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Can Obama bend it like Bono?

Andy Sumner - 8th March 2013

What do Obama and Bono have in common?

Both have proposed that the world should seek to end extreme poverty over the next twenty years or so.

Obama said so in his annual state of the union address and Bono said the same in an interesting and nuanced TED talk in Los Angeles.

Are they mad or deluded? Actually, no and the numbers are here in a new paper.

The idea of an end to extreme poverty is part of a broader discussion on the next generation of UN global poverty goals.

The current set of goals, the Millennium Development Goals (MDGs), will expire in 2015 (here’s a brief history).

The MDGs aimed to halve income poverty and hunger and to reduce other forms of poverty so the big question for the UN and others is what sort of global goals are after 2015? (assuming you think global goals are good which not all do).

To answer that question we need first to know a bit about progress towards the current – 2015 – goals.

Charles Kenny and I crunched the numbers back in 2011 and concluded, in short, that the goals had contributed in notably more aid for the poorest countries and faster progress on poverty reduction in some areas – notably heath related, MDGs, 4 and 6.

Of course, quite a lot of the progress would have happened even if there hadn’t been any global goals. It seems unlikely, for example, that the MDGs had much to do with China’s and India’s and other emerging economies’ incredible economic take-off.

Still, the first MDG, to cut in half the share of the world’s population living in extreme poverty, has probably been met, though some have their doubts.

So, what might be feasible in terms of poverty reduction in the next, say 15-20 years?

One idea that has evolved is that the MDGs were about halving global poverty and reducing other aspects of poverty so the post-MDGs should be about ‘finishing the job’ – meaning ‘getting to zero poverty’, to echo a World Economic Forum report on the matter.

We conclude too that it is entirely feasible to get close to ending extreme poverty – as measured by the World Bank at $1.25 per person per day – by around 2030 or so – but under certain conditions which I’ll come to in a moment.

The new paper is really a further extension, across multiple scenarios for growth and inequality, of work with Charles, Jonathan Karver and myself in an earlier CGD paper on a range of possible new MDGs.

And we’re not alone –Martin Ravallion, head of research at the World Bank, found something similar.

If economic growth meets IMF forecasts and inequality starts to decline it could even be feasible to end poverty at the less-than-$2-a-day level by 2030-2040, since the cost of doing so by 2030 could fall to as little as 0.1% to 0.2% of world GDP.

What needs to happen to end global poverty?

First, economic growth needs to be strong – the recent record for most countries is really good (see here and here). In fact, over the last decade almost 30 countries became middle income and a staggering 80 countries are on a convergence path with the rich countries

Second, declining inequality has to accompany that economic growth – and this is the crux – without this it will take much, much longer to end poverty at whatever level – and it will cost much more in terms of raising the incomes of the poor to any kind of minimum level.

Third, as Charles Kenny has blogged recently, we need to remember ending $1.25 poverty doesn’t necessarily mean ending all poverty – in fact it probably does not. Furthermore, real security from poverty may only emerge as people achieve $10 per day or so.

Finally, don’t forget half of the world’s poor live in just two countries (India and China). And just 20 populous countries like Nigeria, Pakistan, Indonesia, Bangladesh and DRC, account for 90% of global poverty. This means what happens in a handful of populous countries will make a big difference.

Surely anyone would have to agree aspiring to the end global poverty really ought to be what the world seeks to do. The question is whether Obama and Bono can bend the MDG curve enough to end global poverty within a generation.

This blog was originally posted on the Centre for Global Development website and Global Dashboard.