Regaining Momentum

• Author: Delfin S. Go, Richard Harmsen, and Hans Timmer
• Position: a lead economist and is Director, both at the World Bank's Development Economics Prospects Group. is a Deputy Division Chief in the IMF's Strategy, Policy, and Review Department.

LOW-INCOME countries, particularly in sub-Saharan Africa, did relatively well during the recent global economic crisis, and developing countries are now recovering better than expected. But progress on the Millennium Development Goals (MDGs; see Box 1 and Chart 1) will be slow for many years. The impressive precrisis progress in economic growth and poverty reduction will not be matched for some time, and gaps or deviations in MDG progress from the precrisis trends will persist until 2020, five years after the 2015 target date for achieving the goals.

If we let the recovery slide and old patterns of policy failures, institutional breakdowns, and growth collapses persist, history tells us the adverse impact on human development, especially for women and children, will be devastating. So this is no time to be complacent. The international financial institutions and international community, having responded quickly and strongly to the crisis, need to do more to help developing countries regain their momentum toward achieving the MDGs.

Human development indicators improved significantly before the crisis hit in 2008, thanks to the acceleration of economic growth in many developing countries after the early 1990s. Overall progress on poverty reduction was particularly strong, even in Africa. Primary education, gender parity in primary and secondary education, and reliable access to improved water gained ground as well. But the picture isn’t so encouraging when it comes to the other MDGs—especially those related to health.

Regional variations

Globally, there is considerable variation across regions, countries, and income groups. Among regions, sub-Saharan Africa lags on all the MDGs, including poverty reduction. But that is only half the story—because the region did make progress. Sub-Saharan Africa was headed in the right direction for practically all the MDGs for more than 10 years, but the path to the goals was steeper in comparison with other regions because of Africa’s lower starting points. For example, the distance to the poverty target was difficult for Africa to traverse, because the 1990 incomes of much of Africa’s population were far below the poverty line. And Africa implemented reforms later than other regions and thus benefited later from accelerating income growth.

Progress has been slowest in fragile and conflict-affected states (see Chart 2). Wracked by conflict and hampered by weak capacity, these states—more than half of them in sub-Saharan Africa—present a difficult political and governance context for effective delivery of development financing and services. Fragile states account for close to one-fifth of the population of low-income countries but more than one-third of their poor people. Much of the challenge of achieving the MDGs will thus be concentrated in low-income countries, especially fragile states.

Middle-income countries have progressed fastest toward the MDGs. As a group, they are on track to achieve the target for poverty reduction. But many of them still have large concentrations of poverty, in part reflecting great income inequality. This concentrated poverty, together with large populations in some countries, means that middle-income countries remain home to a majority of the world’s poor in absolute numbers. Many middle-income countries also continue to face major challenges in achieving the non-income-related human development goals.

Successes

Extreme poverty is falling rapidly. Global poverty has fallen 40 percent since 1990, and the developing world is well on its way to reaching the global target of cutting income poverty in half by 2015 (relative to a 1990 baseline). Despite population growth, the number of poor people living on less than $1.25 a day in developing countries fell from about 1.8 billion in 1990 to 1.4 billion in 2005—from 42 percent of the population to 25 percent. Thanks to rapid growth, especially in...