ERADICATING POVERTY IN FRAGILE STATES: PROSPECTS OF REACHING THE “HIGH-HANGING” FRUIT BY 2030 Given a great range in the forecasts for global poverty, it is not surprising that those for fragile states also vary widely (see Figure 5 and Table 2). In fact, in light of differences across studies in definitions of fragile states, the 2030 poverty forecasts of these studies are not entirely comparable. Yet the overall trends of the forecasts are a useful reference point for our analysis. Except for Chandy et al., the base case forecasts for the authors mentioned above suggest the likelihood of increasingly large poor populations in fragile states over the next 15 or so years. The base case forecast for Chandy et al. decreases rapidly because of the inclusion of low-middle income countries like Nigeria and Bangladesh, both of which have large concentrations of populations sitting just below the poverty line in 2010 that are expected to cross that line in the next five to ten years.<sup>16</sup> The pessimistic forecast cases for Edward and Sumner are, in fact, by far the most pessimistic of the set. Even the trajectory of the optimistic national account-based scenario is more pessimistic than the estimate of IFs; while its 2010 starting value is below that of IFs, an extension of their forecast would suggest a comparable 2030 level to that of IFs. The World Bank forecasts for fragile states follow the same methodology used by Ravallion (2013); the “high” forecast uses extrapolated current trends in economic growth and inequality, and the “low” trajectory takes the growth and inequality projections from the simulation forecast in Ravallion (2013). Adjusting for initial starting points, the IFs forecast has a comparable pattern to that of the World Bank "high forecast". The Chandy scenario and the low World Bank scenarios are the most optimistic, but neither one brings fragile state poverty below 10 percent in 2030.

# 4. ALTERNATIVE SCENARIOS FOR POVERTY IN FRAGILE STATES: GROWTH AND SHARED PROSPERITY

## 4.1 RATIONALE

The international community has made a call for the eradication of extreme poverty by 2030 (the World Bank considers poverty eradicated if the global rate is below 3%), but, given the figures in the table above, fragile states would require unprecedented progress in just 15 years to completely eradicate poverty, making them the highest hanging fruit for this global goal. Before assessing the impacts of particular policy levers on poverty reduction, we explore the limits of realistic potential for poverty reduction in fragile states more generally.

As described above, the two main determinants in calculation of poverty reduction are increased growth and improved income distribution within a country. Economic growth is seen as the traditional aggregate driver of poverty reduction; the predominant logic is that, just as a rising tide lifts all boats, an increase in the total income of a country will lead to increasing incomes for the poor. While not all economic growth leads to poverty reduction, economic growth is held to be an important, if not the most important, contributing factor to poverty reduction. Where economic growth has not been associated with poverty rate reduction, it is because inequality has increased. More equal income distribution has been linked to poverty reduction by major international development organizations. World Bank President Jim Kim has stressed the importance of including “shared prosperity” in the post-2015 agenda<sup>17</sup> , and the phrase “leave no one behind” has been an important part of the United Nations post-2015 agenda discussion.<sup>18</sup> In our modeling, like that of the other projects discussed above, calculations of income-based poverty measures are a function of both income and distribution. It follows then that changes to economic growth or inequality will have a direct mathematical relationship with poverty. In that respect, the first set of scenarios presented below represent the range of what is possible, given the model’s underlying assumptions about these two variables, rather than implications of policy. While policy makers can certainly adopt growth-promoting or inequality-reducing policies, the relationship between the policies and their effects are inherently more complex and we return to those in the next section. The first set of scenarios we present is an exploration of the potential poverty reduction that can be achieved given optimistic, but

> 16 Chandy et al. (2013). 17 Jim Yong Kim (April 2013) 18 United Nations (2013)

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