How can poverty be forever suppressed?
Inequality has been a clear and studied barrier to poverty eradication, as well as many other development challenges.
This issue is featured under several forms across the 2030 Agenda for Sustainable Development – the universally adopted plan to promote prosperity and social well-being while protecting the environment.
Multiple statistics and metrics paint a somehow positive picture, with income inequality among countries declining somewhat during the past decades, driven primarily by strong growth in East Asian and South Asian economies.
But there are still many countries – especially in some parts of Africa, Western Asia and Latin America and the Caribbean,where income levels have continued to fall even deeper behind, aggravating the income inequalities between countries even more dramatically.
What does the UN rapport on poverty say in 2019?
The latest United Nation’s analysis in the World Economic Situation and Prospects 2019 indicates that per capita income levels essentially stagnated or declined in a total of 47 developing and transition economies last year.
Most of these countries have been consistently falling behind for several decades. This, of course, puts an enormous amount of stress on the countries that actually strive to reduce poverty, develop essential infrastructure, create job opportunities and support economic diversification.
Most of the lagging countries are highly dependent on commodities, stressing the importance of both diversification and effective management of natural resource wealth to tap into their development potential.
Several countries have also suffered long-standing armed conflict or civil unrest and political instability. If this trend continues, eradicating poverty and creating decent jobs for all will become even harder to attain.
The saddest thing about this is that weak economic performance is also linked to a series of other troublesome consequences like insufficient investment in quality education, health services, social protection, programs for marginalized groups and mitigation and adaptation to climate change.
Having the growth domestic product increase all alone will not necessarily lead to broad-based improvements in living standards. Deep inequalities also persist in the distribution of income within countries, acting as a major barrier to development progress.
High inequality within countries is associated with social exclusion and fragmentation; weaker possibility of building elaborate systems of institutions and governance, and increased risk of violence and internal conflict.
Fundamental transformations are needed going forward, to narrow the income gaps between and within countries.
According to UN estimates, without significant changes in behaviour, more than 7% of the global population may remain in poverty by the year 2030, including about 30%of the populations in Africa and the least developed countries (LDCs).
For example, in Africa, where the population is expanding at a rate of more than 2% per year, reducing the level of extreme poverty to below 5% by 2030 will require a complicated combination of double digit GDP growth and dramatic declines in inequality… which is clearly tough to aim for.
This puts us in an unprecedented historical situation, where integrated and cross-cutting policy measures that both raise prospects for economic growth and reduce income inequalities are essential to shift the world towards a more sustainable and inclusive path.
What measures should be taken to reduce poverty levels?
The measures that need to be taken include investing in education, health care, resilience to climate change, and financial and digital inclusion, to support economic growth and job creation in the short-term, while promoting sustainable development in the long term.
Macroeconomic stability and a strong development-oriented policy framework, including a well-functioning and robust financial system, are key elements for successfully tackling inequality.
Well-designed fiscal policies can help smooth the business cycle, provide public goods, correct market failures and directly influence the income distribution. Broadening access to quality education is also crucial, coupled with employment policies, such as raising minimum wages and expanding social protection.
Prioritizing rural infrastructure development, through public investment in transport, agriculture and energy, are also a few measures that could support poverty alleviation and narrow the inequality gaps within countries.