Dec 16, 2024 | HIPPOLYTE FOFACK, SAKIKO FUKUDA-PARR, JAYATI GHOSH, INDERMIT GILL, and JUSTIN YIFU LIN

Despite ambitious commitments from governments and the untiring efforts of international institutions, NGOs, and philanthropic foundations, global progress toward ending poverty has slowed markedly. What will it take to put this central component of the broader development agenda back on track?

PS Quarterly regularly features predictions by experts on a topic of global concern, and as we look ahead to 2025, the international community’s aspiration to end poverty warrants closer attention. This past fall, the United Nations held its Summit of the Future and sought to give momentum to the Sustainable Development Goals (SDGs), warning that the world is on track to meet only 17% of the targets enshrined in the internationally agreed 2030 Agenda.

After the pandemic years, when tens of millions of people were pushed into poverty, the need for a renewed effort is obvious. But the fact is that most of the progress made against poverty occurred between 2000 and 2015 – the years of the Millennium Development Goals – raising questions about the feasibility of today’s targets, not to mention current approaches to development assistance. To assess the world’s prospects for tackling humanity’s oldest problem, we asked contributors to respond to the following proposition:

“Progress toward the world’s 2030 poverty-reduction goals will continue to disappoint.”

HIPPOLYTE FOFACK

Only one-third of countries are on track to halve their national poverty levels this decade, and forecasts suggest that more than 600 million people will still be living in extreme poverty by 2030. Billions more will continue to face severe material deprivations and the consequences of the climate crisis. Today’s world is characterized by the old dichotomy between developing and developed countries, and by a vast SDG financing gap – estimated at around $4 trillion per year.

Even before the pandemic derailed many countries’ growth and raised poverty rates, the marginal gains in poverty reduction were largely driven by the spectacular performance of emerging Asian economies. China and others used sustained public investment in human, physical, and digital capital to mobilize private investment (including large-scale foreign direct investment) and establish a robust manufacturing base. These manufacturing industries then catalyzed technology transfers, which allowed their countries to move up the global value chain, with incomes converging toward those of advanced economies.

The Summit of the Future rightly recognized that the use of technology for rent-seeking and the existing global financial architecture are two of the greatest obstacles to poverty reduction. African and Latin American countries, in particular, contend with chronic deficits of human and physical capital, which inhibits foreign investment inflows and stifles the economic diversification needed to expand employment opportunities and sustainably boost per capita income growth.

At the end of 2023, the world’s 500 largest asset managers had $128 trillion under management. Yet, instead of providing developing countries with adequate financing, the global financial architecture subjects them to growth-crushing, default-driven borrowing rates. Meeting interest payments on external debt has become one of the largest expenditure items in these countries’ national budgets. Beyond limiting access to affordable “patient” capital, such conditions increase the fiscal incidence of sovereign debt and undermine poverty-stricken countries’ capacity to scale up investments in sustainable development and their own people.

Countries should not have to choose between debt sustainability and poverty reduction. But a global income convergence will remain elusive unless we transcend the old developing-developed mindset that underpinned the colonial model of resource extraction, equalize access to financing, and extend the material benefits of modern education and technology to all parts of the world.

SAKIKO FUKUDA-PARR

A decade ago, resounding cheers erupted in the United Nations General Assembly as it adopted the 2030 Agenda for Sustainable Development. Unprecedented in its ambition to set the world on a course to a brighter future, the agenda promised a transformation that would save the planet, end poverty, and foster economic development. The point was not only to accelerate the pace of progress, but to change its direction to benefit the planet and all people. Yet only 17% of the 2030 targets are on track, and one-third are stalled or even in reverse. Why?

The politics that drove the agenda’s adoption could not be sustained to ensure its implementation. International negotiations did produce a consensus, but they did not follow the usual pattern of dealmaking among diplomats behind closed doors. A unique process – the Open Working Group – was set up to broaden participation, draw on civil society, and strengthen the voices of smaller, weaker governments, especially those from the Global South.

But while these new dynamics disrupted the existing power structures in the establishment of global norms, they did not create the momentum to reshape national and global policymaking. Hence, the “means of implementation” targets and the “partnerships” goal (SDG17) have been the most neglected, and politically contentious targets concerning the environment and inequality are lagging farthest behind. Yet these are the most “transformative” elements of the SDG framework. They are meant to address systemic obstacles defended by powerful vested interests.

Making progress against poverty will require shifts in the global political economy. We need to create the space for new national and international policy experiments. A good starting point is the UN secretary-general’s “rescue plan” for the SDGs, which calls for radical changes in the international financial architecture, developing-world debt, international tax cooperation, and access to life-saving medicines and vaccines.

JAYATI GHOSH

The recent reversal of progress toward global goals to eradicate poverty and end hunger comes at a time when the world is richer than ever, and when total food production is more than sufficient to feed everyone on the planet. This contradiction results from extreme and increasing inequality of incomes, assets, opportunities, and access across and within countries, and it is born of institutions and policies at both the national and international levels.

The international economic architecture and most governments continue to favor wealthy individuals and large corporations with greater lobbying power, while disregarding their responsibility to uphold human rights, especially social and economic rights. Meanwhile, volatile capital flows, monopolies over critical knowledge, and an inability to address debt overhangs reduce low- and middle-income countries’ ability to ensure their citizens’ economic welfare. Having failed to fulfill their mandates, multilateral institutions are struggling to stay relevant. And now, the inward-oriented, protectionist shift in rich countries like the United States will further restrict cross-border flows of goods, services, and people, thereby intensifying the problem.

This depressing trend is not inevitable. But changing it requires a major transformation of economic strategies in a majority of countries, with a new policy focus on meeting people’s basic needs and sustaining nature and the planet, rather than on maximizing output growth for its own sake.

INDERMIT GILL

It is disheartening to admit, but the goal of ending poverty by 2030 is simply out of reach. It is out of reach at the bare minimum, just-enough-to-survive level of $2.15 per day. It is far out of reach at the $6.85 threshold that holds down nearly half of humanity. And it is fantastically out of reach at some of the new levels (as much as $30 per day) being proposed.

A first step, under current circumstances, is simply to recognize this reality and prevent the disappointment from recurring. The 2020s, far from being the transformative period for development that we hoped they would be, are on track to become a lost decade. Progress on poverty reduction has all but ground to a halt: today, about 8.5% of the global population lives on less than $2.15 per day, a percentage that has barely budged since 2019, the near-term prospects for improvement are dim. Global economic growth in 2025 and 2026 is expected to average 2.7%, well below the 3.1% average that prevailed from the mid-1990s through 2015, when the world came closer than ever to eliminating extreme poverty altogether.

Our priority now should be to introduce policies to restart poverty reduction. The tried-and-tested formula for reducing poverty is broadly based economic growth, investments in education and health, and well-targeted safety nets. For the rest of this decade, it is more important to regain momentum on poverty reduction than to fuss over precise goals and timelines. Despite the setbacks from pandemics and climate change, I am an optimist on this score: it can be done.

JUSTIN YIFU LIN

The world is facing multiple complex challenges that will impede progress toward the 2030 poverty-reduction goals. Climate change is causing extreme weather, which is exacerbating food and water insecurity, hitting the poorest the hardest. High-income countries have not delivered on their promises, enshrined in the Paris climate agreement, to provide sufficient funding for developing countries to mitigate and adapt to global warming, leaving them more vulnerable.

Moreover, the lingering effects of the COVID-19 pandemic have reversed years of hard-won gains, and geopolitical tensions are disrupting trade and investment, in turn limiting economic growth in developing regions. In developed countries, worsening income disparities and a shrinking middle class have led to more protectionist policies. In Africa and Latin America, developing countries face premature deindustrialization, owing to government inaction in supporting structural transformation. Many countries lack the necessary resources and infrastructure to implement effective poverty-reduction strategies. Inequality within and between countries persists, further hindering inclusive growth.

Without concerted global efforts and substantial policy changes, it is likely that progress toward the SDGs will continue to fall short of expectations, disappointing those who hoped for a more equitable world by 2030.


HIPPOLYTE FOFACK
(Writing for PS since 2020)
Hippolyte Fofack, a former chief economist and director of research at the African Export-Import Bank, is a fellow with the Sustainable Development Solutions Network at Columbia University, a research associate at Harvard University’s Center for African Studies, and a fellow of the African Academy of Sciences.

SAKIKO FUKUDA-PARR
(Writing for PS since 2020)
Sakiko Fukuda-Parr is Professor of International Affairs at The New School.

JAYATI GHOSH
(Writing for PS since 2018)
Jayati Ghosh, Professor of Economics at the University of Massachusetts Amherst, is a member of the Club of Rome’s Transformational Economics Commission and Co-Chair of the Independent Commission for the Reform of International Corporate Taxation.

INDERMIT GILL
(Writing for PS since 2013)
Indermit Gill is Chief Economist and Senior Vice President for Development Economics at the World Bank.

JUSTIN YIFU LIN
(Writing for PS since 2009)
Justin Yifu Lin, a former World Bank chief economist, is Dean of the Institute of New Structural Economics and Dean of the Institute of South-South Cooperation and Development at Peking University.

Source: PS Quarterly - Project Syndicate