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 the average income of the population—an approach that implicitly assumes that economic growth automatically trickles down to the poor.
The latest data show 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 middle-income status while maintaining high levels of inequality. Inequality reduction today matters for opportunity and mobility tomorrow, and for the next generation.
Without a significant reduction in inequality, especially in countries with high poverty and inequality, the world will not meet its goal to end extreme poverty by 2030. 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. Inequality is not an inevitable consequence of economic growth. In fact, long-term growth and social stability are two important reasons to focus on equity. A stronger focus on faster inequality reduction, especially in countries with high inequality and large numbers of poor people, will further enhance the power of economic growth to translate into poverty reduction and better opportunities for all.
Last Updated: Sep 24,2018