Reducing Poverty and Inequality

© The World Bank

The past year saw both progress and continued challenges in the global fight against poverty and inequality. For the world’s poorest countries, advances against poverty are measured by progress in achieving the eight Millennium Development Goals  (MDGs), which provide specific objectives against which to measure results in obtaining basic services for citizens, enhancing environmental sustainability, and forming global partnerships for development. The MDGs also measure progress in middle-income countries as governments seek to expand existing but often unequal access to services and employment. For countries of all economic levels, the quality of governance and the investment climate affect citizen well-being.

The Bank works with countries to prioritize their needs, articulate development strategies, and select financial instruments appropriate to fund those needs. Middle-income countries borrow through IBRD. The world’s poorest countries receive grants and interest-free, concessional loans through IDA. To better meet the needs of countries, especially those eligible for both IBRD and IDA client assistance, the Bank is discussing ways to build greater flexibility into its business model. Numerous subregional and continentwide initiatives have been launched in recent years to address development challenges that cross borders. In Africa, for example, many countries face similar problems that are rooted in the region’s extreme poverty and its history of weak institutions and poor governance. Other challenges are worldwide in scope: from climate change, to avian flu, to the stability of the international financial system.

It is unlikely that such cross-border challenges will be resolved through individual country efforts alone. Collective action is needed. The Bank works with the international community to confront these global issues by supporting a broad range of initiatives designed to enhance the supply of global and regional public goods, including programs and funds targeted to combating global health threats, supporting the environmental commons, promoting trade and economic integration, and sharing development knowledge.

Global poverty challenges are strongly linked to economic and social inequality and to disparities in resource allocation. The Bank’s World Development Report 2006: Equity and Development shows how policies that promote economic growth and human development can interact with policies aimed at increasing equity—including interventions to expand access to health care, education, jobs, land, and markets—to move toward the long-term goal of reducing poverty. Although the Bank has undertaken research on the link between poverty and inequality for several years, the 2006 World Development Report underscores its importance for the Bank’s agenda.

FISCAL 2006 HIGHLIGHTS

THE MILLENNIUM DEVELOPMENT GOALS

© 2006 The International Bank for Reconstruction and Development/The World Bank