WASHINGTON, DC – The World Bank has set two new goals for itself: ending extreme and chronic poverty in the world by 2030, and promoting shared prosperity, defined in terms of progress of the poorest 40% of the population in each society. Now that the United Nations General Assembly Open Working Group on Sustainable Development Goals has endorsed the Bank’s anti-poverty target, debate about how to achieve it has revived an old question: Will the benefits of economic growth trickle down on their own, reaching all, or will we need targeted redistributive policies?
Many people remain in the growth-only camp only because of an error in deductive reasoning; unlike committed ideologues, they can be weaned from their position. That is why the World Bank’s second goal of promoting shared prosperity is important not only in itself, but as an essential complement to the goal of ending poverty.
Recognizing that some “frictional” poverty will inevitably persist over the next two decades, the World Bank’s formal target is to reduce the percentage of people living below the poverty line – defined as daily consumption of less than $1.25 (in purchasing-power-parity terms) per person – to less than 3%.
World Bank research predicts that if all countries grow at the same rates that they did over the past 20 years, with no change in income distribution, world poverty will fall to 7.7% by 2030, from 17.7% in 2010. If they grow faster, at the average rates recorded in the 2000’s, the poverty rate will fall to 5.5%.