The World Bank (WB) said extreme poverty has been falling steadily around the world. But eliminating poverty by 2030 could be stymied by unequal distribution of the gains of economic growth. The “Poverty and Shared Prosperity” WB report warned that unless the gains of growth are steered better to those at the bottom of a country’s economy, they could be left behind. However, the gains particularly in China, India and Indonesia have led to a dramatic reduction in global poverty. Unequal income gains hinders fight against extreme poverty
Deep poverty will persist if the gains of growth stay concentrated in the relatively well-off
segments of the population
Prof. Sarwar Md. Saifullah Khaled
The World Bank (WB) said extreme poverty has been falling steadily around the world. But eliminating poverty by 2030 could be stymied by unequal distribution of the gains of economic growth. The Poverty and Shared Prosperity WB report warned that unless the gains of growth are steered better to those at the bottom of a countrys economy, they could be left behind. However, the gains particularly in China, India and Indonesia have led to a dramatic reduction in global poverty.
As per the latest year with comprehensive data, in 2013 some 767 million people were living below the global poverty threshold of US $1.90 per day; while this is still a high number. That was 10.7 percent of the worlds population, compared to 12.4 percent the year 2012 earlier. The report said 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 biggest concentration remains in sub-Saharan Africa, with 41 percent of people mired in utter poverty. Many of them rural based with little access to education. In South Asia, the figure is 15.1 percent; Latina America and the Caribbean, 5.4 percent; and East Asia and the Pacific, 3.5 percent.
But the report warned that gains in the future will be much tougher to achieve, in part because extreme poverty is being exacerbated by conflicts in the Middle East and Africa and because of the unexpectedly slow growth of the global economy. The report also highlighted inequality as a key impediment of ending poverty. It stressed economic growth cannot do that alone. The most successful countries in eliminating extreme poverty are those where policies ensure that the bottom 40 percent of the population enjoys the strongest income gains as economic growth picks up. The report maintains that the larger the growth in incomes of the bottom 40 percent, the more quickly prosperity is changing life for poor people in a society. The size of income growth among the bottom 40 percent defines a countrys level of success in boosting shared prosperity.
But deep poverty will persist if the gains of growth stay concentrated in the relatively well-off parts of the population. While inequality has mounted in developed economies, a number of emerging countries have been able to temper it with efforts to ensure the benefits of growth reach the poorest, said Francisco Ferreira, who oversees the WBs research programs on poverty, inequality and agriculture. The report highlights such achievements in Brazil, Cambodia, Mali, Peru, and Tanzania. The recipe for success is generally the same that is, maintaining macro-economic stability and low inflation; ensuring labour markets function well so that growth translates into jobs and jobs into wages; economic diversification; building manufacturing and services industries on top of farming; and having proactive social policies like healthcare and education.
Francisco Ferreira said that declining inequality is actually possible. It is not a pipe dream; The report has found over 40 such countries where inequality has declined.... It can and has been successfully reduced both in the world as a whole and in individual countries. He warned, however, the world will be unable to reach the WBs target of bringing extreme poverty down below three percent of the global population by 2030, even if global economic growth is firm over the next decade, if inequality is not tackled simultaneously. The target may well be out of reach unless growth becomes more pro-poor and leads to faster gains at the bottom of the distribution following inequality.
In the Indian Subcontinent in particular, despite Indian Prime Minister Narendra Modis claim that Islamabad needs to learn from New Delhi how to fight poverty, statistics released by the WB show that both India and Pakistan face an uphill task in eradicating poverty. Poverty and Shared Prosperity places Pakistan among the countries where incomes of the poorest are growing faster than average. The poorest in Pakistan are slightly ahead of the four percent national growth rate (while China tops the list with a more than 8.0 percent growth rate). Sri Lanka is also in this category. Although India has one of the fastest growing economies in the world it is placed among the countries where incomes of the poorest are growing slower than average.
The statistics show, overall, that while in some fields India is doing better than Pakistan, in others Pakistan is ahead. The data shows that compared to 8.3 percent in Pakistan as many as 21.25 percent Indians live at or below the WBs poverty line of US$ 1.90 a day. And 58 percent Indians make US $3.10 a day, compared to 45 percent in Pakistan. India fares marginally better than Pakistan in life expectancy that was 66.1 years in Pakistan and 68 years in India in 2014. Life expectancy in Bangladesh is 70 years on an average. India has an edge in life expectancy for women too, 69.49 years versus 67.15 years for Pakistan.
India, however, has a clear edge in adult female literacy with 59.2 percent, while for Pakistan it was 41.9 percent in 2011. Infant mortality in India declined from 46.3 per 1000 live births in 2010 to 37.9 in 2015, while for Pakistan the comparable figures are 73.5 in 2010 and 65.8 in 2015. This gives a clear advantage to India. India is better in dealing with undernourishment as well, with 15.2 percent of its population undernourished in 2015, compared to 22 percent in Pakistan. During 2007 and 2013, Pakistans annualised growth in mean consumption for the bottom 40 percent was 2.81 percent, compared to 2.53 percent for the total population. The mean consumption or income per capita, (US dollar per person) for the bottom 40 percent was 2.07 percent as compared to 3.81 percent for the total population. The data for most recent year shows the annualised growth rate for the bottom 40 percent at 2.44 percent while it was 4.42 percent for the total population.
The data also shows that increased schooling has led to more productive non-farm activities in Pakistan. Similarly, conditioning cash support to low income families to childrens regular school attendance at school, led to large increases in enrolment between 11 to 13 percent in Pakistan. Pakistan is also among the countries where the WB study noticed a shift toward declining inequality between 2008 and 2013. In Pakistan, the Gini index, which measures inequality, fell by 2.4 points. As regards Bangladesh if it continued its economic reforms the WB hopes that Bangladesh can overcome its poverty by 2030, although the statistics show that 43.7 percent Bangladeshis continue to live at or below US $1.90 while 77.6 percent live at US $3.10 a day.
Bangladesh has done an impressive job in reducing poverty over the last decades and has the potential to overcome extreme poverty by 2030 if it takes firm steps to make economic growth and equitable distribution possible. Presenting a new revised international poverty line of US $1.90 a day on 2011 PPP (purchasing power parity), WB said now 18.5 percent or 28 million people in Bangladesh are living in extreme poverty as of 2011. A WB report said some 16.2 million people were lifted out of poverty in between 2000 and 2010. But despite such success, WB said it is unlikely for Bangladesh to eliminate poverty by 2030 as per target set by the UN Sustainable Development Goals (SDGs). Zero poverty means below 3 percent poverty. But until Bangladesh Gross Domestic Product (GDP) growth achieves a faster GDP growth rate and simultaneous equitable distribution of the gains of economic growth, it is unlikely to reach such target.
However, Bangladesh is currently the 64th poorest out of the 154 countries included in the WBs global poverty data base and much remains to be done. To move to the next level and realize its goals of becoming a middle income country by 2021 and overcoming extreme poverty by 2030, the country needs to sustain its economic growth and equitable distribution of gains of economic growth in a politically peaceful atmosphere, create more and better jobs, focus on energy and transportation infrastructure, and make progress on improving the investment climate and the quality of health and education. Bangladesh needs to continue creating enough jobs to employ its 2.0 million young people who enter the job market every year to enhance the equitable distribution of the gains of economic growth. This requires boosting productivity and foreign and domestic investment by reforming business regulations for creating more job opportunities, reducing infrastructure and energy deficiencies, while enhancing financial efficiency and good governance.
The writer is a retired Professorof Economics
