REVERSALS OF FORTUNE REVERSALS OF FORTUNE REVERSALS OF FORTUNE © 2020 International Bank for Reconstruction and Development / The World Bank 1818 H Street NW, Washington DC 20433 Telephone: 202-473-1000; Internet: www.worldbank.org Some rights reserved 1 2 3 4 23 22 21 20 Revised 2021 This work is a product of the staff of The World Bank with external contributions. The findings, interpre- tations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries. 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Contents Foreword xi Acknowledgments xiii About the Team xv Abbreviations xix Overview 1 Poverty reduction was slowing before the crisis 2 Shared prosperity was positive for the period 2012–17, but gains were uneven and slowing 4 COVID-19, conflict, and climate change have reversed the gains in poverty eradication for the first time in a generation 5 COVID-19, conflict, and climate impacts will change the profile of the global poor 8 Conclusion: Tackling the crisis while looking to the long term 15 Notes 18 References 19 Introduction: Global Goals, Shared Challenges 21 1 Monitoring Global Poverty 27 Introduction 27 Monitoring global poverty: Tracking progress toward the 2030 goals 31 Beyond extreme poverty: The US$3.20-a-day and US$5.50-a-day poverty lines 39 A relative poverty measure: The societal poverty line 41 Beyond monetary poverty: The multidimensional poverty measure 43 A focus on extreme poverty in Sub-Saharan Africa 46 Annex 1A PovcalNet data and methodology for measuring extreme poverty 50 Annex 1B Higher poverty lines: US$3.20 and US$5.50 a day 63 Annex 1C Societal poverty line 65 Annex 1D Multidimensional poverty 68 Notes 71 References 77 2 Shared Prosperity: Monitoring Inclusive Growth 81 Introduction: Shared prosperity—Focusing on the bottom 40 81 The most recent estimates of shared prosperity and the shared prosperity premium 82 v Outlook: COVID-19 and prospects for shared prosperity 90 Shared prosperity and its connection to other welfare indicators 95 Who is in the bottom 40? 100 Annex 2A Shared prosperity estimates, by economy 102 Annex 2B Data for shared prosperity over different periods 106 Annex 2C Comparison of two shared prosperity rounds 111 Notes 115 References 116 3 Key Socioeconomic Characteristics of the Global Poor: Vulnerability to Conflict, Climate Risks, and COVID-19 121 Introduction 121 Key socioeconomic characteristics of the global poor 122 Poverty and conflict: A global and subnational perspective 129 Poverty and climate risks 138 Vulnerability and multiple risks: Poverty in the face of COVID-19, conflict, and climate risks 142 Annex 3A New vintage of the Global Monitoring Database 150 Annex 3B Robustness of poverty profiles: Adding and subtracting countries 151 Annex 3C Construction of the Global Subnational Atlas of Poverty, Second edition 154 Notes 155 References 156 4 Navigating Tough Terrain: Sound Principles, Good Maps, and Adaptive Learning 159 Introduction 160 The poorest suffer most from COVID-19, conflict, and climate change 161 Familiar development challenges persist 163 Responding to COVID-19 presents unique challenges 164 How might strategies to reverse reversals be strengthened and sustained? 166 Conclusion 172 Notes 172 References 174 Boxes 1.1 Different Measures for 2.1 Data Challenges: Shared Prosperity Understanding Poverty 29 Cannot Be Measured in Some of the 1.2 Measuring Poverty in India Most Deprived Economies 84 without Recent Data 30 2.2 Early Evidence of the Impact of 1.3 How Is Climate Change Affecting COVID-19: The High-Frequency Poverty? Nowcasts and Forecasts 37 Surveys 92 vi POVERTY AND SHARED PROSPERITY 2020 2.3 The Importance of Equity for 3.3 Poverty and Conflict: A Poverty Reduction 97 Vicious Circle? 130 3.1 The Rural and Urban Poor 123 3.4 Estimating the Number of Poor 3.2 Data Limitations to Profiling Affected by Flood Risk on a the Global Poor 128 Global Scale 139 Figures O.1 Global Poverty Rate and Number 1.9 Poverty Rates and Number of Poor, of Poor at the US$1.90-a-Day US$3.20-a-Day and US$5.50-a-Day Poverty Line, 1990–2017 2 Poverty Lines, Sub-Saharan Africa, O.2 Trends in Poverty Rates at the US$1.90-a- 1990–2018 41 Day Poverty Line, by Region, 1990–2018 3 1.10 Global Societal Poverty Rate and O.3 Nowcast of the Global Poverty Number of Poor, Compared with Rate at the US$1.90-a-Day Poverty International Poverty Line Estimates, Line, 2015–21 5 1990–2017 42 O.4 Additional Poor at the US$1.90-a-Day 1.11 Societal Poverty Rates, by Region, Poverty Line in 2020, per the COVID- 1990–2018 43 19-Baseline and COVID-19-Downside 1.12 Correlation between Monetary and Scenarios 6 Multidimensional Poverty Headcount, O.5 Four Profiles fo the Global Poor, by circa 2017 43 Region, Gender, Age, and Educational 1.13 Deprivation in Multiple Dimensions, Attainment, circa 2018 9 circa 2017 45 O.6 Share of the Global Poor and of 1.14 Variation in Poverty Rates, East Asia the Global Population, by FCS 2020 and Pacific versus Sub-Saharan Africa, Typology 12 1990–2018 47 O.7 Number of Poor Living at the Three 1.15 Distribution of Extreme Poor, by Poverty Lines Who Are Also Exposed Economy, Sub-Saharan Africa, 2018 49 to Catastrophic Floods 13 1A.1 Global Distribution at the 1.1 Global Poverty Rate and Number of US$1.90-a-Day Poverty Line, Poor at the US$1.90-a-Day Poverty by Region and Economy, 2017 56 Line, 1990–2017 32 1A.2 Projection of Global Poverty at 1.2 Number of Poor at the US$1.90-a-Day the US$1.90-a-Day Poverty Line, Poverty Line, by Region, 1990–2017 32 1990–2030 61 1.3 Trends in Poverty Rates at the 1A.3 Projection of Global Poverty at US$1.90-a-Day Poverty Line, by the US$1.90-a-Day Poverty Line Region, 1990–2018 33 to 2030 with Changes in the 1.4 Nowcasts of the Global Poverty Rate Gini Index 62 and Number of Poor at the US$1.90- 2.1 Shared Prosperity and the Shared a-Day Poverty Line, 2015–21 34 Prosperity Premium, by Economy, 1.5 Additional Poor at the US$1.90-a-Day circa 2012–17 83 Poverty Line in 2020, per the COVID- 2.2 Correlation between Shared Prosperity 19-Baseline, and COVID-19-Downside and Growth in Mean Incomes, Scenarios 35 91 Economies, circa 2012–17 87 1.6 Projection of Global Poverty at the 2.3 Positive and Negative Values for Shared US$1.90-a-Day Poverty Line, to 2030 36 Prosperity and the Shared Prosperity 1.7 Global Poverty Rate and Number of Poor, Premium 88 US$3.20-a-Day and US$5.50-a-Day 2.4 Shared Prosperity and the Shared Poverty Lines, 1990–2017 39 Prosperity Premium across Rounds 89 1.8 Poverty Rates at the US$3.20-a-Day 2.5 Projected Growth in Mean Incomes, and US$5.50-a-Day Poverty Lines, 2019–21, and Past Shared Prosperity, by Region, 1990–2018 40 circa 2012–17 90 CONTENTS vii B2.2.1 Share of Survey Respondents B3.3.1 Relationship between Who Stopped Working or