• The growth performance of World Bank borrowers has strengthened over the past five years, but achieving sustained per capita income growth, essential to poverty reduction, still remains a challenge for a considerable number of countries. Only two in five borrowing countries have recorded continuous per capita income growth over the 5 years ending in 2005, and just one in five did so for a full 10 years 
  
  

  Growth Performance Has Improved, but Achieving Sustained Income Growth Remains a Challenge for Many Bank Borrowers

  Source: World Bank 2006h.

• Countries that have posted strong growth have exhibited better policies and institutions than slow growers. The strongest growers have better economic management, as well as better policies for social inclusion than do moderate or slow growers. This demonstrates that high growth can be achieved alongside policies for social inclusion
  
  
• Economic growth over the past decade has led to substantial poverty reduction in many East and South Asian countries, and more recently in the transition economies of Eastern Europe and Central Asia (see country example). This progress notwithstanding, poverty reduction remains a challenge for many Bank borrowers, because growth has remained sporadic and translated into poverty reduction with varying efficiency. High and sometimes worsening inequality has dampened the poverty-reducing effect of growth in a number of countries
  
  

  Poverty Reduction Remains a Significant Challenge Even in Countries with Positive Growth Rates

  Note: High growth=average annual per capita GDP growth rate of >2.5%, moderate growth=average annual per capita GDP growth of 0%-2.5%, low growth= average annual per capita GDP growth Source: Povcalnet , DECRG poverty database and World Bank 2006h

  
  
• Strategies aimed only at boosting overall growth may miss opportunities to reduce poverty more effectively. In the countries IEG reviewed where growth did not result in poverty reduction, growth resulted in little job creation and was concentrated in areas where few of the poor could earn their incomes. The Bank's assistance in these countries effectively contributed to bringing the countries back on a growth path through improved economic management, but it was less successful in bringing about job-creating growth.
  
  
• Strengthening urban-rural linkages and strategies to improve rural productivity require more attention. About half of the Bank's Country Assistance Strategies reviewed by IEG over the past four fiscal years concluded that the Bank's assistance in rural areas had either not led to satisfactory outcomes or that rural poverty reduction required increased attention.

• To support growth strategies that more consistently translate into poverty reduction, the Bank and its partners will need to further strengthen their understanding of what keeps the poor from participating in growth in each country, what prevents growth from reaching particular regions and sectors where the poor are concentrated and how inter-sectoral mobility can be enhanced.
  
  
• The Bank's assistance has been effective when it has taken a realistic view of borrowers' political and institutional capacity and has focused on well-specified objectives. Almost half of all Bank Country Assistance Strategies reviewed by IEG in the past four fiscal years were found to be overly ambitious in two distinct ways. They either lacked selectivity or they were founded on unrealistic expectations for a reform program that was not commensurate with the country's institutional capacity and political situation. (see country example)
  
  
• Assistance strategies built on analytical work done in collaboration with local specialists have tended to be more realistic and resulted in better outcomes. Collaborative work also helps enhance local capacity and build ownership of Bank-supported programs. (see country example)

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