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World Economic Review 4: 43-62, 2015 43 World Economic Review Incrementum ad Absurdum: Global Growth, Inequality and Poverty Eradication in a Carbon-Constrained World David Woodward 1 United Nations Conference on Trade and Development (UNCTAD) Abstract The paper seeks to assess the timeframe for eradication of poverty, defined by poverty lines of $1.25 and $5 per person per day at 2005 purchasing power parity, if pre-crisis (1993-2008) patterns of income growth were maintained indefinitely, taking account of the differential performance of China. On the basis of optimistic assumptions, and implicitly assuming an indefinite continuation of potentially important pro-poor shifts in development policies during the baseline period, it finds that eradication will take at least 100 years at $1.25-a-day, and 200 years at $5-a-day. While this could in principle be brought forward by accelerating global growth, global carbon constraints raise serious doubts about the viability of this course, particularly as global GDP would need to exceed $100,000 per capita at $1.25-a-day, and $1m per capita at $5-a-day. The clear implication is that poverty eradication, even at $1.25-a-day, and especially at a poverty line which better reflects the satisfaction of basic needs, can be reconciled with global carbon constraints only by a major increase in the share of the poorest in global economic growth, far beyond what can realistically be achieved by existing instruments of development policy – that is, by effective measures to reduce global inequality. Keywords: economic growth, inequality, carbon constraints, poverty, income distribution, poverty eradication The United Nations High-Level Panel on the Post-2015 Development Agenda (2013) has proposed as a central development goal for the post-2015 period the eradication by 2030 of extreme poverty, as defined by the poverty line of $1.25 per person per day at 2005 purchasing power parity. This follows a number of studies seeking to estimate the extent of poverty reduction over this period as a basis for discussions of post-2015 development goals (eg Karver et al., 2012; Chandy et al., 2013; Ravallion, 2013). The author has argued elsewhere (Woodward, 2013) that the shift from poverty reduction to poverty eradication is very welcome and entirely appropriate, but that the latter is qualitatively different from the former, and has major implications for our approach to development, particularly in relation to the relative importance of global economic growth and the global distribution of income. This article develops this theme by considering the likely timeframe for the eradication of poverty, based both on the $1.25-a-day line and a poverty line of $5-a-day, which is considered as a more realistic reflection of requirements to fulfil basic needs, on the basis of pre-crisis (pre-2008) trends. Adapting and improving the methodology developed in an earlier paper (Woodward and Simms, 2006, whose results are also updated), the article extrapolates pre-crisis (1993-2008) trends in global GDP growth and in income growth in the lower deciles of the world population. Since poverty reduction has hitherto been largely driven by China, whose greatly reduced incidence of poverty will considerably diminish its effect on poverty trends in the future, it bases its findings primarily on analysis of the world excluding China. Adopting this as a baseline scenario, the article considers the implications of variations in the two basic variables, the rate of global economic growth and the growth rate of per capita income of the poorest decile relative to global GDP per capita in the context of environmental (and particularly carbon) constraints to long-term growth of the global economy. 1 The author is Senior Adviser in the Division for Africa, Least Developed Countries and Special Programmes in the United Nations Conference on Trade and Development (UNCTAD). However, this article was written in its entirety, and submitted for publication in an individual capacity, prior to his beginning work with UNCTAD. The author is grateful for comments on previous drafts by Roberto de Vogli and Nazrul Islam. Any views expressed in the paper are entirely the author's own and do not reflect the position or policy of UNCTAD; and any shortcomings remain solely the author’s responsibility.