What will it take (series)? Eliminating poverty in 15 years

November 6, 2015

An integral approach to development, ecology, and economy — care of our common home —  reprinted from http://www.odi.org/opinion/9900-infographic-sdgs-leave-no-one-behind-risk-marginalised-groups and also: http://www.odi.org/comment/9996-economic-growth-pro-poor-poverty-absolute-inequality

Over the last 30 years, absolute inequality has always increased when countries have experienced prolonged periods of income growth.  Reducing absolute inequality in the future will require the rate of growth for the bottom 40% to be more than twice the mean.

‘Pro-poor’ or ‘inclusive’ growth ensuring that growth benefits the poor  more than the average  –  is a popular mechanism for achieving this. For example, the Sustainable Development Goals and the World Bank both have targets that aim to promote income growth for the bottom 40% of every country’s population.  While we should welcome this recognition that who benefits from growth matters just as much as the amount of growth.

Importantly, an Overseas Development Institute (ODI) report highlights that if action is not taken to address climate change immediately, over 700 million people could re-enter extreme poverty from 2030 to 2050.

So it will be critical to address climate change simultaneously with trying to eliminate extreme poverty.

GDP growth does not necessarily translate into improvements in household living standards in poor countries.  Forthcoming ODI research illustrates that for the poorest countries, there is not a clear relationship between GDP growth and average household levels of consumption. This can been seen in the chart below of countries that had low income status around 2000.  It’s not clear whether this is due to a disconnect between the formal economy and household living standards, or problems with how we measure these.

If you exclude the four outlier countries on the far right of the chart (Honduras, Zambia, Lesotho and Central African Republic) then countries that moved from low to middle income status are slightly more equal on average than those that stayed low income.

80% of the world population lives in countries where the income of the bottom 40% grew slower than the average, though an ODI paper shows that while around half of countries experienced ‘pro-poor’ growth.

Infographic showing which groups are at risk of being left behind