Can we end extreme poverty in a world with extreme inequality? That question inspired a spirited debate in English and Spanish on Oct. 7, just ahead of the World Bank Group-IMF Annual Meetings in Lima, Peru, addressing corruption, taxation, discrimination against women, and the need to even the playing field for the younger generation.
Latin America’s experience with inequality was front and center at the live-streamed event, Inequality, Opportunity, and Prosperity, featuring World Bank Group President Jim Yong Kim, Ibero-American Secretary General Rebeca Grynspan, Oxfam International Chair Juan Alberto Fuentes Knight, and moderated by CNN Español news anchor Patricia Janiot.
Achieving shared prosperity, one of the World Bank’s twin-goals, isn’t just a middle-income country’s preoccupation. It has a special resonance in Tanzania, a US$1,000 per capita economy in East Africa.
Tanzania has seen remarkable economic growth and strong resilience to external shocks over the last decade. GDP grew at an annualized rate of approximately 7 percent. Yet, this achievement was overshadowed by the slow response of poverty to the growing economy. The poverty rate has remained stagnant at around 34 percent until 2007 and started a slow decline of about one percentage point per year, attaining 28.2 percent in 2012. To date, around 12 million Tanzanians continue to live in poverty, unable to meet their basic consumption needs, and more than 70 percent of the population still lives on less than US$2 per day. Promoting the participation of the poor in the growth process and improving their living standards remains a daunting challenge.
We started with a standard warm-up question as Gangi Devi, our first respondent, sat in anticipation. “Tell me a little bit about your society. What is distinctive about the Himachali way of life?” A smile lined up a face creased otherwise with wrinkles. “We are a peaceful society,” she said after thinking a little. “People here are good to one another, we stand by each other.” A person sitting next to her added for good measure, “We Himachalis are very innocent people.”
For those working in the development space in India, the state of Himachal Pradesh, a small state ensconced in the Himalayas with a population of 7 million, is an outlier for many reasons, not least of which is Gangi Devi’s near puritan response.
Gangi Devi lives near a tourist centre close to Shimla, the state capital, which has seen increasing tourist footfall in recent years. Even as her community is debating the costs and benefits of increased activity around their village, Gangi Devi and her neighbours trust that the state government would keep people’s interests in mind and address adverse impacts, if any, of increased tourism on the environment.
Their belief in the government is supported by real actions. Himachal Pradesh is the first state in India to ban the use of plastic bags. Smoking in public spaces in the city of Shimla is punishable by law.
Governance in Himachal Pradesh looks doubly impressive when considered against an enviable development record.
If you could make one New Year’s wish for your country, what would it be?
For many Malaysians, Prime Minister Najib Razak’s wish for “a safer, more prosperous, and more equal society” likely resonated with their hopes for 2015.
Malaysians appear to be increasingly concerned about income inequality. According to a 2014 Pew Global survey, 77% of Malaysians think that the gap between the rich and poor is a big problem. The government has acknowledged that inequality remains high, and that tackling these disparities will be Malaysia’s “biggest challenge” in becoming a high-income nation.
How can Malaysia narrow the gap between the rich and poor? Global experience suggests two possible levers to achieve a more equitable income distribution.
In 1954, the World Bank’s first mission report on Malaya – as the soon-to-be-independent country was called then – expressed concern about its development prospects. The mission was “favorably impressed with Malaya’s economic potentialities and prospects for expansion.” But it questioned whether the “rates of economic progress and additions to employment opportunities can move ahead of or even keep up with the pace at which the population and the labor force are growing.”
Sixty years and 25 million more Malaysians later, hindsight proved such worries overdone as income per capita climbed from USD 250 at the time of the report to over USD$10,000 today.
With its successful economic and social development, Malaysia is now actively moving into a new role as a global development partner—supporting other countries in ending poverty and sharing lessons from its journey to become a regional economic powerhouse. This new role is a natural fit for a nation in transition toward a high-income status, and a big gain for the rest of us.
While the world has seen a rapid reduction in extreme poverty in recent decades, the goal of ‘ending poverty’ by 2030 remains ambitious. The latest estimates show that 1 billion people (14.5% of the world’s population) lived below the $1.25 threshold in 2011. Projections until 2030 suggest that even under optimistic growth scenarios, the global poverty target may not be reached. The latest World Bank estimates show that if developing countries were to grow at the (rather unprecedentedly high) rates they achieved during the 2000’s the global poverty headcount could decline from 14.5% in 2011 to 4.9% in 2030 – short of ‘ending poverty’. These projections assume distribution-neutral growth – that every individual’s income within each country grows at the same rate, essentially keeping inequality unchanged. As in the past, overall growth will be an important driver of future poverty reduction, but the inclusiveness of growth will also matter.
When I got that quote by the French philosopher tattooed on my arm, I wasn’t thinking about world poverty. I wasn’t thinking about the environment or peace or conflict or starvation or social justice. In fact, aside from puzzling over which recycling bin my coffee cup goes in, I didn’t think about much outside of my own world. Like so many others, I have plenty of my own problems to worry about, let alone ending world poverty. It’s easy to get caught up in our own lives. That daily crush of details — getting to work on time or paying the bills — can swallow up years. But if everyone only focused on what’s happening in their own world, then nothing would ever get better.