The new estimates of global poverty presented in this policy brief pose a number of questions for how the international community addresses the challenge of global poverty reduction. As alleviating poverty is at the heart
of foreign assistance efforts, aid donors must adapt to the evolving poverty landscape and update
their policies and programming to reflect current needs and priorities. In order to stay relevant and
have the greatest impact, both bilateral and multilateral donors should be thinking about poverty in a dynamic,
forward-looking sense, concentrating their efforts where they are most needed.
Our evidence suggests that there are two particular areas on which aid agencies should be focusing
their attention over the medium term: Sub-Saharan Africa and fragile states. The former has long
been recognized as one of the front lines in the war on poverty. This view was enshrined at the 2005 G8 Gleneagles Summit, where world leaders promised to boost their annual aid to the continent by $25 billion over the
following five years, in recognition that poverty was a more intractable and persistent challenge in Africa than in
other regions. But the Gleneagles commitments were not fully realized, as only $11 billion of the promised $25
billion was ultimately delivered.
19
Since 2005, the number of poor people in Africa has fallen by just 2.1 percent,
relative to a decline of 38.6 percent globally. As poverty becomes further concentrated in Africa between now
and 2015, aid agencies must do better at delivering on their commitments to the continent.
Fragile states represent a more recent priority for the development community, with donors increasingly coming to recognize the spillover effects these states can impose on others, and the need for a clear policy to engage
with them. This growing focus is being matched with more aid; much of the recent increase in aid flows has been
directed to fragile states and further increases are expected.
20
And yet, while our poverty estimates suggest donors are right to focus on fragile states, there is still remarkably little consensus on which interventions are most
likely to succeed in such environments, how they should be implemented under such challenging conditions,
and most importantly, how the problem of fragility itself can be tackled.
In addition to deciding on which countries and regions to focus, donors must also choose which projects and
programs they will spend their money on. Amidst these complicated budgetary decisions, one simple idea has
recently garnered considerable support from both politicians and development economists: just give money
to poor people.
21
Basic cash transfer payments, sometimes conditioned on behavior such as attending school
or routine medical checkups, can serve as a safety net for the poor, providing social protection to ensure basic
necessities are met and shocks are overcome.
Our results suggest that providing every person in the world with a minimum income of $1.25/
day—in other words guaranteeing the right not to live in absolute poverty—is rapidly becoming feasible. In 2005, supplementing the income of each poor person in the world to bring their daily income
up to $1.25 would have cost $96 billion, or 80 percent of the total volume of foreign aid disbursed that year.
In 2010, with poverty less widespread and larger global aid volumes, the cost of such a global safety net would
be just $66 billion, or slightly more than half of all official aid.
22
While the logistics of distributing cash to poor
populations would not be without challenges, recent advances in biometric identification technologies—such
as fingerprint and iris scanning—have greatly expanded the promise of implementing large-scale welfare pro-
1
grams in poor countries.
23
Given the success of many cash transfer programs, significantly scaling up their use
to provide a minimum income for all individuals living in poverty might be a fruitful new direction for donors
to pursue.
One final policy recommendation revealed by this analysis is the need to improve the quantity, quality and
timeliness of poverty data, at both the national and the global level. For both developing country governments
and aid agencies working to fight poverty, it is impossible to efficiently allocate resources toward this goal using
poverty data that is incomplete, unreliable or out of date.
At the country level, there has already been a significant uptake in the use of household surveys and an improvement in their quality. Yet in remarkably few countries is there a standardized, recurrent—and therefore
consistent—approach to household survey data collection and analysis. A renewed, long-term commitment to build capacity in domestic statistical agencies would be a valuable use of aid agencies’
resources. Given its global reach and expertise in statistics and capacity development, the World Bank is the
appropriate agency to lead this effort. While greater investment in national poverty statistics may not answer
some of the long-standing questions in poverty analysis—At what level should the global poverty line be drawn? How
should national accounts and household survey data be reconciled?—many of which are more normative than positive,
it would provide a richer empirical foundation for these debates.
At the global level, one concrete policy recommendation that could be implemented immediately
is for the World Bank to begin producing global poverty estimates every year.
24
The World Bank
currently produces updated poverty estimates every three to four years, and each new release suffers from a
three-year lag attributable to time spent on data collection and analysis. This means that when we are near the
end of the data production cycle—as we hopefully are today—our estimates of “current” global poverty are
six years out of date. While the lags in data collection and analysis may prove difficult to close (though greater
investment in domestic statistics agencies would help on this front), we see no reason why global poverty estimates could not be produced annually, incorporating any new survey data whose analysis has been completed in
the previous year. If these releases were timed to coincide with major international meetings, such as U.N. or
G-20 summits, and sufficiently well-publicized, they could go a long way in ensuring the fight against poverty
remains a priority on the global agenda, and in making sure the World Bank remains an engaged and relevant
voice in discussions on the future of the global economy.
25
Moreover, regular updates of global poverty levels
would also lead to greater collective accountability and heighten popular awareness in the global fight against
poverty, potentially leading to better development results.