The New Nation - Internet Edition

THE Asian Development Bank has offered new ways to measure poverty in Asia and the Pacific and fixed US $ 1.35 a day as a new poverty line for the region. The ADB provided a 'comparable rates of poverty' using price data specific to the Asia and Pacific region, and critically to the poor. This is a landmark study for two reasons - for the first time though sensitivity analysis of the internationally comparable poverty estimates has been carried out and second, a poverty line that is relevant specially to the Asia and Pacific region has been adopted.

A person who earns less than US $ 1.35 a day is considered poor. Referring to ADB's chief economist Dr. Ifjal Ali, it was stated that while the US$ 1 - a day poverty line remains an appropriate benchmark for counting the extent of extreme poverty in Asia, and the developing world more generally, in a region that has witnessed rapid economic growth it might also be time to evaluate poverty incidence using a benchmark that reflects the region's dynamism. A major contribution of the report is to examine the sensitivity of poverty estimates to different methods for evaluating 'purchasing power parities' (PPPs).

The World Bank's US$ 1 a - day poverty estimates are based on PPPs developed for comparing household consumption across countries known as consumption PPPs. From the perspective of poverty comparisons, however, it was considered more appropriate to use a set of PPPs that are based on comparisons of prices of goods and services that the poor purchase. The ADP report, using original data collected specifically for its study, examines where the poor shop, what they buy, in what quantity as well as the quality of the products they purchase. The prices paid for the products purchased by the poor are used to generate a new set of PPPs, called 'poverty PPPs'.