inequality increases the annual growth rate by 2 percentage points and 3 percentage points, respectively. A more systematic analysis on how to reduce within-country inequality is necessary.<sup>13</sup>

# _Importance of sustainability and the World Bank Group Goals_

Furthermore, maintaining the sustainability of good performance is important. Even if a country performs well now, sudden breakouts of economic crises or natural disasters can slow the pace of poverty reduction. Therefore, helping countries experiencing a severe economic crisis or a large-scale natural disaster recover quickly will be crucial to meet the global target of ending extreme poverty. Also, it is important to ensure that acceleration of growth and achievement of more shared growth are attained in a fiscally and environmentally sustainable manner. Otherwise, today’s success just increases a risk of a future collapse.

These findings suggest interesting links between the WBG goals. To end extreme poverty, it is crucial to achieve the other goal of promoting shared prosperity – increasing growth of the less well-off for each country – and ensure the process remains environmentally and fiscally sustainable. Only a difference is that to end extreme poverty by 2030, prosperity or economic growth needs to be shared not only between the rich and the poor within a country, but also between rich and poor countries.

# **VI.1. Analysis of Regional Poverty Projections and a Proposed Intermediate Target**

It seems reasonable or inevitable to enhance shared prosperity in the developing world in order to end extreme poverty by 2030. But what do we need to do? In the next subsections, we will review regional poverty projections and propose a simple target that can lead the global poverty rate to reach 3 percent by 2030.

**Table 5. Minimum growth rates required to achieve the 3 percent targets globally**

|Region|SAR|SSA|
|---|---|---|
|Population shares in 2030 (%)|23.91|17.0|
|Poverty rates in 2010 (%)|31.0|48.5|
|Maximum poverty rates allowed in 2030<br>(%)|12.54|17.65|
|Actual growth rate (%)|2.14|1.93|
|Required annual growth rates (%)|1.46|4.06|

Source: Authors’ estimation based using PovcalNet and population projections by World Bank Data Group (as of October 2013).

# _Sub-Saharan Africa and minimum regional requirements to achieve the extreme poverty target_

The benchmark projection indicates that SAR and SSA will likely dominate the population of the extreme poor in 2030. Due to their dominance in the share of poor populations in the world, there is a possibility that even if all other regions end extreme poverty by 2030, if one region fails to achieve a certain level of poverty by 2030, the global target of 3 percent by 2030 cannot be achieved. We call this a “maximum poverty rate allowed for one region” above which the region will singlehandedly fail the global target of 3 percent poverty rate in 2030. For example, if SAR cannot reduce the regional poverty rate to below 12.54

> 13 Dollar et al. (2013) are pessimistic about finding policy instruments that can promote shared prosperity. Their empirical analysis does not find any specific policy that effectively reduces inequality between the rich and the poor and accelerates growth of the less well-off to exceed the average. However, this result can be due to their empirical strategy—conducting empirical analysis using a cross-country database. As shown before, some countries in the LAC region could successfully accelerate growth among the poorer populations to well over that of the average population, but such successes are still outliers from a global perspective. As a result, a typical cross-country regression analysis does not capture this well.

17