We can’t reduce extreme poverty until we tackle inequality

The gains of the past have reduced in recent years because more countries are more unequal than before, say Mahmoud Mohieldin and Carolina Sánchez-Páramo

The impressive progress the world has made in reducing extreme poverty has slowed considerably in recent years. Eliminating extreme poverty requires tackling inequality. The good news is that inequality worldwide has declined since 1990, mirroring the reduction in poverty. The bad news is that within-country inequality has risen.

Compared to 25 years ago, the average person today is far more likely to live in an economy with higher inequality. And, beyond income and wealth, there are still large disparities — between and within countries — with respect to food and nutrition, healthcare, education, land, clean water, and other essentials. Inequality is a political choice. Governments that want to reduce gaps in income and wealth, and to improve the lives of their poorest, have made some progress.

Since 2015, the United Nations Sustainable Development Goals — specifically Goal 10 — have brought unprecedented attention to this issue. And at this month’s High-Level Political Forum, the international community has its first chance to assess the progress in combating inequality, both globally and nationally. To that end, the World Bank Group and the UN Department of Economic and Social Affairs recently held a preparatory meeting to highlight how governments can step up their efforts.

The meeting produced several key findings:

For example, traditional data sources, such as household surveys, which fail to capture incomes at the top (including the top 1%), are now being complemented by administrative and tax data to fill in longstanding knowledge gaps. Nonetheless, we will need to develop more and better metrics that capture various manifestations of inequality, so that all actors — governments, stakeholders, multilateral institutions, civil society organisations, and the media — can directly measure progress toward achieving SDG 10.

The barriers to inequality-reducing policies often reflect a lack of political will to remove them. Policymakers should recognise that large and persistent disparities between groups are bad, not just for the economy, but also for political and social stability.

Social cohesion and public trust in institutions cannot be sustained in the absence of equal opportunity and policies that reflect unifying narratives.

At a summit in September, World leaders will take stock of the progress made toward the SDGs. They must reaffirm their commitment to the global goals, and specifically to SDG 10.

The World Bank Group will focus its energy and resources to see the effort through between now and 2030. But that will not be enough. Reducing inequality within countries, and internationally, will take a global village.

Mahmoud Mohieldin is the World Bank Group senior vice-president for the 2030 Development Agenda, UN Relations, and Partnerships. Carolina Sánchez-Páramo is global director of the World Bank’s Poverty and Equity Global Practice.

Copyright: Project Syndicate, 2019.