Economic Growth and Poverty Reduction in a Rapidly Changing World

Summary:

Economic growth has proven to be a powerful force in the fight against poverty across the world, especially since 2000. While good progress has been made, 900 million people are still trapped in extreme poverty and the prospects for many, particularly in Sub-Saharan Africa, remain worrying. The persistence of extreme poverty in this region, which also struggles with numerous regional conflicts and fragile states, has the potential to stoke sustained geopolitical tensions, which, in turn could stymie future global growth, if left unaddressed. Furthermore, unless accompanied by a matching rise in job opportunities, rapid population growth in Sub-Saharan Africa could continue to fuel migration flows.

Although critical, economic growth alone will not be sufficient to cut the global poverty rate to below 3 % by 2030 unless it is accompanied by policies to ensure that the poorest benefit from growth and the job creation process. By looking at the experiences of China, India and Brazil, this paper assesses what makes a country successful at tackling poverty. This could provide valuable lessons for Sub- Saharan Africa, where global poverty is expected to be concentrated in 2030. To the extent that the concentration and depth of poverty is largely fuelling non-economic risks, like geopolitical conflicts, terrorism and migration flows, making growth inclusive is also critical for the stability of the global economy and should be at the core of global economic policy considerations, including in the G20. This is why, at the recent Hangzhou Summit, the G20 agreed to ‘work to ensure that our economic growth serves the needs of everyone and benefits all countries and all people including in particular women, youth and disadvantaged groups, generating more quality jobs, addressing inequalities and eradicating poverty so that no one is left behind’.

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