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Poverty Overview

The World Bank Group’s mission has been carved in stone at our Washington headquarters to always remind us that “our dream is a world free of poverty.” This mission underpins all our analytical, financial and convening work in more than 145 client countries that strive to end extreme poverty and promote shared prosperity. 

The developing world has already attained the first Millennium Development Goal target—to cut the 1990 poverty rate in half by 2015. The 1990 extreme poverty rate – $1.25 a day in 2005 prices – was halved in 2010, according to estimates.

  • According to these estimates, 21 percent of people in the developing world lived at or below $1.25 a day. That’s down from 43 percent in 1990 and 52 percent in 1981.
  • This means that 1.22 billion people lived on less than $1.25 a day in 2010, compared with 1.91 billion in 1990, and 1.94 billion in 1981. 

Notwithstanding this achievement, even if the current rate of progress is to be maintained, some 1 billion people will still live in extreme poverty in 2015—and progress has been slower at higher poverty lines. In all, 2.4 billion people lived on less than US $2 a day in 2010, the average poverty line in developing countries and another common measurement of deep deprivation. That is only a slight decline from 2.59 billion in 1981.

In some developing countries, we continue to see a wide gap – or in some cases – widening gap between rich and poor, and between those who can and cannot access opportunities. It means that access to good schools, healthcare, electricity, safe water and other critical services remains elusive for many people who live in growing economies. Other challenges, such as economic shocks, food insecurity and climate change threaten to undermine the progress made in recent years.

Last Updated: Apr 07, 2014

In April 2013, the World Bank Group set two new goals: ending extreme poverty and promoting shared prosperity in a sustainable way. The first goal, to eradicate extreme poverty within a generation, includes a target to decrease the global extreme poverty rate to no more than 3 percent by 2030. This is possible but challenging, and galvanizing efforts to fight against extreme poverty is critical as many low income countries and most fragile and conflict-affected states will be unable to meet this target.

The second goal, to promote shared prosperity in every country, is measured by the growth in income among the bottom 40 percent of the income distribution in each country. This goal helps the World Bank Group focus on the welfare of the less well-off wherever they are, and includes a strong emphasis on tackling persistent inequalities that keep people in poverty from generation to generation. The following themes form the core of the Bank’s poverty work today:

Measuring Poverty: It is essential to understand which poverty reduction strategies work, and which do not, in order to create better policies to reach the poor and most vulnerable in each country. Poverty measurement helps client governments gauge program effectiveness and guide their development strategies in a rapidly changing economic environment. Much of the World Bank’s work in this area centers on improving household surveys and survey methodology to generate more reliable statistics. We are working to develop new, shorter surveys and innovative high-frequency survey methods to help fill in gaps between traditional surveys and allow for more responsive policymaking.

Inequality and shared prosperity: Concerns about high or growing gaps in incomes are rising. And despite progress, differences in access to education, health services, basic infrastructure and job opportunities are still an urgent development challenge. Birthplace, gender and parents continue to determine what opportunities many people have in life. Our World Bank teams work with client countries to map out trends in inequality and to examine how public policies can level the playing field.

Evidence-based public policy: A growing number of our client governments want to develop monitoring and evaluation systems to track whether policies are benefiting the poor as intended and public resources are being used well. We are working to improve the capacity of national statistical offices and other government agencies for data collection and analysis, developing national monitoring and evaluation systems, and sharing cutting-edge research on evaluation methodologies and tools in order to improve government systems and accountability.  

Jobs and poverty: More and better job opportunities provide the most powerful way out poverty. The World Bank works with client countries to help provide better access to the labor market to poor and vulnerable populations. We support employment training initiatives, credit services, and small business development initiatives, and work with clients to reform and strengthen labor protection laws. Research and analytical work on labor market developments, wage inequality, job creation strategies, and much more underpins the projects we undertake with our clients.

Shocks and vulnerabilities: When food prices rise, a natural disaster occurs or the world economy declines, poor people tend to suffer the most. Our World Bank teams explore how climate change-related weather events affect human welfare, and what coping mechanisms and public policies help vulnerable populations deal with shocks. They also monitor international and domestic food prices and their potential impact on poverty.

Last Updated: Apr 07, 2014

Progress to Date

While poverty rates have declined in all regions, progress has been uneven:

  • East Asia saw the most dramatic reduction when the region’s $1.25-a-day poverty rate fell from 77 percent in 1981 to 12 percent in 2010. In South Asia, the share of the population living in extreme poverty is now the lowest since 1981, dropping from 61 percent in 1981 to 31 percent in 2010. Sub-Saharan Africa reduced its $1.25-a-day poverty rate to 48 percent in 2010 from 52 percent in 1981.
  • China alone accounted for most of the decline in extreme poverty over the past three decade. Between 1981 and 2010, the nation had 680 million people moving out of extreme poverty. During the same time, the developing world as a whole saw a reduction in poverty of 723 million.* I would say that “during the same time, the rest of the developing world saw a reduction of poverty of only 43 million excluding those in China” or something like that…
  • In 2010, nearly three-quarters of the extremely poor lived in South Asia (507 million) and Sub-Saharan Africa (414 million). In addition, 251 million lived in East Asia.
  • Fewer than 50 million of the extremely poor lived in Latin America and the Caribbean, Middle East and North Africa, and Eastern Europe and Central Asia combined.

Successful Initiatives

Poverty and Social Impact Analysis (PSIA) helps partner governments and other stakeholders understand what impact the proposed policies and programs may have on poor people, and on inequality of income and opportunity. For example, one high-profile study on trade barriers in Africa raised awareness about untapped opportunities for African nations to trade goods, service and investments across borders.

Economists and data experts from the World Bank worked closely with the Bangladesh Bureau of Statistics to collect and process household poverty data at a record speed in 2010. With the help of a US$500,000 grant, Bangladesh was able to use new technology to calculate and publish national poverty data – giving policymakers and civil society information they could act on immediately, and broader data to monitor over time.

In Latin America and Africa, the World Bank sponsors the collection of household data via mobile phones. Such “real-time” data will compliment traditional face-to-face survey programs and track changes in welfare. With instant data at their fingertips, policymakers can react faster to urgent public needs.

A number of World Bank teams are using new and innovative methods to analyze inequality of opportunities among children across the world, which refers to inequality in access to basic goods and services necessary to succeed in life; as opposed to well-known measures of inequality of income, which is traditionally measured in monetary terms. Work is completed or ongoing in five of six World Bank regions. The teams working on these studies are helping client countries incorporate the research in their fiscal analysis and development of social programs.

A new, interactive map developed by Bank teams as part of the poverty program in Afghanistan shows, for the first time, the economic diversity and gaps that exist between provinces in the South Asian country. This, coupled with an in-depth poverty status report, helps Afghan policymakers and their partners better target policies and programs that benefit Afghanistan’s poor.

Our ADePT Poverty, Labor, and Inequality software platforms are user-friendly tools that help economists become more productive and efficient when processing and analyzing economic data. The tools allow users to produce poverty profiles that show who the poor are, where they live and what deprivations they suffer from. ADePt also produces labor market indicators and simulates how a crisis affects poverty and inequality.

Last Updated: Apr 07, 2014

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