Uncounted is delighted to have a guest blog from Otaviano Canuto, World Bank Vice President and Head of the Poverty Reduction and Economic Management (PREM) Network, and a former economics professor at U. Sao Paolo.
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When World Bank President Jim Yong Kim addressed the joint boards of governors of the Bank and the IMF in Tokyo last month, he took a powerful theme. President Kim cited Dr Martin Luther King’s optimistic view, that while “the arc of the moral universe is long, it bends towards justice.” With this starting point, President Kim talked of his and the Bank’s resolve to pursue justice, “because wherever there is poverty and inequality, there is too often injustice.” The scenario driving him, he said, “is the path where we come together to bend the arc of history and accelerate progress.”
Save the Children’s new report, Born Equal, presents new evidence on just how far we will have to bend the arc. The study uses data for 32 developing countries and constructs a measure of income inequality between the richest and poorest deciles of households, and finds it to be twice as high for children as for the general population. Children in the richest decile have, on average, 35 times the available income of children in the poorest decile. In addition, this ratio has increased by a third since the 1990s.
Since this measure of household income can be considered as a proxy for the opportunities open to children, the results should cause us great concern about the extent to which poverty and inequality are stifling each new generation’s prospects. The report also details stark inequalities between groups in terms of education and health outcomes.
One of the report’s findings that chimes particularly strongly with the World Bank’s agenda is on data. As the authors argue, “A considerable barrier to effective response to inequality is the lack of adequate data” and therefore “To ensure that governments progressively realise their post-2015 commitments and employ equitable approaches, any post-2015 accountability mechanism should also have a data collection function.” One of four priorities that President Kim identified in his speech was data, which, he argued “are crucial to setting priorities, making sound policy, and tracking results.”
The report also draws on eight case studies from countries at all income levels, and highlights a set of national policy measures that have been important in reducing or controlling inequality. As the World Bank’s World Development Report 2006 noted, “the best policies for poverty reduction could involve redistributions of influence, advantage, or subsidies away from dominant groups”; and Born Equal highlights progressive taxation and social protection mechanisms as having a particular role to play.
The Save the Children study also highlights the importance of global efforts to tackle illicit financial flows. As I wrote (with Norwegian minister Erik Solheim) in the foreword to the Bank’s first major study of this theme earlier this year, “illicit ﬁnancial ﬂows pose a risk to the stability of global ﬁnancial markets; contribute to suboptimal investment decisions; undermine tax morale and accountability between citizen and state; and add to growing income inequality both within and between countries. The consequences are incalculable.”
President Kim finished his speech in Tokyo: “it is time to move from dreaming of a world free of poverty to achieving it. It is time to bend the arc of history.” Using the tools we have to challenge inequality will be central to how far we can bend it.