Decades of progress in reducing extreme global poverty have been hindered by a continued high rate of income inequality, according to a World Bank report.
“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 stated.
Yet, efforts to promote shared prosperity – “the growth in the average income or consumption of the bottom 40 [percent]” – have seen mixed results and uneven progress over the same period.
“The bottom 40 [percent] benefited from solid economic growth in many countries in 2008-13. … Overall, the bottom 40 in 60 of the 83 countries monitored experienced positive income growth. … However, there is no room for complacency: in 23 countries, the incomes of the bottom 40 declined during the period.”
While overall income inequality between nations declined from 1980 to 2013, overall income inequality within nations rose – “within-country inequality for the average person in the world was wider in 2013 than 25 years previously.”
In addition, in “Argentina; India; the Republic of Korea; South Africa; Taiwan, China; and the United States, the share of the top one percent in total income has been increasing.”
Recent trends have been more positive, World Bank reported – “between 2008 and 2013, within-country inequality stabilized or even declined slightly.”
World Bank Group President Jim Yong Kim noted that “the developing world has made unprecedented progress in reducing extreme poverty,” but emphasized that inequality remains “a powerful threat to progress around the world.”
The global poor are “predominantly rural, young, poorly educated, mostly employed in the agricultural sector, and live in larger households with more children,” the report explained.
This informed the development of six strategies to further reduce global poverty and increase shared prosperity: (1) early childhood development and nutrition; (2) universal health coverage; (3) universal access to quality education; (4) cash transfers to poor families; (5) rural infrastructure; and (6) progressive taxation.
“Some of these measures can rapidly affect income inequality. Others deliver benefits more gradually. None is a miracle cure,” said Kim. “But all are supported by strong evidence, and many are within the financial and technical reach of countries.”
The full report is available here.