Search

Financial development may affect poverty directly and indirectly through its impact on income inequality, economic growth, and financial instability. Previous studies do not consider all these channels simultaneously. To proxy financial development, we use the ratio of private credit to GDP or an IMF composite measure. Our preferred measure for poverty is the poverty gap, i.e. the shortfall from the poverty line. Our fixed effects estimation results for an unbalanced panel of 84 countries over the 1975–2014 period suggest that financial development does not have a direct effect on the poverty gap. However, as financial development leads to greater inequality, which, in turn, results in more poverty, financial development has an indirect effect on poverty through this transmission channel. Only if we use poverty lines of $3.20 or $5.50 (instead of $1.90 a day as in our baseline model) to define the poverty gap, we find that economic growth reduces poverty. This implies that in those cases the overall effect of financial development on poverty may be positive or negative, depending on which indirect effect, i.e. that of income inequality or growth, is stronger. Financial instability does not seem to affect the poverty gap. These results are consistent across various robustness checks., Social Indicators Research, 161 (1), ISSN:0303-8300, ISSN:1573-0921

Poverty and inequality are undoubtedly the two major challenges facing the new global world. The recent spurt in growth rate around all spectrum of the global world has intrinsically not resulted in such expected outcomes (declining poverty and income inequality). What we have witnessed however is a growing global world accompanied by poverty and income inequality. This study decomposed growth into two distinct categories: agricultural and non-agricultural growth. Thus, this research set out to re-visit the growth theory in an attempt to further investigate the dynamics of growth in the Western part of Africa and to pin-point the resultant effect of the growth model of this part of the world on poverty and income inequality. The research used a 5-year moving average panel data of 13 West African countries from 1970-2015. Results showed a dynamic growth from the agricultural sector to the non-agricultural sector, but no dynamic growth from the non-agricultural sector to the agricultural sector. In addition, the dynamic results of income inequality and poverty have revealed that political stability, education, and non-agricultural growth are essential to reducing the gap in poverty. Agricultural growth, however, is the key player in achieving poverty reduction., Yoksulluk ve eşitsizlik küresel yeni dünyanın karşılaştığı iki ana sorunudur. Klasik ekonomistler, çarpan etkisinden dolayı ekonomik büyümedeki artışın, yoksulluk ve gelir eşitsizliğini azaltacağı görüşündedir. Bununla birlikte, küresel dünyanın genelinde görülen büyüme oranındaki artış, beklenidiği gibi bir sonuç (yoksulluk ve gelir eşitsizliğinin azalması) yaratmamıştır. Ancak tanık olunan, artan bir yoksulluk ve gelir eşitsizliği ile birlikte büyüyen ve küreselleşen bir dünyadır. Bu araştırmada ekonomik büyüme tarım ve tarım dışı büyüme olarak iki farklı şekilde ele alınmıştır. Bu ayırım, iki sektörden hangisinin yoksulluğun ve gelir eşitsizliğinin azaltılmasında dinamik olarak etkili olduğunu tespit etmek için yapılmıştır. Bundan dolayı, bu araştırmada, Batı Afrika ülkelerinde büyüme teorisi çerçevesinde büyümenin dinamiklerini araştırmak ve bu ülkelerde, kurulan büyüme modeli ile büyümenin yoksulluk ve gelir eşitsizliği üzerindeki etkilerini belirlemek amaçlanmıştır. Bu araştırmada 1970-2015 yılları arasında 13 Batı Afrika ülkesine ait panel verileri kullanılmıştır. Bu ülkelerin ekonomik büyüme, yoksulluk ve gelir eşitsizliği düzeyini etkileyen makro ekonomik değişkenlerin beşer yıllık hareketli ortalamaları kullanılarak analiz yapılmıştır. Dinamik büyüme modeli sonuçları tarım sektöründen tarım dışı sektöre doğru büyümenin olduğunu, tarım dışı sektörden tarım sektörüne dinamik bir büyüme olmadığını göstermiştir. Ayrıca, gelir eşitsizliği ve yoksulluğu ilişkin dinamik modellerin sonuçları, siyasi istikrarın, eğitimin ve tarım dışı büyümenin yoksulluk açığını azaltmada önemsiz olduğunu, ancak yoksulluğun azaltılmasında tarımsal büyümenin en önemli etken olduğunu ortaya koymuştur.

Purpose. Comparable data on distribution of family income provide reference point for determining economic performance of any country, opportunity to assess effects of income inequality and poverty drivers that are either country- or region-specific. This study analysed the effectiveness of composite indices of public spending on family benefits, labour productivity, macroeconomic performance indicators and moderating factors in reducing income inequality and poverty gap in the Group of Seven (G7) countries from 1980 to 2019. Methodology. The study employed fixed effects Least Squares regression model in panel environment within the framework of empirical econometric methodologies. The composite indices comprised public spending on family benefits in cash and kind, unemployment allowance payments, tax on personal income, labour productivity, harmonised unemployment rate, consumer price index, real GDP growth rate, GDP per capita and per hour worked, fertility rate and trade. After graphical analysis of the data, order of integration was via unit root tests. Hausman test was carried out to choose between fixed and random effects models. Subsequently, parameters of the models were estimated and evaluated for significance at the 0.05 critical level. Findings. The results showed that percentage changes in income inequality and poverty gap indices differed for same percentage change in components of the composite indices. Some variable-specific percentage changes in income inequality and poverty gap were statistically significant, while others were not. However, the overall percentage changes was statistically significant. The paper concluded that while some specific effectiveness of the explanatory variables in reducing income inequality and poverty gap was not significant, their joint effectiveness significantly reduced poverty. Therefore, it is pertinent that family-oriented fiscal policy thrusts should be strengthened and sustained so as to continually reduce income inequality and, ultimately, narrow poverty gap in the countries. Limitations. The study considered the G7 countries for a period of 40 years. The limitations were that the variables considered to influence income inequality and poverty gap in the countries were both exhaustive. Also, the results were conditioned to the method used, and different methods can alternatively be used by other researchers and the results compared with this. Originality. The study is original research paper. It has neither been published in any other peer-reviewed journal not under consideration for publication by any other journal.

Moldova has experienced rapid economic growth in the past decade, which has been accompanied by reductions in poverty and good performance in shared prosperity. Nonetheless, Moldova remains one of the poorest countries in Europe and faces challenges in sustaining the progress. The challenges for progress include spatial and cross-group inequalities, particularly because of unequal access to assets, services and economic opportunities. Moreover, strengthening the persistently weak labor markets to boost employment, especially in the nonfarm sectors, is critical for sustaining progress toward the twin goals of reducing poverty and expanding shared prosperity and for addressing the problems associated with an aging population in a fiscally responsible manner. Accordingly, ensuring the viability of the pension system and improving social assistance are necessary areas of reform, particularly in a context of fiscal pressures, the aging population, and the great vulnerability of the poor to shocks. The Moldova poverty assessment 2016 includes three prongs of analysis: this report, which explores trends and the drivers of poverty and shared prosperity, and the accompanying analyses, ‘a jobs diagnostic for Moldova’ and ‘structural transformation of Moldovan small-holder agriculture and its poverty and shared prosperity impacts.’ The jobs diagnostic explores the main labor demand and supply challenges in Moldova in more detail, while the analysis of structural transformation focuses on the agricultural sector and whether it can become a driver of progress.

Analysis of Sri Lanka’s recent progress in reducing poverty and inequality is directly relevant to the new government’s development agenda. The newly sworn-in president ran for election on a platform that featured, among other goals, inclusive growth and support to the agricultural sector. The pursuit of these and other goals of the new administration can be informed by a fuller understanding of recent developments in household living standards across the country. Yet the World Bank’s most recent poverty assessment in Sri Lanka, covering the period from 1990 to 2002, was published a decade ago. Since then, domestic economic growth, the end of the civil conflict and fluctuations in global markets has led to substantial changes in Sri Lanka’s economic environment. To inform the new government’s development policies, this report examines five topics related to recent developments in poverty and welfare. Sections two through five of the report focus on: (i) trends in poverty, welfare, and inequality since 2002, (ii) labor market outcomes associated with the observed reduction in poverty, (iii) four potential causes of this poverty reduction, (iv) the state of poverty and inequality in 2012/13, and (v) the role of social protection in reducing poverty. Section six concludes by pointing out future implications and remaining knowledge gaps to continue to reduce poverty and improve living standards. This analysis draws mainly on data from the 2002, 2006-07, 2009-10, and 2012-13 rounds of the Household Income and Expenditure Survey, supplemented by annual rounds of the labor force survey from 2002 to 2012. Since the surveys could not be conducted in parts of the Northern and Eastern provinces before 2011 due to the civil conflict, their geographical coverage varies from year to year. To ensure comparability, all historical trends presented in this report correspond to the same geographic area. With the exception of figures that are based solely on 2012-13 data, the figures exclude Northern and Eastern provinces, which account for about 12.9 percent of the total population. A more detailed description of the data is provided in appendix one.

With 2015 marking the transition from the Millennium to the Sustainable Development Goals, the international community can celebrate many development successes since 2000. Three key challenges stand out: the depth of remaining poverty, the unevenness in shared prosperity, and the persistent disparities in non-income dimensions of development. First, the policy discourse needs to focus more directly on the poorest among the poor. While pockets of ultra-poverty exist around the world, Sub-Saharan Africa is home to most of the deeply poor. To make depth a more central element in policy formulation, easy-to-communicate measures are needed, and this note attempts a step in this direction with person-equivalent measures of poverty. Second, the eradication of poverty in all of its forms requires steady growth of the incomes of the bottom 40 percent. Yet, economic growth, a key driver of shared prosperity, may not be as buoyant as before the global financial crisis. Third, unequal progress in non-income dimensions of development requires addressing widespread inequality of opportunity, which transmits poverty across generations and erodes the pace and sustainability of progress for the bottom 40. To meet these challenges, three ingredients are core to the policy agenda: sustaining broad-based growth, investing in human development, and insuring the poor and vulnerable against emerging risks.

Afghanistan’s per capita Gross Domestic Product (GDP) grew at an average annual rate of 6.9 percent during that period. In contrast, in 2007-08, 36 percent of Afghans were poor, and four years later, still, more than one in three Afghans did not have the buying power to satisfy their basic food and non-food needs. Economic growth in Afghanistan, therefore, is not in and of itself enough to reduce poverty. To achieve poverty reduction, economic growth needs to be far more inclusive for everyone, regardless of their circumstances. While economic growth is necessary to reduce poverty, the poor must actually benefit from that growth. Poverty reduction hinges on the ability of the poorest to earn a good living; accumulate, control, and protect assets; and access quality services and opportunities. For Afghanistan, this means: strengthening agriculture, investing in human development, managing and mitigating risk.

Poverty estimates based on enumeration from a single point in time form the cornerstone for much of the literature on poverty. Households are typically interviewed once about their consumption or income, and their wellbeing is assessed from their responses. Global estimates of poverty that aggregate poverty counts from all countries implicitly assume that the counts are comparable. This paper illustrates that this assumption of comparability is potentially invalid when households are interviewed multiple times with repeat visits throughout the year. The paper provides an example from Jordan, where the internationally comparable approach of handling the data from repeat visits yields a poverty rate that is 26 percent greater than the rate that is currently reported as the official estimate. The paper also explores alternative definitions of poverty, informed in part by the psychological and biophysical literature on the long-run effects of short-term exposure to poverty or generally adverse environments. This alternative concept of poverty suggests that the prevalence of those who have been affected by poverty in Jordan during 2010 is more than twice as large as the official 2010 estimate of poverty.

Between 2008 and 2012 the urban/rural poverty divide substantially narrowed down, which was the result of relatively stable rural and rising urban poverty rates. Over the same period, food inflation spiked, whereby strong links between domestic and global price movements were observed owed to major import dependence on food. The high shares of consumption that households dedicate to food, especially among the poor, leave limited scope to deal with food price surges by economizing on non-food expenditure. Food price increases of 5, 10, and 15 percent are estimated to increase poverty rates between 2 and 5 percentage points in the baseline scenario.

This note describes the trends in, and composition of, absolute poverty based on household expenditures, and is thus concerned, as a matter of policy objectives, with access of the population to a particular minimum standard of living. This should be viewed as complementary to the companion note on social exclusion based on Europe 2020 indicators including the relative at-risk-of-poverty (AROP) rate, focuses on low income in relation to other residents in a given country. In addition to the analysis of absolute poverty, the note also presents an analysis of inclusive growth, aimed at assessing whether income growth (losses) benefit (impact) differentially the lowest part (here, bottom forty percent) of the distribution. Other approaches, such as those including measures of poverty based on current income, or self-reported measures of affordability, or approached that differ in the way they set the poverty threshold exist. The choice of World Bank’s methodology for purposes of this report is primarily on pragmatic grounds: (i) it allows for the analysis of trends during 2007-2011; (ii) the same methodology was adopted in the previous report (World Bank 2009) to analyze poverty trends during 2004-2007, thus providing a longer trend; (iii) it allows for comparisons of trends across the entities of BiH.

Since the early 2000s, Tanzania has seen remarkable economic growth and strong resilience to external shocks. Yet these achievements were overshadowed by the slow response of poverty to the growing economy. Until 2007, the poverty rate in Tanzania remained stagnant at around 34 percent despite a robust growth at an annualized rate of approximately 7 percent. This apparent disconnect between growth and poverty reduction has raised concerns among policy makers and researchers, leading to a consensus that this mismatch needed to be addressed with a sense of urgency. Over the past few years, the National Strategy for Growth and Reduction of Poverty (MKUKUTA) in Tanzania has given high priority to eradicating extreme poverty and promoting broad-based growth. Achieving pro-poor growth has also been widely recognized by the World Bank as a critical strategy for accelerating progress toward its twin goals of eliminating extreme poverty at the global level by 2030 and boosting shared prosperity by fostering income growth among the bottom 40 percent in every country. The official poverty figures announced by the government in November 2013 have revealed that the national strategy against poverty has begun to facilitate reductions. The basic needs poverty rate has declined from around 34 percent to 28.2 percent between 2007 and 2012, the first significant decline in the last 20 years. Identifying the policy mechanisms that have helped to increase the participation of the poor in the growth process and to speed pro-poor growth is therefore important for present and future decision-making in Tanzania on how best to eradicate poverty. Such task requires a rigorous analysis of the evolution of poverty and of the linkages between poverty, inequality, and economic growth. This report uses the availability of the new Tanzanian Household Budget Survey (HBS) for 2011 and 2012, as well as the new rebased GDP figures released in December 2014, as an opportunity to address these issues. More specifically, the report examines the recent trends in poverty and inequality and their determinants and explores how responsive poverty reduction was to economic growth and the obstacles to achieving it.

Since the early 2000s, Tanzania has seen remarkable economic growth and strong resilience to external shocks. Yet these achievements were overshadowed by the slow response of poverty to the growing economy. Until 2007, the poverty rate in Tanzania remained stagnant at around 34 percent despite a robust growth at an annualized rate of approximately 7 percent. This apparent disconnect between growth and poverty reduction has raised concerns among policy makers and researchers, leading to a consensus that this mismatch needed to be addressed with a sense of urgency. Over the past few years, the National Strategy for Growth and Reduction of Poverty (MKUKUTA) in Tanzania has given high priority to eradicating extreme poverty and promoting broad-based growth. Achieving pro-poor growth has also been widely recognized by the World Bank as a critical strategy for accelerating progress toward its twin goals of eliminating extreme poverty at the global level by 2030 and boosting shared prosperity by fostering income growth among the bottom 40 percent in every country. The official poverty figures announced by the government in November 2013 have revealed that the national strategy against poverty has begun to facilitate reductions. The basic needs poverty rate has declined from around 34 percent to 28.2 percent between 2007 and 2012, the first significant decline in the last 20 years. Identifying the policy mechanisms that have helped to increase the participation of the poor in the growth process and to speed pro-poor growth is therefore important for present and future decision-making in Tanzania on how best to eradicate poverty. Such task requires a rigorous analysis of the evolution of poverty and of the linkages between poverty, inequality, and economic growth. This report uses the availability of the new Tanzanian Household Budget Survey (HBS) for 2011 and 2012, as well as the new rebased GDP figures released in December 2014, as an opportunity to address these issues. More specifically, the report examines the recent trends in poverty and inequality and their determinants and explores how responsive poverty reduction was to economic growth and the obstacles to achieving it.

The Philippines quarterly update provides an update on key economic developments and policies over the past three months. It also presents findings from recent World Bank work on the Philippines. It places them in a longer-term and global context, and assesses the implications of these developments and other changes in policy for the outlook for the Philippines. Its coverage ranges from the macro-economy to financial markets to indicators of human welfare and development. It is intended for a wide audience, including policy makers, business leaders, financial market participants, and the community of analysts and professionals engaged in the Philippines. Though the revised gross domestic product (GDP) growth estimates show small deviation from the old base year and methodology, the revision has resulted in a nominal GDP which is 6 percent larger and hence, lower fiscal statistics as a percentage of GDP (e.g., lower tax effort, but improved debt ratio), but also important sectoral growth changes. Investment is now noticeably higher due to improved coverage and transfer of items previously booked under consumption (e.g., military goods) the investment-to-GDP ratio in 2010 is now 20.5 percent instead of 15.6 percent. The demand side growth continues to post a remarkable uptick in investment. Investment grew by 37 percent year-on-year and contributed 6.8 percentage points to GDP growth, mostly driven by durable equipment and private construction. Private construction grew by 22 percent, albeit at a slower pace than the preceding three quarters, and compensated for the contraction in public construction which shrank by 37.3 percent due to continued fiscal tightening and a high base effect. Investment in durable equipment grew 17 percent with the building up of inventory in industrial machineries and road vehicles.

The main report is organized into three parts: part one provides the overall context by describing the level and evolution of poverty and inequality in the Philippines and by analyzing the factors that could be weakening the link between economic growth and poverty reduction. It also provides a brief profile of the poor. Part two addresses the first strategic component for fostering inclusive growth, which refers to the enhancement of income opportunities and ensuring greater labor mobility for the poor. It begins by reviewing recent economic developments, with particular attention to employment generation, and evaluates the potential of key economic sectors to generate growth and productive employment. Part two then turns to the related challenge of ensuring labor mobility, identifying signs of labor market segmentation and factors that may be responsible for labor market rigidities which inhibit the fluid movement of workers toward the most productive activities. Part three discusses the other main component of fostering inclusive growth, which is to ensure that workers and households are well-equipped to take advantage of productive employment opportunities. It reviews the current state of health, education, and social protection in the Philippines and proposes measures for strengthening social service delivery.

Using recent estimates of industry assistance rates, the effects of trade liberalization in the rest of the world and in Pakistan alone are analyzed using a global and a Pakistan computable general equilibrium (CGE) model under two tax replacement schemes: a direct income tax and an indirect tax replacement. The results indicate that the distributional and poverty effects in Pakistan of a unilateral liberalization of all traded goods are significantly greater than the effects of trade liberalization in the rest of the world. There is relatively higher increase in real income and larger decline in poverty incidence in poor households both in rural and urban areas. The effects of agricultural trade liberalization alone in both the rest of the world and in Pakistan are considerably smaller than those from trade liberalization involving all goods. In both the agricultural and all-goods trade liberalization scenarios involving direct income tax replacement, real household income is raised and the poverty incidence is lowered at varied rates across all household groups except for the urban non-poor. When an indirect tax replacement is used, where the burden of replacing tariff revenue is shared by all household groups depending on their consumption structure, there is reduction in household income for most of the groups and less reduction of poverty.

This paper addresses the potential effects of world agricultural trade liberalization on poverty and regional income distribution in Brazil, using an inter-regional applied general equilibrium (AGE) and a micro-simulation model of Brazil tailored for income distribution and poverty analysis by using a detailed representation of households. The model distinguishes 10 different labor types and has 270 different household expenditure patterns. Income can originate from 41 different production activities located in 27 different regions in the country. The AGE model communicates to a micro-simulation model that has around 112,000 Brazilian households and 264,000 adults. Poverty and income distribution indices are computed over the entire sample of households and persons, before and after the policy shocks. The simulated trade liberalization scenario causes agriculture to expand considerably and so, given the importance that agriculture still has for the poorest in Brazil, it has positive impacts on poverty in Brazil. The only states which show an increase in the number of poor households are Sao Paulo and Rio de Janeiro, where the bulk of the manufacturing activities in Brazil are concentrated. There is an even more positive impact on inequality. The higher fall in the poverty gap is shown to occur mainly on the poorest household groups, suggesting that the poorest among Brazil's poor will benefit more from global trade liberalization.

When the World Bank dreams of 'a world free of poverty,' what should it be dreaming? In measuring global income or consumption expenditure poverty, the World Bank has widely adopted the $1 a day standard as a lower bound. Because this standard is based on poverty lines in the poorest countries, anyone with income or expenditures below this line will truly be poor. But there is no consensus standard for the upper bound of the global poverty line: above what level of income or expenditures is someone truly not poor? This article proposes that the World Bank compute its lower and upper bounds in a methodologically equivalent way, using the poverty lines of the poorest countries for the lower bound and the poverty lines of the richest countries for the upper bound. The resulting upper bound global poverty line will be 10 times higher than the current lower bound and at least 5 times higher than the currently used alternative lower bound of $2 a day. And in tracking progress toward a world free of poverty, the World Bank should compute measures of global poverty using a variety of weights on the depth and intensity of poverty for a range of poverty lines between the global lower and upper bounds. For instance, rather than trying to artificially force the global population of 6.2 billion (a billion is 1,000 million) into just two categories 'poor' and 'not poor,' with the new range of poverty lines the estimates would be that 1.3 billion people are 'destitute' (below $1 a day), another 1.6 billion are in 'extreme poverty' (above $1 a day but below $2 dollar a day), and another 2.5 billion are in 'global poverty' (above extreme poverty but below the upper bound poverty line).

This article offers a new assessment of progress in reducing poverty over 1981–2001 using more consistent data and methods, closely following the methods underlying the Attacking Poverty (World Bank 2000) numbers, which had been based on Chen and Ravallion (2000). In common with our past estimates, the authors draw on nationally representative surveys as much as possible. The article reviews the methods of measuring poverty from those surveys and notes any changes from past estimates, though the authors refer readers to other sources for further discussion of our methods and alternatives. The new estimates presented here supersede all our previous estimates in that the authors recalculate everything back in time on a consistent basis incorporating the new data. The authors summarize our results in a standard regional tabulation following previous work. However, the authors have also created a Web-based interactive tool, PovcalNet, that allows users to access the primary distributions and so estimate poverty measures for alternative country groupings or for a selected set of individual countries (http:/ /iresearch.worldbank.org/povcalnet). The article first describes the coverage of the survey data. It then discusses the poverty line and exchange rates, followed by the measures of poverty, and then presents the main results.