WB President emphasizes 3 pillars of poverty alleviation and shared prosperity

World Bank president Jim Yong Kim delivered a speech at the 2017 Annual Meetings and he emphasized three ways to end extreme poverty and boost shared prosperity.

Jim Yong Kim noted that trade is picking up, but investment remains weak. Downside risks such as a rise in protectionism, policy uncertainty, or possible financial market turbulence could derail this fragile recovery. That’s why now is the time for all countries to take action on the needed reforms to grow economies and compete in what will surely be a more complex, demanding, and digitized future.

He said: “In 2013, we announced our goals to end extreme poverty by 2030, and boost shared prosperity among the poorest 40 percent around the world. And a year ago, I explained the three ways we will get there: by accelerating inclusive, sustainable economic growth; by building resilience to shocks and threats; and by investing more – and more effectively – in people.”

This is an especially important time for tackling global poverty, because there is more room to take bold action to grow the economy, protect countries from major overlapping crises, and invest in people, he said.

The first pillar to end poverty and boost shared prosperity is to accelerate inclusive, sustainable economic growth. 

He pointed out that official development assistance will not be enough to meet the 4 trillion dollars per year needed to achieve the sustainable development goals, and meet the world’s rising aspirations. Last April, he called for a new approach to maximize finance for development by systematically crowding in private sector investment and make it work for developing countries and poor people.

Maximizing Finance for Development means finding win-win solutions, where investors get a good return, and countries utilize these resources to meet their development goals.

“We need to embrace the notion that our greatest moral responsibility is to create equality of opportunity. The Maximizing Finance for Development approach gives countries the resources to build bridges, solar parks, and hospitals. It frees up funds for schools, job training, and social safety nets, and creates win-win solutions that can grow economies and give everyone opportunity – for a good education, for a stable job, for a chance to achieve their highest aspirations.” He said.

The second pillar is to build resilience to overlapping shocks and crises, and one of the most critical is climate change.

According to him, 2016 was once again the hottest year since record keeping began. The last three years each broke the previous record. Worldwide, more extreme natural disasters force 26 million people into poverty every year. It is very important to reduce our carbon footprint and help countries adapt to natural disasters, like the recent hurricanes in the Caribbean and devastating floods in South Asia.

He pointed out that last year, the World Bank Group loaned 12.8 billion dollars for climate investments and scale up climate action by bringing the public and private sectors together. There’s 23 trillion dollars of potential investments just in the Paris commitments of 21 emerging economies – including green buildings, sustainable transport, renewable energy, and energy efficiency.

“We need climate investments in the trillions, not billions of dollars. Around 90 trillion dollars will be invested in infrastructure over the next 15 years, just to replace aging infrastructure in advanced economies and meet expected growth in emerging economies. Right now, infrastructure investment tops out at around 3.4 trillion dollars annually, but the need is more like 6 trillion dollars a year. And all of this must be climate-smart, low-carbon, resilient infrastructure.” He said, “Along with climate change, we have to do more to help refugees – and to help the countries and people who are providing the world with a global public good by hosting them.”

The third pillar of our strategy is to invest more – and more effectively – in people.

He emphasized that everyone deserves a chance to reach their highest aspirations. Providing health, education, and social protection is one of the most powerful ways of giving everyone a chance and investments in human beings – especially in their health, education, and social protection – are far more powerfully correlated with economic growth. Investing in people is investing in economic growth.

Jim Yong Kim said in rich countries, human capital is a much larger proportion of overall wealth; in low-income countries, it’s a much smaller proportion. Now the world is facing several human capital crises and has to fundamentally change the way world invests in building human capital. Aspirations are rising. And aspirations, linked to opportunity, can breed dynamism and inclusive, sustainable economic growth. But if there’s no opportunity to achieve one’s aspirations, rising frustration may very well lead countries down the path of fragility, conflict, violence, extremism, and eventually migration.

“We can play a critical role in finding win-win solutions, using our full range of financial tools to protect countries from overlapping crises and helping countries make more – and more effective – investments in their people.” He said, “If we commit to these pillars, invest the right resources and act with the fierce urgency that these times require, we can be the first generation in history to end poverty on the face of the earth.”