This October the World Bank’s research department released a Policy Research Report entitled “A Measured Approach to Ending Poverty and Boosting Shared Prosperity: Concepts, Data, and the Twin Goals .” Prepared by a team led by Peter Lanjouw and Dean Jolliffe, economists in the research department, the report makes the case that campaigning around the World Bank Group’s twin goals of ending poverty and boosting shared prosperity requires an understanding of the theory and accompanying measurement challenges of the goals.
The World Bank hosted two events at its headquarters to highlight the report’s findings and facilitate a dialogue around the World Bank’s twin goals: first a Policy Research Talk in which Peter Lanjouw discussed the report in depth, followed by a high-profile launch during the 2014 World Bank-IMF Annual Meetings. The event centered on a panel that included World Bank Chief Economist Kaushik Basu, James E. Foster (George Washington University and Oxford Poverty and Human Development Initiative), Nora Lustig (Tulane), and Stephen O’Connell (USAID). Previously, Jolliffe had also presented the report at the World Bank’s country offices in Jakarta and Addis.
World Bank Research Director Asli Demirguc-Kunt, who hosted both events, emphasized the independent nature of the report and its contribution to the larger development discussion and the twin goals. “When institutions set goals, sometimes they are so unattainable that they are just aspirational. Or, they are so close within reach that they are merely there to show success when enough time passes. I think that this report does a very good job of showing that these goals are neither,” she said.
The World Bank’s poverty reduction goal of 3 percent of the world’s population living on less than $1.25 a day by 2030 is potentially attainable, but it is highly ambitious and will pose a challenge for both researchers and policy makers. As Lanjouw stated in his Policy Research Talk, “Reaching the poverty goal is ambitious. Business as usual and growth alone will not get us there by 2030.” Growth alone—absent any change in the distribution of incomes—would have to hit 4 percent each year in each developing country until 2030 to attain the goal, but this type of growth performance is improbable.
Taking into consideration both poverty reduction and the goal of increasing shared prosperity, Lanjouw touched on the complementarity of the twin goals. He highlighted how “growth in average income has historically played a large role in poverty reduction and is closely related conceptually and empirically to shared prosperity.” Policies that target shared prosperity will help countries reach that goal.
The report emphasizes that the twin goals, while useful as benchmarks because they are straightforward and practical, are only two options out of an array of possible indicators of poverty reduction. By placing the goals in the wider context of poverty and welfare analysis, the report makes clear that countries can select other indicators and goals as their circumstances require.