ERADICATING POVERTY IN FRAGILE STATES: PROSPECTS OF REACHING THE “HIGH-HANGING” FRUIT BY 2030

# 1. INTRODUCTION

Efforts to reduce extreme poverty in the first decade of the 21<sup>st</sup> century have been overwhelmingly successful— Millennium Development Goal 1 (MDG1), the global goal of reducing $1.25-a-day poverty by half between 1990 and 2015, was met in 2010 according to estimates by Chen and Ravallion (2012). As 2015 approaches and the MDGs come to a close, attention has now shifted to a new round of global development agenda setting—major voices of international development, led by the World Bank, the United Nations and the United States, have called for the eradication of extreme poverty by 2030.<sup>1</sup> For most of the developing world, poverty eradication (or something close to it<sup>2</sup> ) is quite possible. China has reached single-digit poverty rates, and the majority of India’s poor are situated very close to the poverty line, ready to cross it in the very near future.<sup>3</sup> Meanwhile, there has been relatively little conversation about the prospects for poverty reduction and eradication in fragile and conflict-affected countries (FCS), with a few notable exceptions<sup>4</sup> . This inattention is driven by three related facts, i) most of the poor have historically been located in non-fragile states<sup>5</sup> , ii) fragile states have historically made the least progress on poverty reduction, and iii) development interventions are typically (though not always<sup>6</sup> ) more effective in non-fragile environments. In light of these realities, most policy focus over the last decade has been on poverty eradication in the rest of the developing world, where the proverbial fruit is relatively abundant and lowhanging. With a global development goal of poverty eradication, however, the goal is harvesting _all of the fruit_ from the tree, both low-hanging and high-hanging, and this paper assesses the feasibility of reaching that high-hanging fruit. We use the International Futures (IFs) forecasting system and a scenario modeling approach to contribute some practical forecasts of likely trends in poverty for fragile and conflict-affected states and some analysis of how policies might impact poverty reduction in these environments.

The paper structure is as follows: The second section identifies the countries considered fragile for the purposes of this analysis, and it provides information on current poverty in these countries and the rest of the developing world. The third section summarizes recent poverty forecasts by other authors and compares to our “base case” estimates, both for the world and for fragile states, where available, to place our analysis in the context of other research. The fourth section presents a “best case” poverty forecast for fragile states based on above average economic growth and lower inequality in these countries. The fifth section explores the effects of improvements in security, institutions and other poverty reduction policies on the forecasts for fragile states. The final section uses findings from the alternative scenarios to assess the feasibility of eradicating poverty in fragile states.

## 1.1 DEFINITIONS

The fragile states list used throughout this study will be the Fragile and Conflict-Affected Situations (FCS) list for fiscal year 2014, published by the World Bank’s Global Center on Conflict, Security, and Development. This list changes on a yearly basis, and a table of historical lists is included in the Technical Appendix. For the purposes of this paper, the poverty rate is defined as the percentage of a population living under the international poverty line of $1.25 per day, and the poverty headcount refers to the number of people living on less than $1.25 a day.<sup>7</sup> Following the global discourse, the term “extreme poverty” also refers to poverty marked by the $1.25 poverty line.

Countries are included on the World Bank Fragile and Conflicted-Affected Situations list if they meet any one of the following criteria: 1) the country currently has, or has had within the last 3 years, a UN peace-keeping operation within its

> 1 Kim (2013), UN (2013), White House (2013), USAID (2014)

> 2 World Bank (2013)

> 3 Chandy et al. (2013)

> 4 Ibid.

> 5 Poverty rates on the other hand have been lower typically in non-fragile states; see Edward and Sumner (2012)

> 6 IEG Annual Report (2013); for summary findings in fragile states see Hellman (2013) “Surprising Results from Fragile States” (http://blogs.worldbank.org/futuredevelopment/surprising-results-fragile-states)

> 7 Chen and Ravallion (2008)

3