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Poverty

Why Didn’t the World Bank Make Reducing Inequality One of Its Goals?

Jaime Saavedra-Chanduvi's picture

The World Bank Group (WBG) has established that its mission, endorsed by the governors of its client countries, is centered around the goals of sustainably ending extreme poverty and promoting shared prosperity.  Extreme poverty is monitored by the percent of people living below the $1.25-a-day threshold.  The Bank’s mission thus gives a clear message:  Extreme poverty, hunger, destitution must come to an end.

To monitor progress in shared prosperity, the WBG will track the income growth of the bottom 40 percent of the population in each country.  The clear signal the WBG wants to give is that the institutional mission is about reducing poverty, fostering growth and increasing equity, so we need to monitor what happens to welfare of the less well off in every country.  Improving averages is not enough; a laser focus on those who are at the bottom of the distribution at all times, everywhere, is needed.

Growth Still Is Good for the Poor: New paper also looks at shared prosperity

LTD Editors's picture

Incomes in the poorest two quintiles on average increase at the same rate as overall average incomes, according to a new working paper by David Dollar (Brookings Institution), Tatjana Kleineberg and  Aart Kraay. In a global dataset spanning 118 countries over the past four decades, changes in the share of income of the poorest quintiles are generally small and uncorrelated with changes in average income. The variation in changes in quintile shares is also small relative to the variation in growth in average incomes, implying that the latter accounts for most of the variation in income growth in the poorest quintiles. These findings hold across most regions and time periods, as well as conditional on a variety of country-level factors that may matter for growth and inequality changes. This evidence confirms the central importance of economic growth for poverty reduction and illustrates the difficulty of identifying specific macroeconomic policies that are significantly associated with the relative growth rates of those in the poorest quintiles. This reprise of Dollar and Kraay's earlier work also looks at the World Bank's new "shared prosperity" goal by considering the income growth rates of the poorest 40% of the population in each country in addition to looking at the poorest 20%.

Understanding the Sources of Spatial Disparity and Convergence: Evidence from Bangladesh

Forhad Shilpi's picture

The economic liberalization during the last couple of decades led to impressive economic growth and poverty reduction in many developing countries. This period has also witnessed worsening of income inequality and widening of spatial disparity (World Development Report (2009); Kanbur and Venables (2005); Kim (2008)). There is considerable worry among policy makers about the extent to which this rise in spatial inequality is due to increasing disparity in opportunities in terms of provision of basic infrastructure and services. The recent growth and poverty reduction experience places Bangladesh as an exception to this trend of increasing spatial inequality.  Bangladesh made significant strides in poverty reduction between 2000 and 2010 with incidence of poverty falling from 48.9 percent to 31.5 percent. During the same period, the incidence of poverty declined more than proportionately in traditionally poorer regions, reducing welfare gaps across regions. There is also no evidence of significant change in overall inequality over the same period. What made spatial disparity in Bangladesh to decline while its economic growth accelerated substantially? What were the sources of decline in spatial disparity in welfare?

Collective action and community development: evidence from self-help groups in rural India

LTD Editors's picture

In response to the problems of high coordination costs among the poor, efforts are underway in many countries to organize the poor through "self-help groups" (SHGs) -- membership-based organizations that aim to promote social cohesion through a mixture of education, access to finance, and linkages to wider development programs.

Securing Africa’s Land Rights

Klaus Deininger's picture

In a new book released Monday, the World Bank's Africa Region convincingly argued for "Securing Africa's Land for Shared Prosperity" by recording land rights for both individuals and groups. That’s mainly because at a time when vastly-increased commodity demand has led to a series of widely publicized “land grabs” and urban expansion, the potential benefits from securing rights have greatly increased in several ways.

First, equity and efficiency. Poor and traditionally disadvantaged people, including women, have the least access to land rights, so securing their rights can provide them with access to a key productive resource. Also, if land rights are secured, land users will be more likely to invest in land improvement and modern technology to improve the efficiency of land use.

Five fundamental transformations to end poverty

Homi Kharas's picture

On May 30, 2013, the High Level Panel of eminent persons on the Post-2015 Development Agenda, a group that had been asked for advice by the United Nations (UN) Secretary-General Ban Ki-moon, issued its report, ‘A New Global Partnership: Eradicate Poverty and Transform Economies through Sustainable Development’.  Even though this is not the first report on the topic of what the sequel to the Millennium Development Goals (MDGs) should be (and it will certainly not be the last either), it is perhaps the first comprehensive report that links voices from around the world with some of the political realities facing the General Assembly as it looks to find a consensus agreement on the post-2015 agenda.
 
The Secretary-General established the High-Level Panel (HLP) in July 2012, right after the Rio+20 conference. It consisted of 27 persons and was co-chaired by the President of Liberia, Ms. Ellen Johnson Sirleaf, the President of Indonesia, Dr. Susilo Bambang Yudhoyono, and the Prime Minister of the UK, Mr. David Cameron, MP.  The HLP was tasked to provide bold yet practical thinking for the post-2015 development agenda.  Its report highlights the need for a single agenda that brings together social, economic and environmental issues, and for a universal agenda that is relevant to, and actionable by, all countries.

Ending Extreme Poverty In Our Generation

Kate Dooley's picture

It sounds impossible.  Unthinkable.  A world free from extreme poverty.  A world in which no child is born to die, no child goes to bed hungry, every child lives a life free from violence and abuse and has quality health care, nutrition and learns in school. This has long been Save the Children’s vision but could now be a shared global vision, and by 2030 perhaps, a reality.

On  May 30, 2013, a special panel of world leaders handed in their recommendations to the United Nations (UN) Secretary General on the future of global sustainable development and they, too, believe this can be our reality.

Ending Poverty and Boosting Shared Prosperity: Key Elements of a Development Agenda

Zia Qureshi's picture

At its Spring Meeting, the Development Committee endorsed the eradication of poverty and the promotion of shared prosperity as the twin goals of the World Bank Group mission. What development agenda is implied by these goals? What are the key elements of a development policy framework that should inform WBG strategy to achieve these goals?

Economic growth has been central to the progress achieved in reducing poverty and boosting the incomes of the bottom segments of the population. The change in poverty can be decomposed into the growth of average incomes and the change in inequality. Cross-country analysis shows that, in the medium- to long-term, upwards of 70 percent of the variation in poverty can be attributed to economic growth.  Similarly, the rise in the incomes of the bottom 40 percent of the population can be decomposed into the change in the income per capita of the country and the change in the share of total income that is received by the bottom 40 percent. A review of the data for changes in the income per capita of the bottom 40 percent over the past two decades reveals that, in most cases, overall economic growth played the predominant role.

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