How can coun­tries re­duce poverty faster?

Tehran Times - - INTERNATIO­NAL - ByM Niaz Asadul­lah & An­to­nio Savoia &An­to­nio Savoia

There is no doubt that state ca­pac­ity is one of the key in­gre­di­ents for suc­cess­ful poverty re­duc­tion.

While the to­tal num­ber of im­pov­er­ished peo­ple world­wide is de­clin­ing, the rate of progress is not as fast as it needs to be to achieve the Sus­tain­able De­vel­op­ment Goal of end­ing ex­treme poverty by 2030. To in­crease the pace of poverty re­duc­tion, les­sons from the re­cent past can help.

Can the world end poverty by 2030, the tar­get set by the United Na­tions Agenda for Sus­tain­able De­vel­op­ment? The UN Gen­eral As­sem­bly re­cently reaf­firmed this dead­line but con­ceded that meet­ing it will re­quire “ac­cel­er­at­ing global ac­tions” to tackle poverty’s causes. As the in­ter­na­tional com­mu­nity ex­plores new so­lu­tions, les­sons from the past could be in­struc­tive.

Poverty re­duc­tion has been cen­tral to de­vel­op­ment pol­icy for decades. Dur­ing the 15 years of the Mil­len­nium De­vel­op­ment Goals (MDGs), the pre­de­ces­sor to the Sus­tain­able De­vel­op­ment Goals (SDGs), the per­cent­age of peo­ple liv­ing in poverty – de­fined as less than $1.90 a day – de­clined sig­nif­i­cantly, from nearly 27% in 2000, when the MDGs be­gan, to about 9% in 2017.

At first glance, the rate of poverty re­duc­tion in the first few years of the SDGs has also been im­pres­sive. Be­tween Jan­uary

2016 and June 2018, an es­ti­mated 83 mil­lion peo­ple were lifted out of ex­treme poverty. And yet, to re­main on track to meet the

2030 tar­get date, about 120 mil­lion peo­ple should have es­caped poverty dur­ing that pe­riod. De­spite the wel­come gains, the pace of progress has been less than sat­is­fac­tory.

In a re­cent pa­per co-au­thored for the jour­nal World De­vel­op­ment, we ex­am­ined what fac­tors drive suc­cess­ful poverty re­duc­tion. Us­ing poverty sta­tis­tics from de­vel­op­ing coun­tries dur­ing the MDGs era, we as­sessed whether coun­tries with higher lev­els of in­come poverty – that is, more peo­ple liv­ing on less money – ex­pe­ri­enced faster re­duc­tions in their poverty rates than economies with lower in­come-poverty lev­els. Us­ing lim­its of $1.25 and $2 per per­son per day, we found that poverty tended to de­crease faster in coun­tries that started out poorer.

But these find­ings, while pos­i­tive, tell only part of the story. In many coun­tries, the end of poverty re­mains a dis­tant goal. For ex­am­ple, at the cur­rent pace of poverty re­duc­tion, we es­ti­mate that Mali, where 86% of the pop­u­la­tion lived on less than

$1.25 a day in 1990, will re­quire an­other 31 years to erad­i­cate ex­treme poverty al­to­gether. But even in Ecuador, where only

7% of the pop­u­la­tion lived on less than $1.25 a day in 1990, elim­i­nat­ing poverty will take at least an­other decade.

The dif­fer­ing ex­pe­ri­ences of coun­tries in Africa and Asia il­lus­trate that while adop­tion of the MDG agenda did ac­cel­er­ate poverty re­duc­tion, the de­gree of progress has var­ied widely. In the early 1990s, poverty lev­els in Nige­ria, Le­sotho, Mada­gas­car, and Zam­bia were sim­i­lar to those in China, Viet­nam, and In­done­sia. But by the time the MDGs ended in 2015, the Asian coun­tries had re­duced lev­els of poverty dra­mat­i­cally; the African coun­tries had not.

This di­ver­gence con­tin­ues. To­day, ex­treme poverty is mostly con­tained to Africa; ac­cord­ing to the World Bank’s 2018 Poverty and Shared Pros­per­ity re­port, 27 of the world’s 28 poor­est coun­tries are on the con­ti­nent, and each has a poverty rate above

30%. In fact, at cur­rent rates of poverty re­duc­tion, more than 300 mil­lion peo­ple in Sub-Sa­ha­ran Africa will still be poor in 2030.

Many fac­tors have con­trib­uted to the shift­ing ge­og­ra­phy of poverty. In Africa, weak eco­nomic per­for­mance – fu­eled by con­flict, in­ef­fec­tive poli­cies, eth­nic frag­men­ta­tion, and ex­ter­nal shocks – has made it more dif­fi­cult for coun­tries to fund poverty-alle­vi­a­tion pro­grams. But the most im­por­tant fac­tor may be state ca­pac­ity. Af­ter all, weak state in­sti­tu­tions can­not ef­fec­tively de­liver pub­lic goods and ser­vices.

Of course, this leads to an­other ques­tion: what fac­tors de­ter­mine a state’s ca­pac­ity? In gen­eral, states work bet­ter when rul­ing elites are bound by lim­its on their power. But ad­min­is­tra­tive ex­pe­ri­ence also plays a role. China, with a slightly longer pe­riod of mod­ern state­hood than most of its younger African coun­ter­parts, may sim­ply have de­vel­oped a greater abil­ity to ad­min­is­ter its ter­ri­tory.

And yet, what­ever the rea­son for the vari­a­tion, there is no doubt that state ca­pac­ity is one of the key in­gre­di­ents for suc­cess­ful poverty re­duc­tion. We found that dur­ing the MDGs, high-poverty coun­tries with strong state in­sti­tu­tions were able to re­duce poverty twice as fast as coun­tries with fee­ble ca­pac­ity, and were more likely to achieve the MDGs’ tar­get of halv­ing poverty by 2015.

Poverty erad­i­ca­tion re­mains a top pri­or­ity for the 193 gov­ern­ments that have adopted the SDGs. But as the in­ter­na­tional com­mu­nity learned from the MDGs, goals do not guar­an­tee progress. To en­sure that the 725 mil­lion peo­ple who re­mained in poverty at the end of MDGs pe­riod can es­cape re­quires in­vest­ing in pro­grams that aim at build­ing ef­fec­tive states. Oth­er­wise, an end date for poverty will re­main elu­sive.

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