World Bank President Outlines Plan to Reduce Extreme Poverty to less than 3% of the World’s Population

World Bank Group President Jim Yong Kim outlined a bold agenda for the global community toward ending extreme poverty by 2030 and promoting shared prosperity to boost the incomes of the poorest 40 percent of the population in each country.

Kim noted that the first Millennium Development Goal (MDG), to halve extreme poverty, was achieved in 2010, five years ahead of time, after developing countries spent years investing in social safety nets and working hard to build the fiscal space and create the macroeconomic buffers to respond effectively if a crisis hit.

To achieve the more difficult goal of virtually eliminating extreme poverty, Kim described three factors necessary:

1. to reach the goal by 2030 will require an acceleration of the growth rate observed over the past 15 years, and in particular sustained high growth in South Asia and Sub-Saharan Africa.

2. it will require efforts to enhance inclusiveness and curb inequality, and ensure that growth translates into poverty reduction, most importantly through job creation.

3. it will require that potential shocks – such as new food, fuel, or financial crises and climatic disasters – be averted or mitigated.

The date of 2030 is highly ambitious. If anyone doubts it, consider that the first Millennium Development Goal was to halve absolute poverty over a period of 25 years. To reach the 2030 goal, we must halve global poverty once, then halve it again, and then nearly halve it a third time—all in less than one generation. If countries can achieve this, then absolute poverty will be brought below 3 percent. Our economists set the goal line here, because below 3 percent the nature of the poverty challenge will change fundamentally in most parts of the world. The focus will shift from broad structural measures to tackling sporadic poverty among specific vulnerable groups.

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Today extreme poverty is in retreat. In 1990, 43 percent of the developing world lived on less than $1.25 a day. In 2010 – 20 years later — we estimate that the global poverty rate dropped to 21 percent. The first Millennium Development Goal, to halve extreme poverty, was achieved five years ahead of time.

Looking ahead, we believe the conditions are in place for continued strong performance in developing countries. Yet we can’t take high growth rates for granted. Maintaining growth of 6 percent, let alone the 7 or 8 percent many economies achieved during the pre-crisis boom period, will require sustained reform efforts. For example, countries must continue to improve the quality of education, governance, and the business climate; modernize their infrastructure; ensure energy and food security; and enhance financial intermediation.

We know that despite the dramatic successes of the last decade, there are still around 1.3 billion people living in extreme poverty, 870 million who go hungry every day, and 6.9 million children under five dying every year.

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