In­equal­ity threat­ens fight against poverty

The Myanmar Times - - International Business -

EX­TREME poverty has been fall­ing around the world, but elim­i­nat­ing it by 2030 could be stymied by un­equal dis­tri­bu­tion of the gains of eco­nomic growth, the World Bank said.

Un­less the gains of growth are steered to those at the bot­tom of a coun­try’s econ­omy, they could be left be­hind, warned the in­au­gu­ral “Poverty and Shared Pros­per­ity” re­port.

The re­port said gains par­tic­u­larly in China, In­dia and In­done­sia have led to a dra­matic re­duc­tion in global poverty.

In 2013 some 767 mil­lion peo­ple were liv­ing be­low the global poverty thresh­old of US$1.90 per day. While still a high num­ber, that was 10.7 per­cent of the world’s pop­u­la­tion, com­pared to 12.4pc a year ear­lier.

“The world had al­most 1.1 bil­lion fewer poor in 2013 than in 1990, a pe­riod in which the world pop­u­la­tion grew by al­most 1.9 bil­lion peo­ple,” the re­port said.

The big­gest con­cen­tra­tion re­mains in sub-Sa­ha­ran Africa, with 41pc of peo­ple mired in ut­ter poverty, many of them ru­ral based with lit­tle ac­cess to ed­u­ca­tion. In South Asia, the fig­ure is 15.1pc; Latin Amer­ica and the Caribbean, 5.4pc; and East Asia and the Pa­cific, 3.5pc.

But the re­port warned that gains in the fu­ture will be much tougher to achieve, in part be­cause of the un­ex­pect­edly slow growth of the global econ­omy, and be­cause ex­treme poverty is being ex­ac­er­bated by con­flicts in the Mid­dle East and Africa.

The re­port also high­lighted in­equal­ity as a key foe of end­ing poverty. Eco­nomic growth can­not do that alone, it stressed.

The coun­tries most suc­cess­ful in elim­i­nat­ing ex­treme poverty are those where poli­cies en­sure that the bot­tom 40pc of the pop­u­la­tion en­joys the strong­est in­come gains as eco­nomic growth picks up.

“The larger the growth in in­comes of the bot­tom 40, the more quickly pros­per­ity is chang­ing life for poor peo­ple. The size of in­come growth among the bot­tom 40 de­fines a coun­try’s level of suc­cess in boost­ing shared pros­per­ity,” the re­port said.

But if the gains of growth stay con­cen­trated in the rel­a­tively well-off parts of the pop­u­la­tion, deep poverty will per­sist, it said.

Fran­cisco Fer­reira, who over­sees the bank’s re­search pro­grams on poverty, in­equal­ity and agri­cul­ture, said that while in­equal­ity has mounted in ad­vanced economies, a num­ber of emerg­ing coun­tries have been able to tem­per it with ef­forts to en­sure the ben­e­fits of growth reach the poor­est.

The re­port high­lights such achieve­ments in Brazil, Cambodia, Mali, Peru and Tan­za­nia.

The recipe for suc­cess is gen­er­ally the same: main­tain­ing macroe­co­nomic sta­bil­ity and low in­fla­tion; en­sur­ing labour mar­kets func­tion well so that growth trans­lates into jobs; di­ver­si­fy­ing the econ­omy; build­ing man­u­fac­tur­ing and ser­vices in­dus­tries on top of farm­ing; and hav­ing proac­tive so­cial poli­cies like health­care and ed­u­ca­tion.

Mr Fer­reira warned that even if global eco­nomic growth is firm over the next decade, if in­equal­ity is not tack­led at the same time, the world will be un­able to reach the World Bank’s tar­get of bring­ing ex­treme poverty down be­low 3pc of the global pop­u­la­tion by 2030.

“Un­less growth be­comes more propoor and leads to gains at the bot­tom of the dis­tri­bu­tion, the tar­get may well be out of reach.” –

Photo: AFP

Peo­ple walk past the IMF head­quar­ters in Wash­ing­ton. The IMF will host the 2016 an­nual meet­ings of the In­ter­na­tional Mon­e­tary Fund and the World Bank Group from Oc­to­ber 7 to 9.

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