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Reducing Poverty On A Global Scale: Lessons From China For The Developing World

February 23, 2006

Beijing, February 23,2006 - A new World Bank report concludes that reducing poverty at scale depends on several factors including leadership and commitment, institutional innovation, learning and experimentation, external catalysts such as donor assistance and sometimes even economic shocks. 


Reducing Poverty on a Global Scale: Learning and Innovating for Development draws   on more than100 case studies of poverty reduction worldwide prepared for the Global Learning Process and Conference on Scaling Up Poverty Reduction held in Shanghai in 2004. World Bank analysts have identified the main factors that help or hurt in reducing poverty at scale, and what this means for World Bank and donor operations.


A whole chapter is devoted to China which, over the last 25 years, has achieved the most rapid large-scale poverty reduction in human history.


The Government of China has worked closely with the World Bank to pilot innovative poverty reduction efforts such as the China Southwest, Qinba Mountain and Gansu and Inner Mongolia poverty reduction projects. In addition to raising incomes, improving food security, and expanding access to basic services in 61of China's poorest counties, these projects have played an important role in developing an effective multi-sector approach to rural development and poverty reduction.


Lessons learned from these projects are being shared –Southwest Poverty was one of the projects showcased at the Shanghai Conference – and replicated in poverty reduction programs across the country. Following the Shanghai conference, the World Bank agreed to help establish an International Poverty Research Center in China, and is currently working with the Government on a set of new poverty reduction projects.


"For the past 26 years, the Ministry of Finance of the People's Republic of China has collaborated with the World Bank and other international financial institutions in the areas of public finance, rural development, and poverty reduction," said China's Minister of Finance Jin Renqing . "The World Bank has provided not only financial support but also invaluable development experience. We hope to strengthen and expand our collaboration with the Bank and other international financial institutions, and make even greater contributions to poverty alleviation in China and other parts of the world."


The chapter on China highlights lessons from the 8-7 National Poverty Reduction Program, focused on the period 1994 to 2000; the Southwest Poverty Reduction Project and the Loess Plateau Watershed Rehabilitation Project; three case studies on education, rural roads, and water supply and sanitation; one study on China's institutional innovation and private sector development - the Sunan and Wenzhou models; and a unique model of regional cooperation - the East helping the West to reduce poverty: Shanghai helping Yunnan


"In my first trip to East Asia as World Bank president, I was impressed by China's experience in achieving the most rapid large-scale poverty reduction in human history.  The Loess Plateau Project alone has helped break the cycle of environmental deterioration and poverty for 1.2 million farmers" says Paul Wolfowitz, World Bank President.  "But the most important thing we can gain from China is not a formula for any one project, but an emphasis on supporting change and capacity improvements through knowledge-sharing and learning.  In many cases, the best ideas come from people in the front lines implementing change from day to day, and some of the best learning happens in our partner countries.  This book is an important contribution to sharing knowledge between developing countries that have started to achieve concrete results in the fight against poverty and other developing countries that can benefit from the lessons learned."


The World Bank has placed a great deal of emphasis on this global learning process because sharing experiences, and fostering peer-peer learning and solutions, are deemed necessary to accelerate results to achieve the Millennium Development Goals.


"The Shanghai global learning process used the case study approach to examine how a wide range of countries scaled up poverty reduction interventions," says World Bank Institute Vice President Frannie Léautier. "The cases looked at successful programs, projects, and practices that have something to say about what works on the ground, and in a variety of settings. The learning process was unique because it emphasized South-South knowledge sharing."


Country cases analyzed in the report include Chile, China, Costa Rica, El Salvador, Uganda, and Korea. Sector-specific cases cover infrastructure, judicial system reform, microfinance, health, education, and community driven development, with detailed descriptions about finding solutions by trial and error and through rigorous impact evaluation feedback. Examples include Morocco's rural roads, Kazakhstan's SME and microenterprise lending program, and Rwanda's adaptation of traditional justice mechanisms.


The report concludes that although progress appears to be the result of multidimensional interventions by more than one actor, leadership commitment, sustained and shared growth at the macroeconomic level, seems to be the a necessary foundation for poverty reduction in a particular country.   However, adaptation to local conditions and ability to innovate and share knowledge are also important aspects of scaling up poverty reduction.


The report also stresses that rigorous impact evaluations could create the basis for scaling up poverty reduction efforts throughout the developing world.   The evaluation of the Oportunidades program (previously called Progresa) in Mexico, for example, demonstrated that school enrollment ratios and years of schooling had increased which convinced the Mexican authorities to support and even scale up the program in spite of political changes.


For the World Bank and the donor community the report emphasizes that country ownership, capacity development, results-based management, and donor alignment and harmonization are essential elements or success.


The attachment below provides a summary of the messages coming out of the research.


To order the book from the World Bank:

Telephone: 800–645–7247 or 703–661–1580; Fax: 703–661–1501; Email orders: books@worldbank.org; Internet: Reducing Poverty on a Global Scale: Learning and Innovating for Development: Findings from the Shanghai Global Learning Initiative. 2005. Edited by Blanca Moreno-Dodson. 288 pages. ISBN:0-8213-6362-X. SKU: 16362. Price: US$35.


Key Messages from the Research

At the country level


No country reduced poverty without addressing its macroeconomic imbalances and creating solid foundations for growth; and they all implemented parallel social pro-poor measures.


In Chile the 1990s reform package combined conservative macroeconomic policies with progressive social measures.

In Uganda, strong and single-minded political leadership backed reforms to promote growth as well as social projects when growth alone produced an insufficient reduction in poverty.


Countries that reduced poverty at a scale were also able to develop and sustain institutions that produced good governance, as well as an environment in which learning and adaptation took place, which allowed for midcourse correction.


In Costa Rica and El Salvador, the approach was to decentralize responsibility for delivery of health and education services, while strengthening the policy and regulatory responsibilities of the public sector.  In both settings the crucial policy innovation involved a new reliance on private resources in areas where the state had long dominated.

In China's 8-7 National Poverty Reduction Program, the government's capacity for resource mobilization and institutional innovation, as well as continuous learning and experimentation permitted China to learn from its own and international experience, and to work toward improving the participation and effectiveness of a large number of projects at village and household levels.

Responsiveness--whether to crisis, to the stimulus of technology, or to an external shock - was another key ingredient: the ability to innovate, to adapt institutional capacity, to learn from experience, and to turn external factors into catalysts for positive change.


In Indonesia bad economic times served as opportunities to put good policies in place. They pursued macroeconomic stability while shaping the rural education system to support the adoption of Green revolution technology for raising rice production.


Commitment and leadership were essential to success: how leaders emerge, how they form coalitions for change, how they define where to start and how to sequence reforms and implementation, how they guarantee continuity of reforms and implementation.


In Korea there was high-level commitment to economic development and the strong perception that announced policies would, in fact, be implemented. 


At the sectoral level


The report also assesses a range of sectoral or thematic cases, giving detailed descriptions of the processes that were tried and how solutions were discovered, and how project and program teams used monitoring and evaluation systems to improve performance. Issues of external and domestic financing are covered, as is the role that external catalysts have played, whether through knowledge, ideas, and technical support, or partnerships and cooperation agreements.


Some of the lessons that come out of this analysis are:


The Morocco rural roads project demonstrates two key factors: adopting a focus on accessibility as opposed to numbers of roads built, and promoting local government participation.


In Rwanda, political leaders and executive branch officials encouraged the use of traditional justice mechanisms and adapted them to very volatile situations, in order to overcome a sad legacy of intertribal strife.


Kazakhstan managed to build micro-enterprise units within commercial banks and developed a sound lending program for small and medium size enterprises.


The HIV/AIDS case from Manipur, India, illustrates how ad-hoc trials led to the discovery of the best way to provide treatment and prevention


Egypt prioritized its education investments, emphasizing improvements in school quality which, research had demonstrated, affects girls' enrollment and retention in particular.

China's Loess Plateau Watershed Rehabilitation Project provides valuable insights on how to meet the challenge of environmental deterioration and poverty while realizing nature-friendly development. Among the factors driving the initiative were a strong political commitment for change, public participation, institutional development, and a sound government policy for land tenure. The World Bank also played an important role in project preparation and implementation.

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