Tough choices – and data – needed to end extreme poverty

By Jim Yong Kim

The dramatic fall in global poverty over the past two decades is the best news in the world today. For the first time ever, the percentage of people living in extreme poverty – now defined as living on less than $1.90 a day – is projected to fall below 10% this year, to 9.6% of the world’s population. Unprecedented economic growth, especially in China, has allowed hundreds of millions of people to escape poverty.

But to effectively end extreme poverty by 2030 – which is the goal of the World Bank Group and our 188 member countries – our aspirations must be higher still. Many tough decisions will have to be made before we can become the generation that ends extreme poverty.  

The question we ask today is how can developing countries progress in the face of slow global growth, the end of the commoditiessuper-cycle, pending interest rate hikes, and capital flight from emerging markets?

In South Asia, the particular challenge will be to boost economic growth, ensure this growth reaches the most marginalised and vulnerable people, and to address the growing threat of climate change. For example, Bangladesh will not reach its economic growth potential unless it makes reforms to its banking and energy sectors, as well as improve fiscal and administrative management. In India, the longer term outlook is dependent on the implementation of the government’s reform program.

Our overarching strategy, based on more than 50 years of experience, is that three things must happen:

Economic growth must lift all people.  It must be inclusive.

Investment in human beings is crucial—especially investing in their health and education. Malnourished and poorly educated children will never reach their full potential and countries, in turn, will fall short of their economic and social aspirations.

We must ensure that we can provide safety nets that prevent people from falling back into poverty because of poor health, economic shocks, or natural disasters.

To spur growth, every dollar of public spending should be scrutinised for impact. Every effort must be made to improve productivity. And in a period when banks are de-risking, we have to ensure that capital is accessible – especially for small business owners and entrepreneurs who will create jobs.

In striving to end poverty, we have found that data is sparse and inconsistent globally. Some29 countries around the world had no poverty data from 2002 to 2011, so they could not track their progress. Another 28 had just one survey that collected poverty data during that time.

This is a situation that must change to improve the world’s ability to tackle poverty. In fact, we can’t accomplish our goal if we do not have enough information to know whether people are actually lifting themselves out of poverty. For that we need to address huge data gaps. We need robust data.

To fix this problem, we’ve launched a new initiative to step up data collection in 78 of the world’s poorest countries. We’ve pledged to work with our partners in countries and international organisations, to do something that makes common sense and is long overdue -- conduct surveys in all countries that will assess whether people’s lives are improving.

With the World Bank’s technical assistance, many countries in South Asia region are planning to have more frequent and consistent poverty monitoring. Pakistan and Sri Lanka are already good examples on the frequency of data collection. Pakistan collects data every two years and Sri Lanka typically every three years. Bangladesh is moving to three-year intervals from five years for poverty data collection.

As the world works to end extreme poverty in the next 15 years, it will be ever more important to have a solid foundation of data and evidence so that policies and programs reach people who have not benefited from strong growth since 2000.

In a slowing global economy, governments must invest in quality education, health, sanitation and electricity for all, alongside effective social insurance policies that protect the vulnerable—not as an afterthought, but as a core part of their growth strategies.

In tough times, countries that do well have already made the difficult choices. But countries that haven’t yet, still can. It’s not too late. Tough policy choices will send signals to the world that governments are serious about laying the groundwork for future growth.

(The writer is the President of the World Bank.)