The good news is that there has been a sharp fall in the number of people living in absolute poverty, measured in dollar-a-day terms. The Millennium Development Goal (MDG) of reducing extreme poverty rates by half was met five years ahead of the 2015 deadline. The bad news is that poverty has not gone away, and relative poverty remains a particularly stubborn problem in developing countries, with the inequality gap widening.
In relative terms, low income countries like those in sub-Saharan Africa, have remained stable, staying at extremely high levels. But experts disagree on the long-term dynamics of income inequality in low-income countries. More research is needed, especially given that official estimates are likely to understate existing levels of inequality.
However, there are some factors that drive inequality in low income countries, notably:
- Education: it matters in ensuring parents know how to raise their children safely, in helping people find jobs, and in building communities.
- The rural-urban divide: opportunities are fewer when rural communities lack basic water and sanitation, electricity, fuel and education.
- Gender discrimination: being a woman explains the bulk of inequality in access to full-time employment more than any other factor, including education.
- Wealth: it shapes inequalities of outcome and opportunity.
So, how can policymakers ensure poverty reduction goes hand-in-hand with the inequality reduction? Positive progress has mostly been seen in countries that prioritise investments in the social sector, including through social protection. Long-term investment is needed in critical sectors like infrastructure, transport, energy and ICT. The challenges include capacity building, trade facilitation, debt management, corruption, good governance, and disaster risk management. A main aim is to help raise the state of human development: by simply providing health, education and basic freedoms, policymakers can do wonders to improve life opportunities.