Anti-Poverty 2.0

ROME – Global leaders have touted the apparent success of achieving in 2010 – well ahead of the 2015 target – the Millennium Development Goal of halving the share of people who were living below the poverty line in 1990. But, amid enduring poverty, rising inequality, and lackluster growth in many developing countries, the success of past anti-poverty policies and programs appears dubious.

In fact, outside of East Asia, progress has been modest, with the situation worsening in some countries and regions – despite several economic-growth spurts, sustained expansion in some large developing countries, and public commitments by the international community to the 2000 Millennium Declaration, which led to the MDGs.

This mixed record calls into question the efficacy of conventional poverty-reduction policies, often identified with the Washington Consensus, which transformed the discourse on poverty in the 1980’s. Washington Consensus reforms – including macroeconomic stabilization (defined as low-single-digit inflation) and market liberalization – were supposed to reduce poverty by accelerating economic growth.

But little attention was paid to poverty’s structural causes, such as inequality of assets and opportunities, or the unequal distributional consequences of growth. And, because unskilled workers tend to lose their jobs first in economic downturns, while employment generally lags behind output recovery, reduced public investment in health, education, and other social programs ultimately increased the vulnerability of the poor.