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This poverty assessment evaluates Cambodia’s poverty reduction progress between 2009 and 2019 and contributing factors. Based on the authors understanding of contributing factors, the assessment asks what the impact of the coronavirus disease 2019 (COVID-19) has been, and what will be needed to support inclusive recovery. The Royal Government of Cambodia (RGC) recently updated the national poverty lines for Cambodia. Prompted by Cambodia’s transition to lower middle-income status in 2015, the RGC revisited the poverty measurement methodology in 2017; the review confirmed that the way Cambodians live and spend today has changed considerably as the country became richer, and that the national poverty lines needed revising to better reflect economic realities. This assessment uses the new poverty lines to evaluate Cambodia between 2009 and 2019, coupled with other data sources. This poverty assessment covers 5 chapters. Chapter 1 examines the progress Cambodia made in reducing poverty and boosting shared prosperity between 2009 and 2019. Chapter 2 examines the evolution of nonmonetary poverty between 2009 and 2019. Chapter 3 examines the profile of poverty and inequality in 2019/20. Chapter 4 examines the 2019 fiscal system and its effects on poverty and inequality in 2019/20. Chapter 5 examines COVID-19 socio-economic effects on Cambodian Households in 2020.

This Country Climate and Development Report aims to support Malawi’s efforts to achieve its development goals within a changing climate by quantifying the impacts of climate change on the economy and highlighting key policies and interventions that are needed to strengthen climate resilience. The analysis includes climate modeling across multiple scenarios to account for the inherent uncertainty in climate projections; and sector-by-sector analysis and assessment of economywide impacts to identify the biggest impacts. It examines Malawi’s current policy landscape and identifies needed reforms; considers how Malawi can best protect its most vulnerable households; and considers how the country can finance its ambitious development and climate agenda, including the key role of the private sector. The analysis shows that climate change will impose large costs on the economy and on already vulnerable households. If Malawi stays on its current low-growth development trajectory, climate change could reduce GDP by 3-9 percent in 2030, 6-20 percent in 2040, and 8-16 percent by 2050). The analysis also clearly demonstrates that development, as set out in Malawi’s Vision 2063, provides a strong basis for strengthening resilience to climate impacts. If Malawi was to accelerate implementation of policies and programs envisioned in the Vision 2063 the development trajectory would shift to a higher growth path and climate change impacts would be significantly reduced. But the Vision 2063 development path will not be enough and building greater resilience to climate change will require doing different things and doing things differently. With additional adaptation measures, the analysis shows that not only is the impact of climate change on GDP much smaller, GDP is higher with climate change and adaptation when compared to the counterfactual with no climate impacts; losses range from -1 to 3 percent in 2030 and 2040, and 1 to 4 percent in 2050.

This report reviews the experiences of market linkage programs implemented globally, particularly those focused on poor smallholders, including women, as beneficiaries and farmers who participated in government social safety net schemes. The report highlights lessons learned by program implementers, governments, and other stakeholders related to efforts to link extremely poor households to productive markets. The research was commissioned to inform potential links between two World Bank projects that are currently supporting the economic inclusion of poor households in Zambia. The supporting women’s livelihood (SWL) program of the Girls’ Education and Women’s Empowerment and Livelihoods (GEWEL) Project provides a comprehensive package to promote economic inclusion among women from the poorest households. A second project, the Zambia Agribusiness and Trade Project (ZATP), enhances access to markets by linking producer organizations and high-growth small and medium-size enterprises to buyers (commercial off-takers) by facilitating productive alliances (commercial agreements between a producer organization and a commercial off-taker) and providing matching grants and technical support. A diagnostic of the status of and constraints facing SWL beneficiaries with respect to market linkages highlights the lack of upstream value chain linkages for them. The World Bank will provide technical assistance to the government of Zambia, through relevant ministries, to operationalize a mechanism, at scale, for forging market linkages by SWL households by linking them to ZATP beneficiaries. This report reviews and highlights the experiences of similar market linkages programs implemented globally, in an attempt to answer key questions raised by the program. This report describes operational considerations that may be relevant to the ZATP-GEWEL project context. It provides recommendations to guide the next steps in developing the ZATP-GEWEL pilot.

This paper analyzes the distributional impact of the tax-benefit system in Bhutan. It makes two main contributions: first, this is the first substantive study of this kind in Bhutan, and second, due to limited information on incomes in the household survey, a consumption-based model is combined with Mincer-type earnings to derive estimates of incomes. The results show that the combined impact of government taxes and social spending is to reduce inequality and slightly increase poverty as of 2017. The increase in poverty is mainly due to the burden of indirect taxes and social contributions that are not offset by other transfers. Households in the bottom 80 percent are net receivers of fiscal interventions, with fiscal benefits primarily occurring through education and health benefits, which are both progressive. Most households did not pay much into the system as of 2017, as personal income taxes have a high exemption threshold and sales taxes only apply to a selected number of goods that are mainly consumed by richer households. Due to the lack of direct transfers, the net cash position is negative for poor households, although the magnitude is very small. Simulations suggest that the recent personal income tax reduction leads direct taxes to be slightly more progressive; however, the inequality-reducing impact is dampened. The goods and services tax is expected to increase indirect taxes for households across the distribution and is less progressive than the sales tax. This could lead to a temporary increase in poverty, which could be offset through direct transfers financed by the additional revenues.

This is the third edition of the Liberia Economic Update (LEU), a series of annual reports that assesses recent economic developments in Liberia and assists the government and its development partners in identifying emerging issues and addressing persistent challenges. It presents a broad overview of Liberia’s macroeconomic context, assesses the macro-fiscal and growth outlook over the short and medium terms, and sheds light on the state of human capital in Liberia. The rebound in global and domestic activity and higher prices of Liberia’s main exports helped improve the country’s economic performance in 2021. The government’s fiscal position improved in 2021 due to strong revenue growth and tight expenditure management. The appreciation of the Liberian dollar, coupled with prudent fiscal and monetary policies, helped stem inflation in 2021. Liberia’s current account deficit widened despite stronger export growth. As domestic activity picked up, increased exports were offset by the surge in imports. Liberia’s medium-term outlook is positive but subject to significant downside risks and uncertainties. The positive outlook is underpinned by significant tailwinds for mining, the government’s planned scale-up of public investment, and the implementation of structural reforms in key sectors, including agriculture and energy. On the downside, there are risks and uncertainties related to the path of the pandemic at home and abroad, the war in Ukraine, and the upcoming general elections in 2023.

Bolivia made substantial progress in reducing poverty and inequality during the commodity boom, and despite the adverse external context of the past five years, poverty reduction continued, albeit more slowly. Expansionary policies allowed the country to continue growing and reducing poverty until the pandemic but did so at the expense of large macroeconomic imbalances that increased public debt and eroded the buffers. With these challenges exacerbated by the pandemic and limited room to continue fueling domestic demand, igniting other sources of inclusive and sustainable growth calls for addressing both the immediate challenges of the COVID-19 crisis and structural constraints. The three challenges identified five years ago in the first Systematic Country Diagnostic remain, but their urgency has increased.

The 2015 Systematic Country Diagnostic (SCD) emphasized the need to shift from a public sector-driven to a private sector-driven, export-oriented, and job-creating economic growth model. This SCD Update revisits the constraints and priority interventions identified in the 2015 SCD and posits that most of the challenges and binding constraints identified in the first SCD remain valid today.

Niger earns its foreign exchange mainly from uranium and gold, which has limited domestic economic linkages. Distant second, livestock export also provide important revenue to the country. Overall, most of the labor force is employed in a low productivity and shock prone rainfed agricultural sector. The Coronavirus (COVID-19) pandemic growth slowdown is estimated to have pushed up to an additional people into poverty. Niger is further beset by vast infrastructure gaps, intensifying terrorism attacks domestically, persisting conflict in the Sahel region, and intensifying environmental pressures. Robust poverty reduction and steady gains in shared prosperity will require investments to bolster human capital, interventions to increase agricultural productivity and develop the rural economy, and mitigate vulnerability to shocks both at the household and community levels. The effectiveness of these interventions will hinge on improved governance, successful conflict resolution, and enhanced security. This poverty assessment aims to strengthen the analytical foundation for poverty-reduction policies and interventions in Niger.

Ghana has been a rising growth star and a beacon of hope in West Africa. Strong economic growth over the past two decades led to a near doubling of GDP per capita, lifting the country through the threshold for middle-income status in 2011. GDP per capita grew by an average of 3 percent per year over the past two decades, putting Ghana in the top ten fastest growing countries in Sub-Saharan Africa (SSA). A rising tide has tended to lift all boats. Poverty rates more than halved between 1998 and 2016, and the extreme poverty rate declined from 36.0 percent in 1991 to 8.2 percent in 2016. The net primary school enrollment rate rose from 62.5 percent in 2000 to 86.0 percent in 2019. This progress has motivated the government’s goal to lift the country to high-income status by 2057. The focus of this Country Economic Memorandum (CEM) is to review options for Ghana to create enough higher quality jobs through economic transformation. Economic transformation, or inclusive productivity growth, occurs as people and resources shift from lower to higher productivity activities. It raises household incomes and living standards, thereby lifting people out of poverty. It can be achieved through the movement of workers and other resources between firms and sectors, or through workers staying within existing firms that benefit from within-firm productivity growth by adopting better technologies and capabilities.

This report sheds light on the interlocked long-term territorial development challenges and the recently realized systemic risks affecting the Lake Chad region. It summarizes the findings of seven technical papers, each investigating different aspects of the interlinked challenges faced by the region. These studies are accompanied by complementary research on labor market and geospatial socioeconomic trends, as well as by a review of the thin literature on economic development across the region. In addition to presenting the main results of the technical papers, the report positions the findings in the broader context of an analytical framework depicting the feedback mechanisms between the region’s territorial development gaps and the self-reinforcing link to shocks, namely, violent conflict and climate change. This analytical framework is presented in Section 1.2. The rest of the report is structured as follows. Section 1.3 describes the main social and economic trajectories in the region. It reviews long-term demographic trends, suggesting. Section 1.4 argues that the low-growth, high-poverty equilibrium observed in the region is closely linked to the region’s economic geography. Section 1.5 discusses how the impact of climatic variation and violent conflict experienced in the region interlink with and exacerbate the territorial development challenges. Section 1.6 presents policy directions structured around four crosscutting themes: infrastructure, trade, governance, and natural resource management. The crosscutting nature of these themes encourages the exploration of potential synergies across challenge areas. The discussion in the section aims to inform policy-making efforts to strengthen territorial development and mitigate the impacts of conflict and climate change. Such endeavors can increase the likelihood of breaking free from the self-reinforcing negative mechanisms and boost the potential return of the region to a path of stability and inclusive economic development.

This World Bank Group Systematic Country Diagnostic (SCD) 2021 Update presents a diagnostic of Bangladesh’s growth and poverty reduction since the previous diagnostic in 2015. It identifies emerging opportunities and challenges for the next decade as the country recovers from the COVID-19 pandemic, graduates from least-developed-country (LDC) status, and aspires to become an upper middle-income country (UMIC) by 2031. This SCD Update identifies four frontier challenges that, if tackled properly, can enable the country to accelerate its transition. This SCD Update identifies eight priorities to tackle these four frontier challenges.

Colombia’s high level of inequality is a core constraint to economic growth and social progress. The country has one of the highest levels of income inequality in the world, the second highest among 18 countries in Latin America and the Caribbean (LAC), and the highest among all OECD countries. The disparities in income across adults grow from gaps that open early in life in opportunities for high-quality childhood development, education, and health care services. Inequality in access to good jobs further amplifies these gaps, making Colombia among the countries where inequalities are the most persistent across generations. Longstanding inequality across regions overlaps with the large gaps in welfare between Afro-descendants and indigenous Colombians and the rest of the population. The COVID-19 pandemic has further amplified disparities and threatens to have prolonged negative effects, but this is just one of many potential extreme shocks, including climate change, related disruptions, that could substantially widen the inequality gaps. Current tax and transfer policies at best have only a modest positive impact on these imbalances, so there is clearly ample potential to improve the redistributive role of fiscal policy in Colombia. Policy reforms across many areas could help to chart a more equitable future for the country.

Fiscal balances have started to improve as a result of a stronger economic performance, but it will take further effort to replenish buffers. The growth recovery is contributing to buoyant revenue collection across the region, particularly in value-added tax collections, as domestic consumption strengthens. Similarly, a leveling off of public spending in 2021 after the countercyclical surge of 2020 is helping on the expenditure side. As a result, all countries except Bosnia and Herzegovina expect to see a narrower fiscal deficit in 2021, with the average deficit reduced by 2.7 percent of GDP year-on-year. However, the deficits across all economies of the Western Balkans are still above pre-pandemic trends, and the legacy of the pandemic is a stock of public debt that has now reached historic highs in all countries except Serbia and Bosnia and Herzegovina. As the recovery from COVID-19 takes hold, greater efforts will be needed to mobilize and diversify sources of revenue and to streamline expenditure programs, which in turn would help address fiscal vulnerabilities that have arisen during the crisis. In line with global conditions, inflationary pressures in the Western Balkans are on an upward trajectory. Average inflation is projected to reach 2.3 percent in 2021 from 0.9 percent in 2020. On the external side, strengthening demand in advanced economies is driving commodity prices upward and putting pressure on COVID-19-strained logistics networks and global value chains. Similarly, the faster-than-expected recovery in domestic consumption across the region has placed upward pressure on domestic costs, particularly in labor markets during the summer tourism season.

Sri Lanka has an impressive track record of reducing poverty and sharing prosperity more broadly. A dynamic decade that spurred post-war growth and continued with a process of economic transformation led to a productivity boost and labor reallocation from agriculture to industry and services. The COVID-19 pandemic is expected to have resulted in a significant reversal of welfare gains. Before COVID-19, poverty reduction was mainly driven by increased labor earnings from nonfarm sectors. New jobs were created in these sectors but there are concerns about their quality. Progress in improving agricultural earnings was slow; and the performance of social protection continued to be weak—these trends held back further progress in economic transformation and poverty reduction.

Systematic Country Diagnostics (SCDs) analyze the most critical constraints and opportunities to ending extreme poverty and promoting shared prosperity in a sustainable manner. The first SCD for Egypt was published in 2015. A lot has happened since then, so this SCD Update takes advantage of a longer stretch of reforms and newer data up to 2019 to identify and again assess the set of priorities through which Egypt can most effectively and sustainably achieve the goals of poverty reduction and shared prosperity.

This poverty assessment aims to inform poverty-focused policymaking in Chad. The report examines recent trends in poverty, inequality, and other social indicators and identifies key constraints on poverty reduction. Although agriculture, pastoralism, and related activities provide livelihoods for about 80 percent of the population, the capital-intensive oil sector drives macroeconomic growth, exports, and fiscal revenues. Eliminating poverty and boosting shared prosperity in Chad will require robust and sustained interventions along three strategic axes: (i) economic diversification, with a focus on the rural sector; (ii) building resilience to multidimensional shocks; and (iii) accelerating human capital formation. Chad faces enormous challenges, and the effectiveness of its poverty reduction efforts will hinge on factors that extend beyond economic policy, including the reestablishment of peace and security through improved governance, as well as a comprehensive effort to address the country’s profound gender disparities.

Sri Lanka has made strong progress in reducing poverty and sharing prosperity among the less well-off in recent years. The poverty rate using the World Bank's 3.20 Dollars poverty line (in 2011 purchasing power parity) declined from 16.2 percent in 2012/13 to 11 percent in 2016, a reduction that compares favorably to regional peers. Extreme poverty is almost eliminated. Gains were also made in nonmonetary measures of welfare, including access to basic services, housing conditions, and asset ownership. Growth was inclusive but less pro-poor: per capita consumption growth of the bottom 40 percent of the consumption distribution accelerated to an annualized 4.2 percent but was still below the population averageof 4.7 percent between 2012/13 and 2016. A significant increase in labor income, particularly from nonfarm sectors, is the major factor behind progress. The economy is steadily transitioning toward industry and services, and sectors such as construction and trade led job creation in recent years. Wage growth has also been strong. The expansion in services was underpinned by a booming tourism sector, as tourist arrivals quadrupled between 2009 and 2016. Real gross domestic product (GDP) growth was mainly driven by gains in labor productivity, though most of the productivity growth came from increases in within-sector productivity rather than from reallocation effects. This implies that most of the labor movement occurred from agriculture toward other sectors with low productivity. Agriculture did not contribute to poverty reduction as it had in the previous decade because stagnating productivity and a reversal of favorable prices slowed agricultural income growth.

This report, initiated at the request of His Excellency President Alassane Ouattara to Hafez M. H. Ghanem, the World Bank Group Regional Vice President for Eastern and Southern Africa, is the first country application of the new regional strategy, Supporting Africa’s Transformation. Albert Zeufack, the Chief Economist of the World Bank Group Africa Region, led a team to synthesize knowledge and experience from Côte d’Ivoire and across the world. The report incorporates the perspective of the new International Development Association agenda, Jobs and Economic Transformation, and addresses three operational objectives for Côte d’Ivoire: create sustainable and inclusive growth by maintaining macroeconomic stability, fighting corruption, advancing digital transformation, and maximizing private finance; strengthen human capital by empowering women, reducing child mortality and stunting, and improving education, health, and social protection; build resilience against fragility and climate change. The National Development Plan 2016-20 consolidated promarket reforms and reaffirmed the ambition to reach upper-middle-income status. Côte d’Ivoire is embarking on a strategy to sustain strong gross domestic product (GDP) growth through 2030 while rapidly reducing poverty. Côte d’Ivoire’s aspiration of becoming an emerging market economy with low levels of poverty requires a long period of strong and inclusive growth. The report analyzes growth trajectories and identifies the investments needed to achieve and sustain desired levels of growth, along with the corresponding financing needs. It discusses the opportunities presented by the country’s surplus labor, young population, and huge diversification potential.

São Tomé and Príncipe (STP), a small island nation of 215,000 people in the Gulf of Guinea off the coast of Central Africa, is in many ways a country of great untapped wealth. One of Africa’s least known countries, its striking volcanic landscape is home to virgin rainforests with rich biodiversity, while its large exclusive economic zone (EEZ), approximately 160 times larger than the archipelago, is a marine biodiversity hotspot and supports high numbers of species unique to the area. It has among the lowest violence and crime rates in Africa and has had peaceful elections and transitions of power since becoming a multiparty democracy in 1991, making it an outlier in the region. It also has a young population, half of which is under 18 years of age, raising the prospect of a demographic dividend to be tapped in the years ahead. Its economy has grown steadily over the past two decades, outpacing its high population growth. This growth reflects strong inflows of overseas development aid (ODA) and revenues from oil exploration that have enabled the government to expand public investments, particularly in infrastructure, social protection, health, and education. This has enabled STP to bridge the gap caused by years of underinvestment in local human and physical capital, a legacy of the country’s colonial past (its first secondary school was established only in 1952). This growth model has not been able to spark the fundamental changes needed for the economy to generate resilient poverty reduction and shared prosperity. Few jobs are being created, and indicators and consultations with civil society reveal a broad sense of social exclusion even as the economy has grown. This model is not sustainable.A new growth model is needed, one that will be able to provide more opportunities for its growing population. In the context of STP, a small nation with low capacity facing increasing vulnerabilities and in need of a new growth model, it is important to think strategically to identify an effective way forward. To this end, this Systematic Country Diagnostic (SCD) identifies the most critical vulnerabilities and constraints facing the country and, from these, a set of actionable priorities that will contribute to reducing poverty while promoting sustainable growth and shared prosperity.

Using individual data from over 400 surveys, this paper compiles a global database of intergenerational mobility in education for 153 countries covering 97 percent of the world’s population. For 87 percent of the world’s population, it provides trends in intergenerational mobility for individuals born between 1950 to 1989. The findings show that absolute mobility in education—the share of respondents that obtains higher levels of education than their parents—is higher in the developed world despite the higher levels of parental educational attainment. Relative mobility—measuring the degree of independence between parent and child years of schooling—is also found to be greater in the developed world. Together, these findings point to severe challenges in intergenerational mobility in the poorest parts of the world. Beyond national income levels, the paper explores the correlation between intergenerational mobility and a variety of country characteristics. Countries with higher rates of mobility have (i) higher tax revenues and rates of government expenditures, especially on education; (ii) better child health indicators (less stunting and lower infant mortality); (iii) higher school quality (more teachers per pupil and fewer school dropouts); and (iv) less residential segregation.

Strong boom and bust cycles and Montenegro’s vulnerability to these fluctuations are a critical obstacle to greater prosperity and opportunities for its citizens. Montenegro’s vulnerability to boom-bust cycles was already emphasized as a key development challenge in the previous Systematic Country Diagnostic. Several social and economic indicators improved during the period of high economic growth from 2015 to 2019 supported by a construction boom based on large public and private investments in transport, energy, and tourism. But the temporary construction boom based on few prestigious megaprojects also bolstered Montenegro’s vulnerabilities—it elevated macro-financial imbalances, did not create enough good jobs, discouraged the enforcement of environmental standards when competing with strategic investment, and created a narrow group of primary beneficiaries reinforcing vested interests. The COVID-19 pandemic has exposed and exacerbated these vulnerabilities. As a result of this unsustainable growth strategy, many of the constraints causing Montenegro’s vulnerabilities and hindering sustained progress in shared prosperity remain relevant today and threaten its social contract, as well as its pristine natural assets. Improving economic resilience is key to a sustainable recovery and a virtuous cycle of inclusive growth and poverty reduction in Montenegro.

Aggregated data from mobile network operators can provide snapshots of population mobility patterns in real time, generating valuable insights when other more traditional data sources are unavailable or out of date. The COVID-19 pandemic has highlighted the value of remotely collected, high-frequency, localized data in inferring the economic impact of shocks to inform decision making. However, proper protocols must be put in place to ensure end-to-end user confidentiality and compliance with international best practice. This paper demonstrates how to build such a data pipeline, for the case of The Gambia, channeling data from mobile network operators through the national regulator to the analytical users, who in turn produce policy relevant insights. The aggregated indicators analyzed offer a detailed snapshot of the decrease in mobility and increased out-migration from urban to rural areas during the COVID-19 lockdown. Recommendations based on lessons learned from this process can inform engagements with other regulators in creating data pipelines to inform policy making.

Modern economic policy making in Nigeria has placed enormous emphasis on diversification of the economy to non-oil productive sectors. With the aim to restore economic growth following the 2015-16 recession and lay the foundations for long-term structural change, the economic growth and recovery plan (ERGP) recognized the need to diversify the economy to non-oil productive sectors such as agriculture and agro-allied industries, in order to build an economy that can generate inclusive growth and create jobs. This report aims to improve understanding of the potential of the agribusiness sector (primary agriculture plus off-farm agribusiness) to accelerate inclusive recovery from the 2020 recession, create jobs, and reduce poverty. A key early finding of the report is that the agribusiness sector is critical to accelerating inclusive recovery and creating jobs. The report builds on this evidence to identify the specific value chain groups that have most potential to create jobs, reduce poverty, and improve nutrition outcomes. Next, the report offers to highlight the complex set of factors that mediate the performance of agricultural value chains, distinguishing between issues that pertain to upstream primary agriculture, those that affect downstream off-farm agribusiness and cross-cutting challenges. The agribusiness enabling environment takes center stage in this part of the report, focusing on policy reforms around seed regulations, fertilizers quality control, warehouse receipts, and agricultural trade. Finally, the report takes deep dives to identify reforms to increase competitiveness in the value chains that were found to have the most potential to create jobs, reduce poverty, and improve nutrition outcomes.

Many of the world’s poor people depend on natural resources for their well-being. Four-fifths of the world’s poor people live in rural areas, and most rural poor people depend on natural resources for their livelihoods. The renewable natural resources on which poor people depend are increasingly being degraded, posing significant risks to resource-dependent communities. The World Bank has committed to reducing the vulnerability of resource-dependent people. This evaluation assesses how well the World Bank has addressed natural resource degradation to reduce the vulnerabilities of resource-dependent people.

Maldives is the smallest yet most densely populated country in South Asia. Endowed with an extremely rich and diverse marine ecological system, Maldives has been able to develop a successful high-end tourism sector. Tourism continues to be the main engine of growth, but there are limited interlinkages between the high-end tourism sector and the local economy. This document builds on the findings in the 2015 Systematic Country Diagnostic, providing an in-depth analysis on labor market outcomes and spatial disparities.

Since gaining independence in 1990, Namibia has undertaken an economic transformation and experienced strong economic growth. Despite decades marked by progress, deep underlying challenges remain in Namibia, undermining the prospects for further advancement. Namibia has been in recession since 2016 and public finances have continued to deteriorate. The global COVID-19 crisis is expected to have a substantial adverse economic and social impact.

COVID-19 has severely affected Ethiopia, weakening its economic performance. Ethiopia has experienced a collapse in external demand since April 2020 due to COVID-19. While merchandise exports, excluding gold, increased by 5.8 percent overall in FY20, they declined by 4.1 percent during July-December 2020 (year-on-year). Exports of garments, textiles, and fruits and vegetables have been particularly hit since the onset of the pandemic. Both exports and imports of services, dominated by air transport, recorded negative growth in FY20. Remittances dropped by 10 percent in FY20, although they have rebounded during the first half of FY21. Merchandise imports, which were already on decline prior to COVID-19, dropped by 8 percent in FY20, contributing to the narrowing of the current account balance, estimated at about 4 percent of GDP. Meanwhile, foreign direct investment has been severely hit, with inflows declining by 20 percent in FY20, contributing to weakening reserve levels. Despite the severe impacts, Ethiopia grew at 6.1 percent in FY20, as the impact of the COVID-19 pandemic took place largely in the final quarter of the fiscal year. Phone survey data suggests that both firm revenue and household income are significantly depressed, which points to weakening domestic demand. The adverse impact of the COVID-19 pandemic on economic activity is expected to continue in FY21, prior to experiencing a rebound in FY22 and beyond. Further action is needed to ensure a resilient economic recovery. The Government of Ethiopia is to be commended for having kept advancing its Homegrown Economic Reform Agenda despite COVID-19. Implementing some complementary reforms will be key to ensuring a resilient recovery in the new COVID-19 normal.

Malaysia is likely to make the transition from an upper-middle-income economy to a high-income economy within the next five years, despite thesetback of the COVID-19-induced recession in 2020. This transition represents an important milestone in Malaysia’s development, having transformed living standards in less than a generation, slashing the extreme poverty rate to less than one percent of the population, and ending the country’s long tenure in the “middle-income trap”. However, Malaysia has been severely affected by COVID-19 and it will take several years beforethe scars of the pandemic are fully erased. The country experienced a “triple shock”: the direct health impact of the virus; the economic impact of movement restrictions; and the growth impact of a global recession. With Malaysia on the verge of achieving this transition, it is an opportune time to address a number of questions regarding the speed of Malaysia’s growth, its quality, and its sustainability. Malaysia is growing slower thanmany countries that achieved high-income status in recent decades. In addition, compared to many other countries that have graduated from middle-income status, it has a lower share of employment at high skill levels and higher levels of inequality. And, compared to countries in the OECD, Malaysia collects less in taxes, spends less on social protection, and performs relatively poorly in terms of measures related to environmentalmanagement and the control of corruption. Many of these fault lines have become exposed during the pandemic. Most significantly, there is a growing sense that despite economic growth, the aspirations of Malaysia’s middle-class are not being met and that the economy hasn’t produced enough well-paying, high-quality jobs. There is a widespread sense that the proceeds of growth have not been equitably shared and that increases in the cost-of-living are outstripping incomes, especially in urban areas, where three-fourths of Malaysians reside. Policies and institutions that have worked in the past may no longer be appropriate for the next stage of Malaysia’s development, with a different set of policies and institutions required at higher levels of income and development. The policies that enabled Malaysia to successfully make the transition from low- to middle-income need to be adapted to meet the challenges it will face in the future. At an earlier stage of its development, factor accumulation was a key driver of Malaysia’s growth. As it makes the transition, it will increasingly need to depend upon more knowledge-intensive and productivity-driven growth, closer to the technological frontier and with a greater emphasis on achieving inclusive and sustainable development. As Malaysia positions itself for the next phase of its development and beyond the pandemic, many of the issues related to this transformation are being addressed and discussed, including through the 12th Malaysia Plan and the Shared Prosperity Vision 2030. With the impact of the COVID-19 pandemic and its potential to depress growth into the future, issues related to Malaysia’s readiness for the future have become even more significant. The analysis in this report suggests that for Malaysia to fulfil its potential, to transition successfully to high-income and developed country status, and to sustain equitable growth beyond that point, reforms are needed in six broad and inter-linked areas: (i) revitalizing long-term growth; (ii) boosting competitiveness; (iii) creating jobs; (iv) modernizing institutions; (v) promoting inclusion; and (vi) financing shared prosperity.

The approach paper provides the rationale for further integration of conflict-induced internally displaced persons (IDPs) into World Bank Group (WBG) programming based on its commitment to vulnerable and marginalized populations. It highlights the conflict sensitive engagement required to address the needs of these populations. The purpose of this approach paper is to highlight the key principles for World Bank Group (WBG) engagement to address conflict-induced internal displacement. It provides the rationale for inclusion of IDPs in WBG programming based on its commitment to vulnerable and marginalized populations, while highlighting the conflict-sensitive engagement required to address the needs of these populations. The new World Bank Group Strategy for Fragility, Conflict and Violence (FCV), endorsed in February 2020, identifies support to situations of internal displacement as a priority area. This approach paper is also situated in the broader context of the WBG agenda to support people on the move due to urbanization and economic migration, as well as those displaced due to natural disasters and the effects of climate change.

The Systematic Country Diagnostic Update examines the key constraints to and opportunities for sustainably accelerating inclusive growth and boosting shared prosperity in Bulgaria. It builds on the first Systematic Country Diagnostic (SCD) published in 2015, entitled “Bulgaria’s Potential for Sustainable Growth and Shared Prosperity”. The analysis is organized in three components related to economic growth: strength, inclusiveness and sustainability. Although the earlier diagnostic remains valid for the most part, several contextual factors such as the health, social and economic repercussions of COVID-19, a drive to embrace the digital and green transformation, and a rapidly aging population— have emerged or gained prominence, creating new challenges or sharpening existing ones in all three growth areas. Alongside these mega-trends, institutions and governance continue to play a prominent role through their impacts on all segments of growth.

Jobs are vital for individuals to work their way out of poverty and for promoting shared prosperity. Somalia has few formal social safety nets, and the country is steadily consolidating peace and rebuilding state institutions following decades of conflict. Putting in place a jobs strategy as well as adaptive social protection systems are key to strengthening citizen confidence in state institutions. The Federal Government of Somalia (FGS) seeks to generate economic growth to create jobs and promote economic inclusion, including opportunities for youth, the most excluded and vulnerable group in Somalia. Decent jobs are central to poverty reduction, and have far reaching implications for stability and security, empowerment, and household resilience. Central to any efforts to curb poverty is the creation of enough decent jobs to absorb workers, especially youth. Youth represent an integral part of the economically productive population, possessing many years of productive life before them. The youth bulge and demographic expansion in Somalia suggest a pressing need to create jobs for its youth while equipping future workers with the right set of skills. This report examines the profile of Somali household workers, and identify job characteristics and constraints for creating more and inclusive jobs. The study also evaluates youth employment, patterns of school-to-work transitions, and how well the Somali educational system prepares young people for the job market.

COVID-19 (coronavirus) has had an enormous impact on nearly every country in the world. However, Iraq, Jordan and Lebanon were already facing difficult to extreme circumstances even before the pandemic erupted, making them particularly vulnerable. This report looks at the impact of the pandemic, associated lockdowns and economic shocks and other misfortunes which have compounded the crisis, such as sharply lower oil revenues in Iraq and the Port of Beirut explosion in Lebanon, as well as political instability in both. The report estimates that 4.4 million people in the host communities and 1.1 million refugees or IDPs were driven into poverty in the immediate aftermath of the crisis, and while this considers all of Lebanon, it only includes three governorates in Jordan and the Kurdistan Region of Iraq, due to data limitations. A response commensurate with the magnitude of the shock is needed to prevent further misery. The poverty impact of COVID-19 and the ensuing confinement policies and economic contractions have been felt throughout the world, not least by marginalized communities. However, COVID-19 has compounded existing vulnerabilities or crises in Jordan, the Kurdistan Region of Iraq (KRI) and Lebanon. Syrian refugees – most of whom have been displaced for up to nine years – are particularly exposed given their perilous pre-crisis situation. Host communities in these three countries, who have supported and accommodated such large numbers of refugees, have also been heavily affected; all three countries were in strained positions prior to COVID-19, ranging from economic stagnation and high public debt in Jordan, to a collapse in public revenues due to international oil price shocks in KRI, to complete political and economic crisis in Lebanon. By March 2020, all three countries had witnessed their first cases of COVID-19 and introduced stringent containment policies ranging from partial closures of schools and shops to full curfew. While these measures were initially largely successful in containing the spread of the pandemic, they also led to a decline in economic activity across most sectors, particularly in the informal market. In Jordan and Iraq, the losses are estimated at around 8.2 and 10.5 percent of 2019’s GDP respectively. In Lebanon where the COVID-19 crisis is compounded by economic and political crises the losses are much higher, around 25 percent of GDP. Lebanon has experienced inflation of over 100 percent, largely due to its import dependence and currency depreciation. Unsurprisingly, given the magnitude of these shocks, recent rapid needs assessments and UNHCR administrative data show that refugees, who are highly concentrated in low-skilled jobs in the informal sector, have had to reduce food intake, incur additional debt and in some instances suffered eviction.

One of three kingdoms in Africa, the Kingdom of Eswatini (formerly Swaziland) is a small, homogeneous, and landlocked country that is quasi-enclaved within South Africa. Eswatini is one of the world’s most trade-dependent economies, with South Africa as its most important trading partner. The COVID-19 pandemic is expected to worsen Eswatini’s growth outlook in the near to medium term, which will exacerbate the triple problems of high unemployment, poverty, and inequality. Eswatini has high levels of poverty and income inequality, which are not commensurate with its middle-income status. This Systematic Country Diagnostic views addressing inequality of opportunity, manifested in people’s unequal access to assets, markets, services, and rights, as central to accelerating poverty reduction and shared prosperity in Eswatini. To this end, it identifies five interconnected, broad priority policy areas that could potentially make the greatest contribution to eliminating extreme poverty and boosting shared prosperity. These are: (a) strengthening macroeconomic management; (b) diversifying the economy and creating jobs; (c) strengthening human capital and the inclusive delivery of public services; (d) improving resilience to natural disasters and economic shocks; and across these four areas, (e) demonstrating credible commitment to transparent and effective policy implementation.

This study looks at the redistributive effects of fiscal policy -- in particular of direct taxation and expenditures -- in Uruguay. This fiscal incidence analysis applies a widely recognized methodology to household survey data and government data for fiscal year 2017 and compares the results with the policies seen in 2009 to study the evolution of the distributional impacts of fiscal policy in the country. The study finds evidence that Uruguayan fiscal policy continues to reduce inequality, with government expenditures in the form of in-kind transfers leading to the largest decreases. While expenditures in basic education are benefitting the poorest, expenditures in tertiary education remain largely regressive. The personal income tax is found to be largely progressive, with the top quintile paying more than four-fifths of this tax. Uruguay’s fiscal policies also lead to a reduction in poverty, mainly due to well-targeted direct transfers.

Ethiopia’s economy has grown rapidly over the last two decades, leading to significant national poverty reduction, but there were significant differences in the pace and nature of poverty reduction across Ethiopia’s eleven regions. Based on the national poverty line, poverty decreased from 46 percent in 1996 to 24 percent in 2016 nationwide. Poverty decreased in all the regions, particularly after 2005 when growth became more robust. Although regional disparities remained fairly low, regional poverty rates converged until 2011 only to begin diverging again in 2016.

Guyana stands at the threshold of a new era. The recent discovery of vast offshore oil and gas (O&G) reserves and the start of production, is poised to fundamentally transform the structure of the Guyanese economy while generating an influx of fiscal revenue. Prior to the discovery, extractive industries and commodity exports already played a major role in Guyana’s economy and public finances. However, the mining sector created few jobs and had a limited impact on poverty reduction. The rise of the O&G sector poses unprecedented macro-fiscal management challenges while offering new opportunities to address longstanding development constraints. The development of oil-producing countries often comes at high cost of environment and climate change, which needs to be balanced. In addition, the country is now facing the challenges from the COVID-19 pandemic that will stretch the public health systems and highlight inadequacies of testing and treatment facilities. The SCD is organized into six chapters. Chapter 1 situates the development of the oil sector within Guyana’s broader economic, social, and political context. Chapter 2 estimates the magnitude of fiscal revenues from the oil sector, along with alternative cost scenarios, and the implications of alternative strategies for allocating these revenues and considers how policies can mitigate the macro-fiscal and environmental risks posed by the sector. Chapter 3 focuses on institutional quality and good governance, especially in terms of strengthening the public sector, and it details challenges related to the design and implementation of a sovereign wealth fund, which the international experience has shown to be vital to the success of resource-rich developing countries. Chapter 4 explores how the government can leverage natural resource revenues to accelerate Guyana’s economic transformation and spur job creation. Chapter 5 evaluates strategies for transforming Guyana’s natural capital into human capital and reaching full coverage of basic services and infrastructure through investment in health, education, and social protection. The chapter highlights the constraints in human capital development and health facilities; even more critical that these are addressed in context of the current COVID-19 pandemic. Chapter 6 prioritizes interventions necessary to generate enduring gains in poverty reduction and shared prosperity. A key offering of the chapter is a spatial development package to address deficiencies in basic service delivery and infrastructure necessary to protect well-being and health of Guyanese citizens. To ground the analysis in the real-world experience of Guyanese communities, each chapter begins with a brief discussion of how the newfound wealth will affect the most vulnerable and marginalized households.

While its poverty rate has fallen slightly over the past two decades, the DRC remains one of the poorest countries in the world. The unaddressed demand for service delivery will require local private sector solutions to meet the needs of the poor, marginalized, and other underserved populations. Social enterprises (SEs) champion emerging private sector solutions to bring services to these populations, by switching from charity-based, donor-dependent organizations to revenue generating and sustainable enterprises. This report provides an overview of opportunities for, and constraints to, social entrepreneurship in the DRC and lays out a menu of options for strengthening social entrepreneurship through development programs.

Agriculture and food systems in Latin America and the Caribbean Region (LAC) are rightfully recognized as among the most successful on the planet: they have fed a fast-growing population, facilitated economic development, enabled urbanization, generated substantial exports, and helped drive down global hunger and poverty. Yet despite these significant contributions, the public image of the region’s agriculture and food systems as dynamic, productive, and efficient reflectsonly part of a more complicated reality. The impressive achievements have come at the expense of significant environmental and health costs. LAC agriculture uses over one-third of the region’s land area, consumes nearly three-quarters of the region’s fresh water resources, and generates almost one-half of the region’s greenhouse gas emissions. And despite the consistent food production surpluses, millions of people in LAC regularly go hungry or suffer from malnutrition and related diseases. In short, the region’s successes in feeding the population and exporting food to the rest of the world are exacting high costs on people and on the environment.

This World Bank Systematic Country Diagnostic (SCD) provides an analytical foundation for identifying country-level actions and investments that would increase growth and boost shared prosperity in Kenya. The conceptual framework adopted for this SCD is organized around two main strategies: (1) higher aggregate output and productivity growth and (2) greater equity and inclusiveness.

Many governments in developing countries have pursued policies targeting specific geographic areas over the past several decades. However, only a few have rigorously evaluated the causal impact of these interventions. This paper examines the effectiveness of a prominent place-based policy in India: the centrally sponsored New Industrial Policy for the state of Uttarakhand. Using georeferenced economic census data, the analysis applies a boundary discontinuity research design and zones in on the unique border between Uttarakhand and Uttar Pradesh, two states that were officially one before the implementation of the New Industrial Policy. The findings show that there was a significant and abrupt increase in employment at the town and village level when crossing the state border from Uttar Pradesh to Uttarakhand after the full implementation of the New Industrial Policy. The conclusion even holds for firms within the same sector. The increase is mainly due to larger firm sizes and expansions into new industries. A main component of the New Industrial Policy was excise tax incentives for certain industries. The paper finds that the increase in cross-border employment is higher for sectors receiving excise tax incentives than others. Additionally, exploring spillovers between industries, the paper shows that, controlling for the direct effects, the sectors with labor requirements similar to those receiving excise tax incentives also experience an increase in employment. Finally, the growth in the number of firms in Uttar Pradesh close to the border remained stable before and after the New Industrial Policy, which suggests the results are not fully driven by firms relocating from Uttar Pradesh to Uttarakhand.

As elsewhere in the world, in the Western Balkans the COVID-19 pandemic has plunged countries into deep recession. Because of the recession, labor market conditions have taken a turn for the worse and welfare improvements have been interrupted, although government response measures cushioned the blow. Policy efforts in the region need to remain focused on fighting the pandemic, limiting the economic damage and facilitating recovery.

Rwanda is renowned among African countries for the rapid advances achieved in its population’s standard of living. Public service delivery has grown dramatically, and educational attainment, vaccination rates, educational attainment, and demographic factors have all improved. Access to financial services, health insurance, and infrastructure have expanded. Between 2000 and 2010, the percentage of people living in poverty fell from 59 to approximately 46 percent and then to 38 percent by 2016 (NISR: national poverty line). Yet progress has not always been even, and challenges endure. With the COVID-19 pandemic, Rwanda will face fiscal strains and economic setbacks, in addition to public health difficulties. It will be paramount to identify and implement cost-effective policies that foster broad-based growth and sustained poverty reduction, while building resilience to a range of shocks. This poverty assessment provides empirical evidence regarding the constraints to accelerated poverty reduction over the period October-September 2010-11-2016-17 to help guide the country’s policies going forward.

This poverty assessment focuses on the evolution of poverty and other social indicators in Ethiopia between 2010-11 and 2015-2016 (henceforth referred to as 2011 and 2016). Using data from a variety of sources, mainly the twinned household living standards surveys (HCES and WMS), the Ethiopia Socioeconomic Survey (ESS) and the Demographic and Health Surveys (DHS), the poverty assessment documents trends in monetary and non-monetary dimensions of living standards and examines the drivers of observed trends, with a special focus on government programs. The aim of the poverty assessment is to provide policy makers and development partners with information and analysis that can be used to improve the effectiveness of their poverty reduction and social programs.

This Systematic Country Diagnostic (SCD)—the first to be conducted in Pakistan—is aimed at informing Pakistan’s ongoing structural reform process and providing an analytical base for the World Bank Group’s (WBG) engagement moving forward. It presents a timely and evidence-based assessment of the constraints that the country needs to address, and the opportunities that it can embrace, to sustainably accelerate progress toward the goals of ending extreme poverty and promoting shared prosperity. The SCD, while focusing on developments in the past two decades, builds on the extensive analytical work conducted under the “Pakistan@100 – Shaping the Future” study and reflects inputs from the WBG’s previous and ongoing stakeholder consultations. This SCD was completed before the COVID-19 pandemic struck, and the analysis presented in the report primarily uses data released up until end-February 2020.

Using World Bank PovcalNet data from 1974-2018 for 135 countries, this paper approximates the identity that links growth in mean incomes and changes in the distribution of relative incomes to reductions in absolute poverty, and, in turn, examines the role of income inequality for poverty reduction. The analysis finds that the assumption that income is log-normally distributed allows one to approximate the identity well. Using this approximation, both the growth and inequality elasticities of poverty reduction are calculated. The inequality elasticity of poverty reduction is larger, on average, compared to the (absolute) growth elasticity of poverty reduction. Moreover, the (absolute) growth elasticity declines steeply with a country's initial level of inequality. However, despite these results, most of the observed changes in poverty can be explained by changes in mean incomes. This is a consequence of changes in income inequality (as measured by percentage changes in the standard deviation of log-income) being an order of magnitude smaller than changes in mean incomes. Overall, the results highlight the important role income inequality can play in reducing poverty even if prior poverty changes have, in large part, been a consequence of economic growth.

What is the pathway to development in a world with less international integration? This paper answers this question within a model that emphasizes the role of demand-side constraints on national development, which is identified with sustained poverty reduction. In this framework, development is linked to the adoption of an increasing returns to scale technology by imperfectly competitive firms that need to pay the fixed setup cost of switching to that technology. Sustained poverty reduction is measured as a continuous decline in the share of the population living below $1.90/day purchasing power parity in 2011 US dollars over a five year period. This outcome is affected in a statistically significant and economically meaningful way by domestic market size, which is measured as function of the income distribution, and international market size, which is measured as a function of legally-binding provisions to international trade agreements, including the General Agreement on Tariffs and Trade, the World Trade Organization and 279 preferential trade agreements. Counterfactual estimates suggest that, in the absence of international integration, the average resident of a low or lower-middle income country does not live in a market large enough to experience sustained poverty reduction.

This World Bank Systematic Country Diagnostic (SCD) provides an analytical foundation for identifying country-level actions and investments that would increase growth and boost shared prosperity in Kenya. It aims to be an objective diagnostic that analyzes and prioritizes binding constraints on development, based on government and external sources as well as consultations with local stakeholders. The conceptual framework adopted for this SCD is organized around two main strategies: (1) higher aggregate output and productivity growth and (2) greater equity and inclusiveness. Constraints limiting advancement in these two key thematic areas are identified using the latest available data. The document then outlines three main pathways to accelerate the attainment of the World Bank’s “twin goals” of ending extreme poverty and promoting shared prosperity. Using filtering criteria and with attention to foundational issues that cut across all sectors, this SCD proposes specific priorities for development initiatives in Kenya.

As in most conflicts, in South Sudan, women and girls have been the most vulnerable. Not only do they face many challenges, including extreme poverty and lack of access to basic services and productive assets, but many of the risks they face, such as gender–based violence (GBV), are heightened during times of conflict. The implementation of well–designed and inclusive poverty reduction programs can contribute to empowering women and addressing persistent gender gaps. Yet, until now, there have been few assessments undertaken to better understand how successfully these goals have been achieved. This paper examines how social protection and other poverty reduction programs targeting the most vulnerable have addressed the needs of women and girls in South Sudan. Based on a portfolio review of World Bank operations and a review of impact evaluation evidence, it provides guidance to practitioners to integrate gender equality in the design and implementation of social protection and poverty reduction programs in fragile situations.

Papua New Guinea’s economy has been hit hard by the COVID-19 crisis due to weaker demand and less favorable terms of trade. Pandemic-related global and national movement restrictions have weakened external and domestic demand and affected commodity prices, which will lead to an economic contraction, wider financing gaps in the external and fiscal accounts, and higher unemployment and poverty than previously anticipated in 2020. The authorities reacted swiftly to the emerging external shock by developing a package of emergency health and economic relief measures. While the focus of the authorities is currently on crisis mitigation measures, they should also look beyond the current year at a more robust and resilient recovery over the medium term. In addition to the economic analysis, the report contains additional sections dedicated to physical infrastructure development in PNG. The infrastructure section suggests that the provision of more equitable access to quality infrastructure will be crucial once the country moves to the recovery and resilience phase of COVID-19 response. While improving the quality of infrastructure in PNG faces serious constraints, the country’s abundance of natural resources is a potential source for financing the work and government’s stated vision and strategy can provide necessary policy guidance.