The development of information systems requires investments in these technologies, as well as complementary investments in research, education, and training. The 2016 World Development Report _Digital Dividends_ makes this case well.

# **2030—Ending Extreme Poverty**

The 1990 World Development Report analyzed the association between poverty and policies of the 1970s and 1980s and came to the conclusion that sustained poverty reduction is possible through a combination of labor‐intensive growth, investments in human capital, and supplemental social assistance or insurance. A quick review of the record of poverty reduction in the 1990s and 2000s validates this 2.5‐point strategy. But with the reduction of global extreme poverty from more than half to less than a fifth, changes need to be made. The question is: In light of these developments, where and how much does the 2.5‐point strategy need be altered?

The evidence over the last three decades (see Box 3 below for a summary of key reforms) indicates considerable support for the 2.5‐point strategy that was pioneered by the East Asian countries, but with one important change: in countries where $1.90 a day poverty has been reduced to low levels, governments should consider expanding the third component from a partial supplement to a full complement. The reasons have to do with both necessity and feasibility. With reduction in extreme poverty rates in Asia and Latin America to relatively low levels, there have been two changes in the profile of poverty. The first is that with success in addressing extreme poverty, it is progressively harder to tackle, because of demographic, geographic, and cultural reasons. It is increasingly found among the marginalized and the disabled, and in parts of countries that are remote because of economic distance or cultural divisions. The second is that, as of 2012, more than 1.2 billion people are living on between $1.90 and $3.10 a day: around 600 million in South Asia, about 300 million in East Asia, over 200 million in Sub‐Saharan Africa, and almost 40 million in Latin America. This segment of the population is vulnerable to shocks—emanating from the economy, their own health, pandemics, and nature—that can easily push them back into extreme poverty.

The 2000 World Development Report had raised this concern directly by emphasizing the problem of insecurity: “Actions are needed in three complementary areas: first, promoting economic opportunities for poor people through equitable growth, better access to markets, and expanded assets; second, facilitating empowerment by making state institutions more responsive to poor people and removing social barriers that exclude women, ethnic and racial groups, and the socially disadvantaged; finally, enhancing security by preventing and managing economy‐wide shocks and providing mechanisms to reduce the sources of vulnerability that poor people face.” For these reasons, successful countries should consider gradually increasing social insurance coverage. But for this to be done in a manner consistent with the ambition of ending extreme poverty by 2030, this complement has to share a feature with the first two: it should reinforce, not weaken, the other components of the strategy. Examples of social assistance programs that qualify are cash transfers conditioned on private investments in education and health—the investment component of the 3‐point strategy. An example of social insurance schemes that do not meet this test are those financed by 45