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Leave No Country Behind Ending Poverty in the Toughest Places

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Leave No Country Behind Ending Poverty in the Toughest Places GLOBAL ECONOMY & DEVELOPMENT WORKING PAPER 110 | FEBRUARY 2018 LEAVE NO COUNTRY BEHIND ENDING POVERTY IN THE TOUGHEST PLACES Geoffrey Gertz and Homi Kharas Geoffrey Gertz is a post-foctoral fellow at the Global Economy and Development Program at the Brookings Institution. Homi Kharas is interim vice president and director of the Global Economy and Development Program at the Brookings Institution. Acknowledgments: We thank Brina Seidel for exceptional research assistance throughout this project. The Brookings Institution is a nonprofit organization devoted to independent research and policy solutions. Its mission is to conduct high-quality, independent research and, based on that research, to provide innovative, practical recommendations for policymakers and the public. The conclusions and recommendations of any Brookings publication are solely those of its author(s), and do not reflect the views of the Institution, its manage- ment, or its other scholars. Support for this publication was generously provided by the Norwegian Agency for Development Cooperation, with additional support from the Embassy of Denmark. Brookings recognizes that the value it provides is in its absolute commitment to quality, independence, and im- pact. Activities supported by its donors reflect this commitment. CONTENTS Executive summary .....................................................................i Identifying severely off track countries. i Obstacles to development in SOTCs ..................................................... ii Action plans for SOTCs ................................................................iii Summary and conclusions .............................................................iv Introduction ...........................................................................1 The SDGs and the principle of “leave no one behind” .......................................1 Toward an action plan to leave no country behind ..........................................1 Which countries are severely off track? .................................................... 3 Projecting poverty in 2030 ............................................................. 3 Identifying SOTCs .................................................................... 4 The heart of the development challenge .................................................. 6 Obstacles to development in SOTCs ....................................................... 8 Low government effectiveness .......................................................... 8 Improving government effectiveness ..................................................12 Working around or working through governments? ......................................12 Weak private sector ...................................................................13 What obstacles do businesses face in SOTCs? ...........................................13 Managing formal and informal sectors .................................................14 How to catalyze foreign investment ....................................................15 Conflict and violence ..................................................................17 Intra-state conflict ..................................................................17 Violence and crime .................................................................18 Can we effectively prevent conflict? ....................................................19 Natural hazards and environmental risks ...............................................20 Building resilience ..................................................................21 Improving humanitarian responses to disasters ........................................ 23 Action plans for SOTCs ................................................................ 25 Reimagine scaling up ................................................................ 29 Redefine country ownership ...........................................................31 Rethink results-focused metrics ....................................................... 32 Summary and conclusions .............................................................. 35 Annex: Methodology .................................................................. 36 LIST OF FIGURES Figure A1 Severely Off Track Countries ................................................. ii Figure 1 Severely Off Track Countries ................................................. 5 Figure 2 Poverty Trajectories, 2000-2030 ............................................. 5 Figure 3 2030 Poverty Projections .....................................................7 Figure 4 Overlapping Obstacles to Development in SOTCs ............................. 10 Figure 5 What Share of Letters Did the National Postal Authority Properly Return to Sender? ..................................................11 Figure 6 What is the Biggest Obstacle to Doing Business? ...............................12 Figure 7 Some SOTCs attract lots of FDI, others very little ..............................16 Figure 8 On average, resource governance is worse in SOTCs than in other developing countries ...........................................17 Figure 9 Do SOTCs Meet International Targets for Disaster Preparedness? .............. 22 Figure 10 Country Programmable Aid to Severely Off Track Countries ................... 26 Figure 11 Some SOTCs Receive Lots of Aid, Others Barely Any .......................... 26 Figure 12 Aid to Off Track Countries is Very Volatile (select countries). 27 Figure 13 The Gap in Project Evaluation Scores between SOTCs and Other Countries has Narrowed ..............................................28 LIST OF TABLES Table 1 The Overlap between SOTCs and Fragile States ............................... 27 Table 2 Natural Disasters in SOTCs Since 2000 .......................................31 Table 3 Regression results ......................................................... 37 LEAVE NO COUNTRY BEHIND ENDING POVERTY IN THE TOUGHEST PLACES Geoffrey Gertz and Homi Kharas EXECUTIVE SUMMARY we refer to as Severely Off Track Countries (SOTCs). Second, it diagnoses four core obstacles to develop- he past 15 years saw the most rapid decline in ment in these countries: low government effectiveness, Tglobal poverty ever, with the Millennium Devel- weak private sector, conflict and violence, and natural opment Goal (MDG) of halving the global poverty rate hazards and environmental risks. Third, it suggests reached several years ahead of schedule. Building on three ways in which partner country governments and this, governments around the world committed to a donors need to adapt their standard practices to help new set of Sustainable Development Goals (SDGs), in- countries get on track to ending poverty. cluding ending extreme poverty everywhere by 2030. Identifying severely off track The pathway to achieving the SDGs will be qualita- countries tively different from that which worked for the MDGs. In the MDG era, large, rapidly growing economies—in- To determine which countries are least likely to end cluding China, India, Indonesia, Bangladesh, and Ethi- extreme poverty by 2030, we project poverty rates for opia—drove development advances. Indeed, the world 195 countries around the world using the poverty line met the poverty MDG despite the fact that many of the of $1.90 a day in 2011 purchasing power parity (PPP) poorest countries made little to no progress. Success terms. Based on current trajectories, 31 countries will during the SDG era, in contrast, depends precisely on have extreme poverty headcount ratios of at least 20 what happens in these poorest countries. To achieve percent in 2030, our threshold for identification of the goal of ending extreme poverty everywhere, we SOTCs (see Figure A1). This group includes countries need a strategy that ensures no country is left behind. where poverty is falling, but from extremely high ini- tial levels, as well as countries with moderate poverty This paper outlines such a strategy. First, it identifies but who are expected to make only minimal progress those countries most at risk of being left behind: places in coming years. We estimate that, by 2030, four out LEAVE NO COUNTRY BEHIND: ENDING POVERTY IN THE TOUGHEST PLACES i of every five people living in extreme poverty will be in absenteeism and corruption, and they struggle to the 31 SOTCs. provide basic services. Obstacles to development in SOTCs • Weak private sector: 22 of the SOTCs have weak private sectors, where firms face significant Are there common development challenges among obstacles to doing business, resulting in limited SOTCs? Of the 31 countries, 24 are on either one or domestic and foreign investment. While there both of the World Bank’s Fragile States list and the are often potentially profitable opportunities for Fund for Peace’s Fragile States Index. Yet the term the private sector even in very poor countries— “fragility” encapsulates many different concepts and in sectors including but not limited to natural masks important variation across countries. For this resources—a series of market and government reason, rather than focusing on fragility, we look at failures may make it difficult to realize these op- four underlying obstacles to development that contrib- portunities or translate them into financial gain ute to persistent poverty in SOTCs. for the investor. • Low government effectiveness: 16 of the • Conflict and violence: 12 SOTCs have high SOTCs have low government effectiveness, de- levels of conflict and violence. Organized vio- fined
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