What will it take to end extreme poverty?

Abstract

The world has probably met the first Millennium Development Goal (MDG) target: to halve the share of the population living in extreme poverty. Can the world now end extreme poverty by 2030? Using a range of scenarios based on economic growth and income inequality forecasts, the author shows that strong economic growth coupled with a fall in within-country inequality could end extreme poverty. If growth is weak and inequality is not tackled, however, extreme poverty could remain around 1.3 in 2030. Ending USD 1.25 per day poverty does not mean ending all poverty. Nutrition and health poverty, multidimensional poverty and higher poverty lines need to be considered as well. This is why providers of concessional funding should not concentrate attention solely on the poorest countries and should remember the bottom billion in middle-income countries (MICs). A new system of country classification would help to address this challenge. The focus of development co-operation with MICs should be on: supporting economic growth that is equitable and addressing poverty reduction as a national distribution issue; co-financing global, regional and national public goods; ensuring that development and other OECD polices (on trade, migration and others) are coherent and mutually supportive; encouraging new modalities of finance, such as joint funding by traditional and new donors of programmes with benefits beyond borders (vaccination programmes, green infrastructure, etc.); and supporting the exchange of knowledge and experience on poverty reduction.