China has devoted huge resources to eliminating extreme poverty. The government provided free elementary education for all children and financed major construction projects to bring electricity and clean water to rural areas. People have moved from the countryside to cities, where they work in factories and send money home.
The result of all this investment has been striking. Alan Piazza was an economist for the World Bank in the 1990s, and he remembers the “almost impossible poverty” he found when visiting isolated villages in the Ningxia region of north central China.
People lived in cave dwellings dug into desert sand. They had no electricity, no clean water, and the land had been badly eroded by grazing goats and sheep, turning the already arid terrain into a moonscape. To Piazza, improving conditions there seemed unimaginable.
But when he returned to the area in 2016, he was overwhelmed by the transformation. Families were living in brick homes with electricity and had access to clean water. Nearly every child attended school. Shrubs and grasses blanketed the hillsides, having returned after the government paid farmers to prevent their animals from grazing.
The result of all this investment—which is possible because China’s economy has grown almost 10 percent a year for 40 years—is that just 0.3 percent of China’s rural population now live on less than $1.90 a day, according to the most recent World Bank figures.
“It’s a great achievement,” says Ning Zhu, an economist at the Shanghai Advanced Institute of Finance.
The other example of this trend is India, the world’s second-most-populous country, after China. Ejaz Ghani, an economist at the World Bank, says the secret to India’s success in reducing extreme poverty has been steady economic growth over the past few decades—more than 6 percent a year since 2010. Millions of people have moved from tiny rural villages to seek better opportunities in cities, and that’s enabled 271 million Indians to climb out of extreme poverty in the past decade, according to a 2019 United Nations report.
“Poverty reduction takes place through job creation,” Ghani says. “Entrepreneurship matters. The higher the number of new enterprises that are being created, the more jobs you have, and that reduces poverty.”
You can see the tangible effects of that growth, says Akhil Bery, an expert at the Asia Society Policy Institute, in Washington, D.C. When he visits family in New Delhi, he notices the new middle-class neighborhoods springing up around the massive capital city. Mobile phones are everywhere, and they’re cheap enough that most Indians can afford them.