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Maura K. Leary
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Inequality and Shared Prosperity Overview

In April 2013, the World Bank set two new goals: to end extreme poverty and promote shared prosperity in the 140-plus client countries we serve. 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-income 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.

Our work to help level the playing field in the countries we serve is not necessarily an agenda to redistribute an economic pie of a fixed size – or to take from the rich and give to the poor. Rather, we will work with our client countries to try to continuously expand the size of that pie and to share it in a way that benefits groups at the lower end of the income scale, the bottom 40 percent.

 

 

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.

The World Bank’s work to help build more equitable and inclusive nations cuts across all our program areas. It touches gender, education, governance and improved access to basic services and jobs, among other areas.

We 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 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, initially developed for the Latin American and Caribbean region, is now used to measure access to basic services in Africa and beyond.

To promote shared prosperity in the developing world, we have committed to monitoring the income growth of the bottom 40 percent in all countries where we work.

A new Shared Prosperity Indicator, set to launch in late 2013, will track per-capita income growth of the bottom 40 percent in each country annually where survey data is available. This new 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 Shared Prosperity Indicator will help countries see if they manage to reduce inequality over time; and to gauge the impact of tax reforms, a changing economic climate, employment growth, rising educational levels and other developments.

 

 

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

• In Mexico, 6.8 million students received a better education when the country’s Quality Schools program grew from 21,000 to 39,000 students in poor communities between 2006 and 2009.

• In 2010, amid lingering poverty and inequality in Colombia’s growing economy, the World Bank supported the government in its efforts to implement a range of structural reforms, including improvements to its health insurance system, a more streamlined public pension scheme, and preferential access to social services for poor families. Some 1.25 million extremely poor families from almost all municipalities received family counseling and preferential access to social services in the first year of the Juntos strategy – up from up from 900,000 in 2009.

• A flagship government education program in India, the largest of its kind in the world, has managed to bring to school more than 17 million children who had previously been left outside the educational system. The Sarva Shiksha Abhiyan program boosted the enrollment of children who come from poor families, from marginalized and tribal groups; and children with special needs.

• In Liberia, with the support of the Adolescent Girls Initiative, 1,131 girls received business, job, and life skills training in the first round of the program. About 95 percent of the beneficiaries completed the training, and 85 percent of those trained have been placed in jobs or are self-employed. The second round of training started in July 2011 with 1,300 adolescent girls and young women.

• In Guatemala, 900,000 families benefitted from a conditional cash transfer program in 2010. Of those who participated, 100 percent are sending their children to school and attending required health check-ups.

 

Around The Bank Group

Find out what the Bank Group's branches are doing on Inequality and Shared Prosperity.