This is the first blog in a series about how countries can make progress on the interlinked objectives of poverty, shared prosperity and the livable planet. For more information on the topic, read the 2024 Poverty, Prosperity, Planet Report.
In his speech at the 1973 Annual Meetings, World Bank President Robert McNamara coined the term “absolute poverty,” describing it as “a condition of life so degrading as to insult human dignity and yet a condition of life so common as to be the lot of some 40% of the peoples of the developing countries.” He then posed a difficult question: “And are not we who tolerate such poverty, when it is within our power to reduce the number afflicted by it, failing to fulfill the fundamental obligations accepted by civilized [people] since the beginning of time?” This defining speech solidified the Bank’s new goals at that moment: to accelerate economic growth and to reduce poverty.
Since then, we cannot fail to recognize the immense progress the world has made on reducing extreme poverty. From 1990 to 2024, extreme poverty fell from about 40% to 8.5% of the world population.
Fifty years on, the World Bank remains committed to this mission but acknowledges the new context: it aims at ending poverty and fostering shared prosperity on a livable planet. The expanded mission emphasizes an inherent challenge of moving the bottom half of the world out of poverty by delivering faster and inclusive, job-rich, economic growth but that this cannot come at additional costs for the planet.
As we observe End of Poverty Day, we are facing a lost decade in the fight against global poverty
The just released 2024 Poverty, Prosperity, and Planet global monitoring report warns that the world is far from meeting the goal of reducing extreme poverty to less than 3% by 2030 if policies do not improve. At the current pace, it could take decades to achieve this objective. Nearly half the global population lives on less than $6.85 a day and, without faster progress, it could take over a century to lift people above this threshold. Climate risks also threaten future progress, with 1 in 5 people globally at high risk of facing severe weather shocks they may struggle to recover from. Slow growth prospects and high debt servicing severely constrain the ability of many countries to act. Low-income countries are spending about 2 percent of GDP on interest payments to service debt, which is, for example, more than half of what they spend on education.
While the task ahead may seem daunting, solutions and policies exist to change the current path
It's crucial to stay focused on proven policies that boost household incomes and help families cope with worsening climate impacts.
Well-functioning labor markets, enabling conditions for investment and job creation, and investing in human capital –health and education-- are fundamental to increasing incomes along the income distribution, but it also allows households to better face shocks. Additionally, improving infrastructure increases access to markets and productivity but also supports resilience.
Developing insurance markets and increasing the demand for insurance is also central. Despite its importance for risk management, access to insurance remains insufficient, leaving billions unprotected. In 2023, the estimated global economic losses due to natural disasters was $380 billion, only about one-third of which were covered by insurance.
Well targeted social safety nets are also important as insurance of last resort. The use of adaptive social protection can help vulnerable people to manage risks from climate-related hazards by timely transferring resources to disaster victims. Anticipatory cash transfers before the traditional humanitarian response would normally arrive, can have a significant additional welfare impact. Yet, in Sub-Saharan Africa, 7 in 10 of the people exposed to severe weather events are neither covered nor contributing to social protection.
Many ongoing innovations can ease the trade-off between boosting incomes and cutting emissions—right at the heart of the challenge.
The cost of renewable energy has reduced such that it is now largely cheaper than fossil fuels. Solutions to tackle air pollution are a clear win-win, as air pollution costs the world 6.1% of GDP in terms of its health impact, affecting more those at the bottom of the income distribution. Improved land management helps with biodiversity. Climate-smart agriculture improves yields and food security.
At this critical juncture, there is a need to prioritize actions depending on where the poor and vulnerable live and where emissions are mostly generated
The Poverty, Prosperity and Planet report emphasizes that low-income and fragile countries must prioritize poverty reduction by investing in human, physical, and financial capital. Middle-income countries must accelerate growth with managing emissions by scaling up synergistic policies. High-income countries need to accelerate their transition to low-carbon economies now, managing the costs while protecting vulnerable populations from future climate risks.
Setting priorities right: Doing what matters where it matters the most
Advancing on these goals requires a solid foundation of evidence
Policymakers need a comprehensive understanding of both trade-offs and synergies across objectives. More and better data are fundamental to designing solutions that address complex policy challenges while ensuring the well-being of vulnerable populations is monitored and safeguarded. While data availability has improved in many countries, less than half of the world’s nations had a household survey available for poverty monitoring in 2020 or later. This underscores challenges in coverage and accessibility. The IDA 2021 initiative aims to accelerate efforts to close these data gaps but more is necessary. It is also essential to scale up more timely monitoring to provide information when it is actually needed.
Urgent and coordinated global action is essential to meet these interlinked goals.
The current constrained environment calls for fundamental changes in how countries approach their national development strategies and their contribution to global public goods. The potential policy pathways in each context often differ drastically depending on a country’s historical development trajectory, access to technology and financing, and national priorities. However, countries must also consider their global responsibilities and that international actors have a critical coordination role to play. Ending poverty and boosting shared prosperity on a livable planet is possible under a new, committed global strategy.
The authors gratefully acknowledge financial support from the UK Government through the Data and Evidence for Tackling Extreme Poverty (DEEP) Research Program.
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