Amidst all the noise of the 24-hour news cycle and current events competing for our attention there lurks a danger that we lose sight of our mission: the fundamental issues in development that we are committed to solve remain urgent and obviously relevant. Now more than ever, the World Bank and DEC (home to the Bank’s research unit) in particular should focus on core research questions whose answers can help end poverty and improve countless lives. These questions rise above the ebb and flow of the political tide and are deeply important to the millions of people that we strive to raise up.
Figure 1: Poverty and inequality in rural China
Public knowledge about India's ambitious Employment Guarantee Scheme is low in one of India's poorest states, Bihar, where participation is also unusually low. Is the solution simply to tell people their rights? Or does their lack of knowledge reflect deeper problems of poor people's agency and an unresponsive supply side?
Food price spikes, price insulation, and poverty
This paper looks into the impact of changes in restrictions on staple foods trade during the 2008 food price crisis on global food prices and also analyzes the impact of such insulating behavior on poverty in various developing countries and globally.
The recently launched report by the High Level Panel on the post-2015 Development Agenda puts forward that the post-2015 agenda needs to be driven by five big, transformative shifts. The first one it highlights is that the new agenda should leave no one behind. It states that:
“We should ensure that no person – regardless of ethnicity, gender, geography, disability, race or other status – is denied universal human rights and basic economic opportunities. We should design goals that focus on reaching excluded groups.”
Clearly, the world will have to pay particular attention to slum-dwellers, who are left behind in many areas of development and in the current Millennium Development Goals (MDGs).
Donor countries are routinely confronted with the problem of how to allocate the aid budget. The debate on aid allocation has called for various types of indicators including institutional capacities and governance but in the practice of aid allocation a multitude of factors, such as strategic geopolitical interests, budget constraints and internal political considerations, still play an important role in most countries. However, if we focus on welfare indicators and on current practices of aid allocation, there are two monetary indicators that have gained prominence over the last few decades: GDP per capita and the poverty rate. GDP per capita is a natural choice of an indicator that is well understood and widely available. The poverty rate is a more recent choice explained by the new status that poverty acquired as a development objective. For a combination of events such as the fall of the Berlin wall in 1989, the publication of the World Development Report on poverty in 1990 and the establishment of the Millennium Development Goals in 2000, multilateral organizations have increasingly adopted poverty reduction as the overarching development goal. This new focus on poverty and the increased availability of expenditure surveys worldwide have also enabled the use of poverty measures to rank countries and allocate aid.
Poverty is indisputably central to the World Bank as we sharpen our mission, but inequality matters too, and we underplay or ignore it at our peril. When this message comes from eminent economist and Nobel laureate Joe Stiglitz, Bank staff and the general public tend to sit up and take notice.