The New Geography of Poverty - OECD Development Cooperation Report 2013

This post by Valentin Lang, Policy Analyst at the OECD provides a first look on Andy Sumner’s piece for the OECD’s Development Cooperation Report 2013. This blog is part of the Wikiprogress series on post-2015.

A critical time for the future of global development has begun. In September, the international community gathered at the United Nations General Assembly in New York to launch the final phase of the international process that will lead to a new global development framework for post2015. The development community has started vigorous work on new approaches to end poverty. A much awaited publication in this regard is the OECD’s Development Cooperation Report 2013: Ending Poverty, the subject of a live panel debate in London on 5 December 2013. 

In his contribution to the report, Andy Sumner, Co-Director of King’s International Development Institute, shows that the global patterns of poverty have changed fundamentally over the past few years. He argues that we won’t be successful in tackling this new pattern of poverty with our current approach to international development. The world economy has changed and so has poverty. The next development framework has to account for this and has to initiate new forms of development cooperation. According to Sumner, a “new bottom billion” lives in middle-income countries. Whereas in 1990, most extremely poor persons lived in a low-income country, today more than 70% of them live in middle-income countries. In the next few years, some of these countries could even develop into high-income countries if they meet IMF growth forecasts.

In short, we see the geography of poverty shifting radically

This new world of poverty consists primarily of countries whose gross national income per capita gives them middle income status but whose “nothing magically happens when a country crosses an arbitrary line into a new classification based on per capita income” population comprises large numbers of extremely poor. Apparently, mere economic growth does not guarantee progress in poverty reduction. Today, the poverty problem is inextricably linked to the inequality problem.

Sumner draws some important conclusions from these remarkable findings. He argues that if we want to eradicate poverty in the future, the traditional approach of “development aid” that flows from OECD countries to the least developed countries is by far not enough. Development cooperation has to realise that. Development cooperation with countries whose populations suffer from poverty should therefore not be less intense only because of their middle-income status – but it should be different:

Development cooperation with middle-income countries can draw on a wider range of resources and policy options than low-income countries. Middle-income countries have a larger tax base and have more domestic resources available for work in poverty reduction. The credit ratings of middle-income countries allow them to borrow capital from financial markets. Therefore, development cooperation can and must take new forms beyond ODA.

For instance, Sumner points to the possibility that providers of development cooperation could shift from grants to concessional loans and to the co-financing of global and regional initiatives. Knowledge sharing and joint policy-related research will also have to become more important. Another central challenge for providers of development cooperation is to focus more on policy coherence for development. They must better co-ordinate development and non-development policies and ensure that the latter do not undermine the former.

At the same time, a focus on inequality has to be a key feature of future development cooperation. Combating global poverty means combating inequality inside countries. Mere economic growth will not suffice. It must be inclusive and must be connected to socio-economic policies that tackle inequalities: “Growth with redistribution is the way forward.” Sumner’s analysis, thus, points to the fact that it seems inevitable to address inequalities in the post-2015 development framework.

The new geography of poverty requires new policies to fight it and Andy Sumner’s contribution to the OECD’s Development Cooperation Report 2013 leads the way ahead.