Achieving successful country outcomes is critical to poverty reduction

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Recently, I had the opportunity to visit Bangladesh and take part in the launch of the Bangladesh Poverty Assessment report. From the hustle and bustle of Dhaka to the economic boom happening in the port city of Chittagong, I witnessed firsthand the remarkable progress that Bangladesh has made in the fight to end extreme poverty.

The statistics back up my perception of this tremendous transformation — since 2000, about 25 million Bangladeshis have exited poverty, 8 million of them in the last decade.  Between 2010 and 2016 poverty fell by 8 percentage points to about 18% of the population.

However, as Bangladesh embarks on an ambitious development trajectory, there are still stark reminders that the poverty fight isn’t over. There are nearly 40 million people living in poverty, half of whom are in extreme poverty. Poverty is increasingly concentrated in certain areas. Half of the extreme poor live in Rangpur and Dhaka. That means the policy solutions for the urban poor will not be the same as for the rural poor.

The country is becoming a more sophisticated economy with a rapidly expanding urban population, so the game is changing. Be it the reductions in fertility or the expansion of microfinance in rural areas, Bangladesh has demonstrated success by developing specific policies that cater to the needs of its population.

The experience of Bangladesh is a microcosm of the larger trend in global extreme poverty.   Several countries at various levels of development have shown in the last few decades that it is possible to successfully reduce extreme poverty. However, with the pace of reduction slowing in recent years, poverty is becoming increasingly concentrated in the tough-to-reach places.

This comes amid a cloud of uncertainty that the world is facing. From high inequality to sluggish growth, from macroeconomic imbalances to trade tensions, challenges loom on the horizon that can not only make it difficult to reduce extreme poverty but threaten to reverse the gains.

While we know a broad set of policies that can work to effectively reduce poverty, each policy intervention should be tailored to the needs and demands of a particular country. That’s why, similar to what I witnessed in Bangladesh, solutions need to come from a country-driven effort that combines evidence, experimentation, and learning.

This theme of country-led outcomes continued after I came back from my visit to Bangladesh. I had a chance to listen to government leaders from Niger, Jordan, and Kenya discuss country-specific interventions to spur inclusive growth at a panel event during the 2019 Annual Meetings of the World Bank Group and International Monetary Fund. World Bank Group President David Malpass also joined the panel, which was facilitated by World Bank Group Vice President Ceyla Pazarbasioglu.

One fundamental principle that the panelists agreed on was the importance of addressing unemployment and the need to ramp up social protection. Given how labor income and jobs are critical for poverty reduction, it was interesting to see them talk about the reforms needed to bring about solutions.

For instance, Kenya and Jordan are among the top 20 reformers in the latest Doing Business report. Kenya made regulatory changes concerning dealing with construction permits, getting electricity, getting credit, protecting minority investors, paying taxes, and resolving insolvency. Jordan improved in the areas of getting credit, paying taxes, and resolving insolvency. With the private sector generating a bulk of the jobs, these countries understand the importance of implementing reforms to stimulating the business climate.

In Niger’s case, even though poverty is still high, the country has shown the importance of building the health and education levels of the poor.   From 2014 to 2018, the country has helped provide health and nutritional services to over 3.8 million women and children and its 3N initiative has been successful in tackling rural poverty and hunger.

Niger and Jordan, two countries that are facing the spillover effects of conflict, underscored the importance of resilience to shocks. Bangladesh can also attest to the value of resilience, given its experience in dealing with natural disasters and the effects of climate change.

I was heartened by my visit to Bangladesh as well as the experiences that countries shared at the event here in Washington and know that when good policies are effectively implemented based on evidence, we can achieve good outcomes.  

Authors

Carolina Sánchez-Páramo

World Bank Group Global Director, Poverty

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