Global inequality on the wane: World Bank study

Global inequality on the wane: World Bank study

WASHINGTON - Contrary to popular belief, inequality between all people in the world has declined consistently since 1990, a new study by the World Bank has found.

However, it warned that the continuing slowdown in global growth could turn the situation around.

Its study, published on the eve of the World Bank and International Monetary Fund (IMF) annual meetings in Washington, said that despite the lethargy in the global economy, extreme poverty worldwide is continuing to fall - in East Asia especially.

"It is remarkable that countries have continued to reduce poverty and boost shared prosperity at a time when the global economy is underperforming," said World Bank Group president Jim Yong Kim.

"But still, far too many people live with far too little." He cautioned: "Unless we can resume faster global growth and reduce inequality, we risk missing our World Bank target of ending extreme poverty by 2030."

The inaugural edition of "Poverty and Shared Prosperity", a new annual series reporting on the latest estimates and trends in global poverty and shared prosperity, noted that nearly 800 million people were living on under US$1.90 a day in 2013.

But this was around 100 million fewer extremely poor people than in 2012, it said. "Progress on extreme poverty was driven mainly by East Asia and the Pacific, especially China and Indonesia, and by India.

Half of the world's extremely poor now live in sub-Saharan Africa; another one-third live in South Asia."

In 60 out of the 83 countries covered by the report, average incomes went up for people living in the bottom 40 per cent of their countries between 2008 and 2013 - despite the financial crisis.

Importantly, the report noted that these countries represent 67 per cent of the world's population.

Even within countries, as well as from one country to another, inequality has been falling in many places since 2008, the World Bank found. For every country where there was a substantial increase in inequality during the period, two others experienced a significant decrease.

The World Bank said that, even so, "inequality is still far too high and important concerns remain around the concentration of wealth among those at the top of the income distribution".

Stressing that there is no room for complacency, the report noted that in 34 of 83 countries monitored, income gaps widened as incomes grew faster among the wealthiest 60 per cent of people than among the bottom 40. And in 23 countries studied, the incomes of the bottom 40 per cent actually shrank between 1990 and 2013 - "not just relative to wealthier members of society, but in absolute terms".

Those countries that have been most successful in reducing poverty and reducing inequality have pursued policies with a proven track record of building poor people's earnings, improving access to essential services and improving long-term development prospects, but without damaging growth.

"These policies work best when paired with strong growth, good macro-economic management and well-functioning labour markets that create jobs and enable the poorest to take advantage of those opportunities."

Also important in these more successful countries has been early childhood development and nutrition, universal health coverage, universal access to quality education and cash transfers to poor families, the Bank found.

Mr Kim said: "The message is clear. To end poverty, we must make growth work for the poorest, and one of the surest ways to do that is to reduce high inequality, especially in those countries where many poor people live."

This article was first published on Oct 4, 2016.
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