In April 2013, the World Bank set a new goal to end extreme poverty in a generation. Our target is to have no more than 3 percent of the world’s population living on just $1.25 a day by 2030.
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Today is the United Nations’ International Day for the Eradication of Poverty, which provides an occasion to reflect on Vietnam’s record and its long-term agenda for poverty reduction and inclusive gr... Show More +owth. Few countries in the world can match Vietnam’s record of poverty reduction over the 25 years. Since the start of Doi Moi (Renewal), the country has sustained high growth without substantial increases in inequality, a feat few countries at any level of development have managed. Tens of millions have been lifted out of poverty. Extreme poverty—as measured by those living on less than US$1.25-a-day—has been all but eradicated.The country has also made impressive improvements in health status, with huge gains in life expectancy and healthy years of life, dramatic reductions in communicable disease incidence, and significant expansion of health insurance coverage. The vast majority of children are now in school, and their international test results surpass those of a number of OECD countries. The country has also put in place a nascent pension and social safety net system. These accomplishments have made for a remarkable record of inclusion as Vietnam has launched itself out of the ranks of low income countries. The question today for Vietnam is how social policy and institutions can play an equally crucial role in achieving the country’s aspirations over the next 20 years. Doing more of the same will not be sufficient to ensure that Vietnam remains an inclusive and high growth society.Vietnam now faces the complex demands required for a transition from a lower-middle income to a modern industrialized country. Moreover, Vietnam faces a changing domestic and external environment, including a rapid demographic transition, a labor market exposed to increased global competition, new health challenges from non-communicable diseases, and shifting societal expectations of the state. All these challenges will require new approaches. The Vietnamese government is now leading a major study, with the World Bank as a partner, which will offer a long-term vision for the next 20 years as the country moves towards high-income status. In crafting this vision, Vietnam can draw lessons from other countries that have made the same journey, particularly those within East Asia. Advanced economies like Korea and Taiwan (China), during their transition, have shifted focus from moving people out of absolute poverty and providing basic services towards promoting equality of opportunity for all. This means higher quality and wider coverage social services, better job opportunities, and adequate and sustainable social protection. Inclusion will mean not just a concern for the poor but also ensuring opportunity for the growing middle class.What, specifically, should be the priority initiatives to help Vietnam have an inclusive society in 2035? Preliminary discussions around the study point to several ideas: Phased reform of the ho khau (household) system, separating its registration function from access to public services. This would stimulate needed labor mobility provide equal opportunity to urban migrants. The evolution of labor market institutions which are responsive to the needs for greater factor mobility of a competitive and aspiring high income country. This will mean developing robust labor dispute resolution mechanisms to sustain workplace harmony, and policies which protect workers without impeding their mobility.A school system that ensures that all children complete secondary school, with relevant skills to become life-long learners, and a higher education system with the autonomy to deliver high quality, relevant education to foster a generation of innovators. A health care system shifted away from a hospital-focused model. This will mean putting primary care in the drivers’ seat of a system of coordinated care. The country will need to tackle this challenge while also achieving its commitment to universal health coverage. An expanded and reformed social insurance system. Vietnam’s insurance-only pension model is incapable of achieving high pension coverage and can discourage dynamism in the labor market. Failing to reform the current system threatens to leave no effective safety net for most elderly people as the country begins to age rapidly.Continued efforts to tackle the chronic poverty and poor social outcomes of ethnic minorities. While many ethnic minorities have shared in Vietnam’s success, the strategy is likely shift from protective approaches to ensuring that minorities are linked to and prepared to take advantage of economic opportunity.The World Bank will be exploring these and other aspects of inclusion as we work with Vietnamese colleagues on developing the study over the next several months. Vietnam is at a critical juncture. At this stage of development, many countries have made bold decisions to move forward, while others lag behind. What do you see as the priorities to ensure that Vietnam continues to be an inclusive society in 20 years time? Show Less -
Inequality and poverty have walked hand in hand in Brazil for decades and even centuries, the result of non-inclusive growth models and regressive social policies. In the second half of the 20th centu... Show More +ry, Brazil has been one of the most unequal countries in the world, with economists coining expressions such as “Belindia – a society consisting of a tiny Belgium of prosperity in a sea of Indian poverty”. For years, the poorest 60 % of the population had only 4 % of the wealth, while the richest 20 % held 58 % of the pie.Ten years ago this month, President Lula launched the innovative Bolsa Família Program (BF), scaling up and coordinating scattered existing initiatives under a powerfully simple concept: trusting poor families with small cash transfers in return for keeping their children in school and attending preventive health care visits.BF was met with considerable skepticism. After all, Brazil had traditionally been a big spender in the social sectors, with 22 % of GDP spent on education, health, social protection and social security. One of the images used by academics was that throwing money out of a helicopter would be just as efficient to reach the poor, given Brazil’s frustration with the lack of results. How could BF, with about half a percent of GDP, change this bleak scenario?Ten years after BF has been key to help Brazil more than halve its extreme poverty – from 9.7 to 4.3 % of the population. Most impressively, and in contrast to other countries, income inequality also fell markedly, to a Gini coefficient of 0.527 an impressive 15 % decrease. BF now reaches nearly 14 million households – 50 million people or around 1/4 of the population, and is widely seen as a global success story, a reference point for social policy around the world.Equally important, qualitative studies have highlighted how the regular cash transfers from the program have helped promote the dignity and autonomy of the poor. This is particularly true for women, who account for over 90% of the beneficiaries.Besides this immediate poverty impact, a second key goal of BF was to break the transmission of poverty from parents to children by increasing the opportunities for the new generation through better education and health outcomes. Assessing progress on this goal requires longer term monitoring, but the results up to now have been very promising. BF has increased school attendance and grade progression. For instance, the chances of a 15 year old girl being in school increased by 21%. Children and families are better prepared to study and seize opportunities with more prenatal care visits, immunization coverage and reduced child mortality. Poverty invariably casts a long shadow on the next generation, but these results leave no doubt that BF has improved the prospects for generations of children. At the same time, fears about unintended consequences such as possible reduced work incentives have not materialized. Indeed, increased labor income has been another critical player in the reduction of poverty and inequality in Brazil during this period.The Cadastro Único is the essential tool that allowed BF to achieve these landmark successes. It provides the basis for targeting BF benefits, but also links to numerous other social programs and services. It is hence not only the backbone that ensures effective administration of the BF, but also a tool for coordinating social policy and facilitating rapid scale-up of additional efforts such as the recent Brasil Carinhoso program. Efficient administration and good targeting has enabled BF to achieve its success at a very low cost (around 0.6% of GDP), and build the base for ambitious programs such as Brasil sem Miséria and the Busca Ativa effort, to include those not yet reached.Brazil’s experience is showing the way for the rest of the world. Despite its relatively short life, BF has helped stimulate an expansion of conditional cash transfer programs in Latin America and around the world – such programs are now in more than 40 countries. Last year alone, more than 120 delegations visited Brazil to learn about BF. The World Bank has been a partner to BF from the very beginning; we are learning from it and helping to disseminate it. Our new global goals of eradicating extreme poverty by 2030 and boosting shared prosperity draw from Brazil’s experience. Another concrete step is the development of the Brazil Learning Initiative for a World without Poverty (WWP), recently launched in Brasília in partnership with the Ministry of Social Development, Ipea and UNDP’s International Policy Center. The Initiative will help support continued innovation and learning from Brazil’s social policy experience.The ultimate goal of any welfare program is for its success to render it redundant. Brazil is well placed to sustain the achievements over the last decade and is close to reaching the amazing feat of eradicating poverty and hunger for all Brazilians, a true reason to celebrate. Show Less -