Across the globe one person in five lives on less than $1 a day–and one in seven suffers chronic hunger

Progress in Some Regions, Delays and Setbacks in Others

1.2 Billion Live in Extreme Poverty

Malnutrition: Another Dimension of Poverty

Reaching the Goal: Ambitious Not Impossible

Governance matters

Good governance and strong institutions are central themes of World Bank support for poverty reduction. Why? Because they:

• directly improve the quality and accessibility of services to poor people (e.g., education, health, water, justice);

• contribute to economic growth and help ensure that budget allocation and policymaking take place in an environment that is open, transparent, noncorrupt, and not biased against poor people;

• give citizens—including poor people—greater voice, which increases the accountability of government to its citizens and thus improves public performance.

Country Assistance

Assistance to India is focused on state-level reform and development, for example in Uttar Pradesh, the most populous and one of the poorest states. Other support will help eradicate polio by the 2001 target date, reduce infant and maternal mortality, and raise enrollment and literacy.

Lending services

Mali’s Grassroots Initiatives Project is improving living standards in the poorest rural areas. Building communities’ capacity for decisionmaking on resource use is empowering them to take charge of their own development.

Nonlending services

A new monitoring system on poverty in Indonesia measures the extent of poor people’s vulnerability to local and national shocks; suggests improvements to safety nets to reduce such vulnerability; and introduces indicators to monitor desired outcomes.

Principles underlying CDF and PRSPs

PRSPs, in effect, apply the principles of the Comprehensive Development Framework (CDF), a development approach introduced by the Bank in fiscal 1999, which is beginning to be adopted by several countries. The PRSP process will build on the valuable experience of countries piloting the CDF approach. It emphasizes the following principles:

• Countries own the development strategy.

• Strategies are comprehensive, reflecting the multidimensional nature of poverty and the need to integrate institutional, structural, and sectoral interventions into a consistent macroeconomic framework.

• Strategies adopt a long-term perspective.

• Strategies are developed and implemented in partnership, with the PRSP becoming the basis for donor support.

• Strategies aim to achieve results on the ground.

The Poverty Challenge:
Where We Are Today

Goal: Halve the Proportion of People
Living in Extreme Poverty by 2015

In many developing countries, the poor struggle at the margin of the formal economy. They lack political influence, education, health care, adequate shelter, personal safety, regular income, and enough to eat.

Worldwide, the number and proportion of people living in extreme poverty declined slightly through the mid-1990s. Most of the decline was in East Asia, notably in China. But progress slowed temporarily in some Asian countries in the late 1990s, and ground to a halt or reversed in others. In the rest of the world, while the proportion of people in poverty declined, population growth meant that the number of poor people increased. And in the Europe and Central Asia region, undergoing economic and social transition, the proportion of poor more than tripled.

The Poverty Challenge:
What the World Bank Is Doing

Intensifying focus on poverty. Over the past year, we have conducted wide-ranging participatory poverty analyses and elaborated a framework for poverty reduction in the World Development Report 2000/2001. We are supporting important efforts to reduce inequality, particularly in poor people’s access to assets. And we are measuring progress by poverty-related outcomes rather than amounts loaned.

Helping countries adopt a strategic framework for poverty reduction. In fiscal 2000, we linked debt relief and concessional assistance more closely to poverty reduction (see Poverty Reduction Strategy Papers). Working with the IMF, we are combining the Fund’s expertise in helping countries follow sound macroeconomic policies with the Bank’s experience in social and structural policies and programs.

Fighting poverty at the global level. We are helping provide global public goods like knowledge, health, agricultural research, and environmental best practice that can go far in helping poor people; we are working with partners to prevent financial crises and mitigate their impact.. . .and at the local level: We are working with communities and helping empower poor people to become agents of change. Pilot community-based development programs will help us learn how to better work with communities. We are also helping people to use natural resources in a manner that does not undermine their long-term welfare.

Sharpening the poverty focus of Country Assistance Strategies (CASs). CASs and related lending and nonlending services are aimed at supporting policies, strengthening institutions, and financing programs that help people better feed and educate their children, find jobs, increase incomes, and manage resources, as illustrated below.

World Development Report 2000/2001: Attacking Poverty

The World Development Report (WDR) 2000/2001 builds on past thinking and strategy but also substantially broadens and deepens what is judged to be necessary to meet the poverty challenge. The experience of the last decade has shown the need for countries to develop strategies that go beyond labor-intensive growth and human development, as advocated in the WDR 1990: institutional context, structural inequality, social barriers faced by disadvantaged groups, and exposure to economic crises and natural disasters all affect a country’s ability to reduce poverty effectively.

The WDR 2000 is developed around a notion of poverty as defined by poor people themselves through multi-country participatory studies. They speak not only of their lack of opportunities for economic advancement but also of their powerlessness, voicelessness, vulnerability, and fear.

The WDR 2000 proposes, at the country level, a general framework for action in three equally important areas. Countries should set their own priorities and sets of actions across these three pillars:

• Promoting economic opportunities for poor people through equitable growth, better access to markets, and expanded assets;

• Facilitating empowerment by making state institutions more responsive to poor people and removing social barriers that exclude women, ethnic and racial groups, and the socially disadvantaged;

• Enhancing securityby preventing and managing economywide shocks and providing mechanisms to reduce the sources of vulnerability that poor people face.

Actions are also required at the international level. Such actions would promote financial stability; ensure that technological, scientific, and medical progress benefit poor countries; increase debt relief and make development assistance less intrusive; open developed country markets to developing country exports; and give voice to poor people in international forums. Progress on these fronts will ensure that countries’ efforts to attack poverty are effective, locally owned, and sustainable.

Poverty Reduction Strategy Papers Based in the Comprehensive Development Framework

In a major new program launched in December 1999, Poverty Reduction Strategy Papers (PRSPs), produced by countries, are becoming the basis for debt relief and for concessional lending by the Bank and the International Monetary Fund.

This new program is the result of growing international concern about the slow progress in reducing poverty. Following intense consultations among national governments, the Bank, the Fund, U.N. agencies, regional development banks, NGOs, and religious groups, it was agreed at the joint Bank–Fund Annual Meetings in September 1999 that the Heavily Indebted Poor Countries (HIPC) Initiative would provide enhanced and faster debt relief, and that poverty reduction strategies would guide the use of freed-up resources.

In terms of content, PRSPs emphasize:

• Understanding the nature and locus of poverty and the links between growth and poverty reduction

• Identifying public actions that have the highest poverty impact

• Selecting and tracking outcome indicators

In terms of process, PRSPs emphasize:

• Country leadership in articulating a development vision

• Participatory processes to ensure broad-based support, good governance, transparency, and accountability

• Close collaboration between the Bank and the Fund and across all development partners