Why Investing in Poor Countries Helps All of Us


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Many people have the misconception that my field -- global development -- is just about do-gooders and charities helping the poor. To be sure, many charitable groups are doing generous, laudable work. But global development extends far beyond charity and has a greater impact on the global economy than most people think.

Strong economic growth in developing countries became an engine for the global economy after the 2008-09 financial crisis, accounting for roughly 50 percent of all global growth. In addition, fully half of the United States’ exports now go to emerging markets and developing economies.

Global economic development can be good for your bottom line. Our focus is on helping more than a billion poor people lift themselves out of extreme poverty and on boosting the incomes of the poorest 40 percent in developing countries. To do that, we need to find economic growth strategies that help all segments of society in emerging markets -- reaching even fragile states striving to put years of conflict behind them and to create good jobs for their people.

The question I ask my team all the time is, what’s our plan? Increasingly scarce public funding isn’t enough to get the job done. We need to attract private sector investment that creates jobs. Ninety percent of all jobs in the developing world are created by the private sector. If we have high aspirations for the poor and vulnerable, there is no argument: We need the private sector to flourish, even in the poorest countries.

At the World Bank Group, we’re focused on three main paths toward strengthening economies in developing countries:

First, we need growth that is inclusiveWe now have good evidence that the best strategy for countries is to foster the kind of economic development that will include everyone. A good strategy both economically and politically is ensuring that a growing economy benefits the poorest 40 percent of the population.

Conversely, when nations exclude people because of their gender, ethnicity, age, religion, sexual orientation, or other reasons, then their economy suffers, and the frustrations of those excluded can spill into the streets. Growth without inclusion is unsustainable, and threatens the prosperity and security of all countries.

Second, countries need to invest in their people. Investing in educationhealth, andsocial protection not only pays off for individuals whose lives are improved, we now have evidence that it contributes directly to economic growth and greater stability for their countries.

For most poor people, a good job is the key to escaping poverty. To get those jobs, they’ll need good skills, a quality education, and years of good health as they’re growing up and when they’re adults.

A commission led by Nobel laureate Michael Spence found that countries with the best growth performance invested 7 to 8 percent of their GDP in education, job training, and health. Furthermore, if low-income countries could achieve equal numbers of men and women in entrepreneurship and the labor force, it would boost GDP per capita by 15 percent.

And third, we must never lose sight of the deepening threat of climate change. Climate change could erase decades of progress in poverty reduction. The poor are the first and the most severely hurt by its effects -- but all nations’ economies suffer as well. If we don’t confront climate change, we won’t end extreme poverty, and we’ll leave an awful legacy for our own children and grandchildren in the process.

We have an historic opportunity. We can end extreme poverty in our lifetimes if we promote economic growth that includes everyone, invest in people, and protect opportunities for future generations by fighting climate change. At the same time, by creating conditions for strong and sustainable growth, developing countries’ economies will continue to help fuel the global economy. This isn’t a zero-sum game. Working together, we can build a more prosperous, sustainable and just world.

This post first appeared in LinkedIn Influencers

Join the Conversation

April 05, 2014

Africa needs infrastructure, good governance
+rule of law, direct investment, clear land tenure system and environment
for entrepreneurship

Zar Khan SAREN
March 29, 2014


hog rider
May 23, 2019

Yeah nice information

March 30, 2014

Good points Mr. Yim! There cannot be real global progress when others are left behind struggling..Help your brother up!

March 30, 2014

When we will see the currency reset happen? Its millions of people waiting for this to happen so we be ot of the hole this Global economi pt us in.

Patricia Ravasio
March 31, 2014

Thank you for your work on climate change. I'm concerned though that you so seldom actually mention the fossil fuel industry. This rogue cabal of profit mongrels is taking down the planet while we look the other way, scurrying about to mitigate their damage. Who is going to take them on, if not you? How of we of this? This part of the conversation must be held!

April 02, 2014

Mr Kim:
Thank you for your writing. I must say we need an specific suggestion for this:
A good strategy both economically and politically to include all in development, in what kind of development? What idea or concept of development? Eagerness to earn more (to accumulate) has led companies to keep salaries low and governments to steal...They don't search for a proper strategy.

Menghestab Haile
January 07, 2016

Mr Km,
The challenge is how to make this practical. For example almost all the World Bank projects exclude local SMEs by simply putting tequirements that local companies can not meet. I am speaking from personal experience. The challenge is we need to create a mechanism that facilitate local ownership and learning. When we talk about the private sector we often think of those in developed countries. It really would be great if we could focus on how to empower the locals to address their issues while also making money

March 18, 2016


January 10, 2018

by doing so you create jobs and people stay and develop

September 26, 2019

Help the poor boys and girls in my country to get education?