The end of global poverty may be as close as 2030, said Armando Barrientos, research director and professor at the Brooks World Poverty Institute at the University of Manchester.
According to World Bank data, the rate of decline of global poverty has accelerated since 2000, when it increased from 0.4 percent per year in the 1990s to 1 percent. With the advent of new and better social assistance programs, there is the potential to reduce world poverty even further, he said.
However, it’s too early at this point to start celebrating.
“We have to be cautious about this optimistic scenario, because it means we have to do a lot better over the next 15 years than we have over the previous 15.”
Barrientos delivered the latest in the Rethinking Development Policy lecture series on Wednesday, March 19, at the Sanford School of Public Policy. During the talk, he shared findings from his new book, Social Assistance in Developing Countries, about how the surge in large-scale programs that provide income transfers in developing countries is leading to a significant drop in poverty worldwide.
Across the globe, Barrientos said, between 750 million and a billion people are reached by transfers. And that number is growing.
In China, for example, one social assistance program for urban areas began serving 2.4 million people in 1999 and has since grown to 22 million people. When the program is rolled out in rural areas, that number is expected to more than double.
The explosion in anti-poverty transfers can be explained by a number of factors, Barrientos said. These include several crises in the 1980s and 1990s that eroded social well-being and protection, especially in developing countries. Democratization and better research have also paved the way for the creation of more effective transfer programs.
“Democratization and an expanding fiscal space have created favorable conditions in which governments can address structural deficits,” he said. “In addition, poverty research has helped develop knowledge and tools for more innovative and effective anti-poverty programs.”
These programs differ considerably in their design and ultimate goals, he said. While some are pure income transfers, such as pensions and family allowances, others are designed for more long-term goals such as asset accumulation and infrastructure development, including programs to increase the productive capacity of the poor. Still others are multipronged and based on the specific situation of individual households.
These programs are also becoming increasingly more effective by taking a longer-term approach to assistance, focusing on capacity building and incentives, and ranking poverty on a scale from moderate to extreme, he said.
“They’re taking into account the depth and severity of poverty, not just the headcount,” he said.
Despite the success of social assistance programs, their reach has been limited in the countries that need them most, Barrientos said. For the lowest-income countries, financing social assistance is a challenge because of their low revenue collection capacity.
In order for a program to work, he said, it cannot be permanently supported and funded by outside sources. It ultimately has to be institutionalized and financed domestically.
“International assistance has a limited role in supporting anti-poverty transfers, mainly to help overcome the large initial costs of new programs,” Barrientos said.
Bolivia provides an instructive example for how a low-income country can fund a program and facilitate its long-term success. In 1994, the country was poised to privatize state-owned enterprises, especially in the energy sector. To gain public support, the government proposed to maintain half of the shares in the privatized enterprises in a special fund. The returns from this fund were used to create a pension public fund, the Bono de Solidaridad, payable from the age of 65. The government later expanded this benefit to all Bolivians age 60 and older.
Overall, however, commitment from the community is not sufficient to create a successful social assistance program, Barrientos said. The right conditions have to be in place in order for social assistance to work.
“These programs cannot, by themselves, mitigate all other factors,” he said. “If there is continued economic growth and improvements in basic service provisions, these programs have a much greater impact.”