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IFPRI Forum

October/November 2007

Cutting Poverty: Learning from the Leaders

A few developing countries have succeeded in quickly and dramatically reducing the share of their populations living in poverty. What lessons do these countries’ experiences offer the rest of the developing world? The year 2007 marks the halfway point toward the Millennium Development Goals (MDGs), which were adopted in 2000 and have a deadline of 2015. The MDGs are predicated on the hope that countries can cut poverty deeply and quickly. But can they? After seven years, many developing countries are not on track to meet the goal of halving poverty by 2015. Is it just too difficult to cut poverty by that much in such a short span of time? In fact, some countries have done it. China reduced the share of its population living in poverty from 53 percent to 8 percent over the course of 20 years, and a number of Asian countries have made similar progress. Chile also cut poverty sharply—the share of people living in poverty fell from 40 percent to 17 percent in 12 years. Ghana made significant progress as well; although poverty remains high there, the country reduced the incidence of poverty from 52 percent to 40 percent in just 7 years. Do these countries’ experiences offer lessons that could be useful to other developing countries seeking to cut poverty rapidly? Is there a recipe for rapid poverty reduction that other countries can follow? Yes and no.

According to Alberto Valdes, a research associate at the Catholic University of Chile in Santiago, “Most of the work by economists has shown that rapid economic growth is the most effective way to reduce poverty because it creates employment and provides government revenues that are needed to implement social programs. The task is how to achieve a balance between rapid growth and delivering the benefits of that growth to the poor.” Broadly speaking then, most countries that have succeeded in dramatically reducing poverty have done so by promoting growth and then ensuring that the benefits of growth are reliably shared with the poor. But the details of this strategy—how countries achieve growth and pass its benefits to the poor—vary widely.

Economic Liberalization and Social Spending

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Agricultural Reforms and Local Innovation

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Industrialization, Agrarian Reform, and Redistribution

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Macroeconomic Reform and Public Investment

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The Need for Good Governance

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A Multiplicity of Models

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Reported by Heidi Fritschel