HCR

(per

cent

age

poin

ts)

Page 9: Emerging Trends of Urban Poverty in Asia and the PRC

Growth Vs. DistributionCh

ange

in H

CR (p

erce

ntag

e po

ints

)

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2Central

-2

-1.5

-1

-0.5

0

0.5

1

1.5

2Eastern

-3-2.5

-2-1.5

-1-0.5

00.5

11.5

2 Western

Growth

Inequality

Page 10: Emerging Trends of Urban Poverty in Asia and the PRC

Inequality Really Matters25 30 35 40 45 50

-0.7

-0.6

-0.5

-0.4

-0.3

-0.2

-0.1

0.0

Central and West

East

South

Southeast

The PacificInitial Gini

Gro

wth

ela

stici

ty

No. of obs 124 R-squared 0.2574Adj R-squared 0.2513

Variable Coefficient Std. Error t stat P-valueGini 0.0218 0.0034 6.5 0.000Constant -1.2277 0.1247 -9.84 0.000

Page 11: Emerging Trends of Urban Poverty in Asia and the PRC

Inequality usually higher in urban than in rural areas; urbanization may/may not help

1990

2008

1993

2009/10

1990

2011

Chin

a, P

eopl

e's R

ep. o

fIn

dia

Indo

nesia

0 5 10 15 20 25 30 35 40 45

Rural Urban

Gini coefficient (%)

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

PRC

Thei

l ind

ex

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%-0.03

0.02

0.07

0.12

0.17

0.22

0.27

India

Total inequality Within Between

Share of urban population

Thei

l ind

ex

Page 12: Emerging Trends of Urban Poverty in Asia and the PRC

Inequality-Urbanization: PRC

Page 13: Emerging Trends of Urban Poverty in Asia and the PRC

Urban Poverty-Urbanization: Asia

10 30 50 70-5

5

15

25

Level of Urbanization (%)

Hea

dcou

nt R

atio

(%) Logarithmic

QuadraticLinear

Page 14: Emerging Trends of Urban Poverty in Asia and the PRC

10 20 30 40 50 60 70 80 90 100-3

2

7

12

17

22

27

32

37

Level of Urbanization (%)

Hea

dcou

nt R

atio

(%)

Urban Poverty-Urbanization: PRC

LogarithmicQuadraticLinear

Page 15: Emerging Trends of Urban Poverty in Asia and the PRC

0 10 20 30 40 50 60 70 80-55

152535455565758595

Level of Urbanization (%)

Hea

dcou

nt R

atio

(%)

Total Poverty-Urbanization: Asia

LogarithmicQuadraticLinear

Page 16: Emerging Trends of Urban Poverty in Asia and the PRC

Tentative Conclusion

• Urban poverty has become a serious issue in Asia

• Inequality is as important as growth for poverty reduction

• Urbanization may lead to higher inequality, offsetting its growth impact on poverty

• But overall, urbanization is good for poverty reduction in Asia

Page 17: Emerging Trends of Urban Poverty in Asia and the PRC

Policy Implications for PRC

• Fast urbanization is win-win: growth + distribution

• The key is to control within-urban inequality