We are at a critical juncture today in the fight against poverty. Despite decades of hard-won development progress, a world free of poverty remains out of sight.
Ten years ago, the outlook appeared more positive. The world had experienced a prolonged period of sustained reduction in global extreme poverty, beginning in the early 1990s. Between 1990 and 2013, more than one billion people escaped extreme poverty. The extreme poverty rate fell from 37.8% to 11.7%.
However, starting around 2014, the speed at which poverty was declining began to slow down. Between 2014 and 2019, poverty was declining at a rate of only about 0.6 percentage points per year, and the goal of ending extreme poverty by 2030 was looking increasingly out of reach.
As we all know, in 2020, this progress was abruptly halted. Several major overlapping crises – the COVID-19 pandemic, climate shocks, unexpected conflict, and rising food prices – led to three years of lost progress between 2020 and 2022. The global poverty rate is now back to pre-pandemic levels globally, but low-income countries, the most impacted, have yet to recover.
What does this mean for real people? It means that around 700 million human beings around the world are trying to survive today on less than $2.15 dollars per day (the international extreme poverty line). It means that 700 million people do not have enough income to meet even their very basic needs. More than half of them are children.
Millions more people live without adequate access to health, education, housing, water, or electricity – they are deprived not only of essential needs, but also of opportunity, hope, and basic dignity.
The World Bank’s very first World Development Report—released 45 years ago in 1978—defines absolute poverty as “a condition of life so characterized by malnutrition, illiteracy, disease, squalid surroundings, high infant mortality, and low life expectancy as to be beneath any reasonable definition of human decency.”
Indeed, poverty is multidimensional, so our efforts also must be coordinated, intersectoral efforts. Thus, we must use the idea of multidimensionality as a tool to coordinate policy action. We need to work more effectively across sectors to ensure that the right set of policies are reaching households to jointly tackle these intertwined challenges.
Fueling inclusive economic growth will be an important factor in accelerating poverty reduction efforts. But inclusive growth is not a given; it is a policy choice. In the long-term, sustained poverty reduction will only be possible if policies work to invest in the productive capacity of the poor.
This requires a focus on lifting the constraints that too many poor households face in accessing better quality jobs. When thinking about jobs, we tend to focus on investments in human capital—such as expanding access to good quality education and health. These are of course very important.
However, we must also support poor households to accumulate and use other types of productive assets, such as natural capital and financial capital. This may mean, for example, environmental investments to improve soil quality, or infrastructure investments to expand access to agricultural markets, or laws to enhance gender equality in land titling, and digital technologies to include people in financial markets.
Finally, hundreds of millions of poor people are vulnerable to shocks. They live in areas that are highly exposed to extreme weather events such as floods, cyclones, drought or extreme heat. And millions more are vulnerable to falling into poverty as a result of such events. Urgent action is needed to reduce the impact of climate shocks.
Governments should aim for policies that are “triple wins” – policies that improve the livelihoods of the poor today, reduce their vulnerability to climate risks tomorrow, and help to mitigate future climate hazards.
In fact, climate action – if we get it right – can be an opportunity for inclusive growth. The transition to a more sustainable growth model could potentially improve the lives of millions of poor people.
With all that we have learned in recent decades, we have a chance to make a real difference going forward. A world free of poverty on a livable planet is in our line of sight. But it can only happen if we take action now.
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Luis Felipe López-Calva is the World Bank Global Director for Poverty and Equity.
Follow Luis Felipe on X (Twitter): @LFLopezCalva
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