Reflecting on Reversals of Fortune: poverty and shared prosperity through 2020

Posted in: Poverty

By James Copestake

For nearly thirty years, starting in 1990, the global incidence of extreme poverty fell almost without interruption in both absolute terms (from nearly two billion to less than one billion), and in relative terms - from more than a third of all people to less than 10%. While aware that further reductions would become increasingly difficult, the World Bank – guardian in charge of these statistics – dared to advocate near elimination of extreme poverty by 2030, and also to acknowledge the case for supplementing this almost inhumanely miserly measure of progress (income of 190 US cents per person per day) with others, starting with ‘shared prosperity’, which it defined as the proportion of income accruing to the poorest 40% of any given population.

The headline poverty reduction statistics were always something of a smokescreen – hiding the persistence of less extreme but more widespread poverty recorded by other measures, and indeed its increase in many countries, particularly in the Middle East and North Africa. With 2020 coming to a close even this modest aspiration has gone with the wind. In its latest poverty and prosperity monitoring report, the World Bank notes that the process has gone into reverse, with extreme poverty already back up to the level of 2017. Worse still, it suggests that the economic effects of Covid-19, climate change and conflict (what it calls the three ‘Cs’) undermine prospects for poverty reduction in the longer-term – a casualty of the twin calamities of slower growth in the size of the economic cake and rising inequality in its distribution.

These were some of the headline messages Michael Woolcock, one of the reports lead authors, shared in a seminar on 8 December co-hosted by CDS, the Institute for Policy Research (IPR), and the Centre for Trust, Peace and Social Relations (CTPSR) at Coventry University. Commenting on the presentation, Zainab Mai-Bornu highlighted analysis in the report of the new forms of poverty created by Covid-19 (more urban, more educated, more poverty in employment) and also that while the poorest 40% in many African countries failed to maintain their share of growing economies (Zambia being the extreme example – see Figure 2.1) they have borne a disproportionate burden of economic reversals. Santosh Mehrotra picked up on evidence that South Asia is the region hardest hit in 2020 (with more than 50 million people likely to have fallen back into extreme poverty already) and highlighted the overly hasty and extreme lockdown response of the Government of India as a contributor to this.

Attendees asked whether this new reality points towards the need for stronger redistribution policies, including greater use of cash transfers to guarantee a minimum income. Discussion also pointed to the likelihood of a polarizing or ‘K’ shaped recovery between countries, as well as within them. Responding to those who challenged the emphasis on recovery in the form of economic growth, Michael Woolcock emphasized that no country had reduced extreme poverty without at least achieving per capita income of $1,500 per head, but agreed that many were failing dismally to reduce poverty despite enjoying incomes far higher than this. He also highlighted the resurgence of sovereign debt problems among the poorest countries, and the need for external fiscal support (including from the World Bank) to prevent this resulting in further retrenchment of national social protection programmes.

For myself, the seminar came as a salutary reminder that while academic development studies may be more finely focused on the political sociology of identity and recognition, this should not distract us from also keeping up with hard numbers on the political economy of poverty and inequality. It was beyond the scope of the report to reflect on the underlying causes of the three ‘Cs’ and what to do about them, but clearly curtailing capitalist excess is part of that story, as well as finding ways to strengthen government capability and responsiveness to human needs. These are big asks. Meanwhile, other priorities include investing in disaster preparedness and prevention actions, strengthening capability for global as well as national collective action, and continuing to invest in reliable and comparable evidence with which to monitor, understand and learn more about what is going badly as well as well. One telling revelation in the report is how many gaps and lags there are in our understanding of poverty in many countries, with even India (in contrast to Nigeria) showing a new reticence in sharing its most recent poverty statistics.

Posted in: Poverty


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