Blog post

Shouldn’t we just focus on economic growth to lift people out of poverty?

3 min read
4 May 2021

This article is part of a series addressing common concerns about charitable giving.

Shouldn’t we just focus on economic growth to lift people out of poverty?

Critics of philanthropic efforts to reduce poverty sometimes argue that economic growth is the only sure path to ending extreme poverty. However, without effective philanthropic efforts to reduce poverty and eradicate disease, economic growth is neither fast enough nor adequate to avert the millions of preventable deaths that happen every year.

Some critics of charity argue that the solution to poverty is economic growth. They believe that, instead of working to address poverty through charity, we should focus on growing the economy. It is true that economic growth, particularly in China, has substantially contributed to reducing poverty in recent years. However, China may be an outlier. Even under very optimistic growth projections, it would take decades to eventually lift everyone on earth out of extreme poverty through economic development. In the meantime, billions of people will needlessly continue to suffer and millions will die each year.

A key reason why it would take a long time to eradicate poverty through economic growth is that, put simply, most of the world is very poor. As Our World in Data's Max Roser writes, "The huge majority of the world lives in countries where the majority is poor." More precisely, "77% of the world population live in countries in which more than 90% live on less than $30 per day." If we want to reduce global poverty to the level of poverty in a wealthy country like Denmark, Roser argues, we will have to increase the global economy by about five times. Moreover, even if economic growth is an effective way to reduce poverty, we currently lack evidence-based interventions to achieve it. For now, it may be best to support research in this area.

Luckily, we don't have to choose between economic growth and humanitarian aid. We can support policies to encourage economic growth in low-income countries and concurrently support communities through aid and philanthropy.

Moreover, many highly effective charities conduct work that has significant economic benefits in addition to their humanitarian impact. For example, the Against Malaria Foundation distributes highly effective long-lasting insecticidal nets (LLINs) to prevent malaria in countries around the world. There's some evidence that such interventions can have economic benefits for the countries in which they're employed by reducing the incidence of malaria, tuberculosis, and other preventable diseases. Empowering people in these countries by improving their health increases their ability to contribute to their local economies.

You can support economic empowerment throughout the world by donating to the Centre for Effective Altruism's Global Health and Development Fund, or by supporting any number of other highly effective charities.

By giving to effective charities, we can make a positive impact in low- and middle-income countries. Make a giving pledge and join our worldwide community of like-minded people who are working to make the world a better place.

This post is part of our Common Concerns About Donating to Charity page. Multiple authors contributed.