The World Bank Group has two clear goals: to end extreme poverty globally and to boost shared prosperity in every country. Promoting shared prosperity means that we will work to increase the incomes and welfare of the poorer segments of society wherever they are, be it the poorest of nations or thriving, middle- or high-income countries. This indicator departs from the traditional focus on growth of average income of the population – an approach that implicitly assumes that economic growth automatically trickles down to the poor.

The latest data shows that in 60 of the 83 countries studied, the bottom 40 percent of the income distribution experienced positive income growth between 2008 and 2013, representing 67 percent of the world’s population. In 49 countries, the income growth of the bottom 40 exceeded that of the top 60. East Asia and Pacific and Latin America and Caribbean tended to perform better, but, there was large variance, especially in Europe and Central Asia and among industrial countries.

The shared prosperity goal reflects the fact that as developing countries grow their economies and lift millions out of poverty, they may also experience growing inequality. We now know that nations with a widening gap between those who can and cannot access opportunities in life have difficulty sustaining economic growth and social stability over time. To date, no country has managed to transition beyond a middle-income status while maintaining high levels of inequality.

Given current and projected growth patterns, inequality can play an important role both in ending extreme poverty by 2030 and in ensuring that growth works for the poorest. Inequality between all people in the world has declined since 1990, and although within-country inequality is still higher today than 25 years ago, in the last number of years, for every country in which inequality widened, there were two countries in which inequality narrowed.

In far too many places, however, inequality remains unacceptably high, and the increasing share of income going to the top 1 percent of earners is of great concern. A stronger focus on faster inequality reduction, especially in countries with high inequality and a large number of poor people, will further enhance the power of economic growth to translate into poverty reduction and better opportunities for all. 

Last Updated: Oct 02,2016

To reduce inequality and promote shared prosperity, progress must be sustained over time and across generations. In many cases, this will require fiscal, social, and labor market reforms that help create a more inclusive and prosperous society.

While there is not a single way to reduce inequality nor a single type of successful country, some common lessons from successful countries and several interventions are proven to help. Countries under widely different circumstances have shown that a combination of good policy choices – sound macroeconomic foundations, sustaining growth, and strong labor markets – and favorable external factors have contributed to progress in reducing inequality.

Six policy areas have shown to be effective in reducing inequality. They offer very few trade-offs between equity and efficiency and have worked repeatedly in different settings around the world. They are by no means the only paths to reduce inequality, but they are those for which researchers have the most compelling body of evidence.

  • Early childhood development and nutrition interventions 
  • Universal health coverage 
  • Universal access to quality education 
  • Cash transfers to poor families 
  • Rural infrastructure- especially roads and electrification 
  • Progressive taxation

The World Bank’s work to help build more equitable and inclusive nations cuts across all our program areas. It touches on the policy areas listed above along with others including gender, governance and improved access to basic services and jobs, among others.

It is crucial to work closely with our country clients to ensure that the projects the Bank finances benefit the less well-off and provide equalizing opportunities where there are few or none. We anchor all of our country engagements in the latest available evidence, laying out clearly the opportunities for and barriers to poverty reduction and shared prosperity in each of our partner countries through the Systematic Country Diagnostic. We use empirical data and conduct poverty and social impact analyses (PSIA) to assess how projects affect vulnerable groups in society. The Bank’s Human Opportunity Index (pdf), initially developed for the Latin American and Caribbean region, is now used to measure gaps in access to basic services in Africa and beyond.

Last Updated: Oct 02,2016

Here are a few examples of projects we support to help nations become more inclusive:

  • In one of the poorest provinces in Lao PDR, a project is improving basic health care services for women and children and in five years, it is expected to benefit one million women and children 
  • After being isolated for long periods during Sri Lanka’s 30-year civil war, the North and East provinces are in the midst of recovering from a traumatic past. A project designed to improve the delivery of infrastructure services is helping residents enjoy swift services including building 611 kilometers of inter-connective rural roads, 23 kilometers of flood storm drainages, and four rural water supply schemes. 
  • Mozambique is working on a new financial inclusion strategy which is designed to increase access to financial services from 24 percent to 60 percent of the population by 2022 
  • Through a new women entrepreneurship program, Ethiopia is transforming the landscape for women entrepreneurs by lending over $2 million to growth-oriented women-owned businesses per month and supporting over 10,000 women with loans and business training to date. 
  • Child malnutrition in Cambodia is severe - 40 percent of children under 5 years were stunted in 2013 and 21 percent of the poorest women did not receive antenatal care. A pilot cash transfer project is giving poor women and children cash or cash bonuses when they attend health and nutrition community learning workshops or get antenatal and postnatal checkups at local health centers. 

Last Updated: Oct 02,2016

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