Category Archives: World Bank

What is shared prosperity, and how do we know if it’s on the rise?

Published on Oxfam America’s Politics of Poverty blog

What is shared prosperity, and how do we know if it’s on the rise?

This blog post is an adaptation of Nick’s recent article in Global Policy.

The World Bank has chosen an indicator of shared prosperity that’s inadequate, and gives a distorted picture of progress. According to the Bank’s indicator, countries where the poorest forty percent are faring better than the country average are considered to be experiencing shared prosperity. Yet, comparing the poorest to the average masks whether income and wealth are concentrating among the very rich at the top. Given what we know about the dangers of extreme inequality, the Bank’s indicator is not only misleading, but irresponsible. Continue reading

The World Bank is Getting ‘Shared Prosperity’ Wrong: The Bank Should Measure the Tails, Not the Average

Published in Global Policy

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In October, the World Bank released its 2014 Global Monitoring Report (GMR). The annual GMR is a flagship report produced by the World Bank and the International Monetary Fund (IMF) that traditionally offers an update on the progress of the Millennium Development Goals. In a bit of a twist, the aim of this year’s report is to assess the World Bank’s broad goal of seeing shared prosperity increase in all countries.1 This is a worthy intention, but how can we measure whether shared prosperity is rising? The indicator developed by the World Bank measures the income (or consumption) growth of the poorest 40 per cent and compares it to the growth of the whole country over a five year period. If the bottom 40 per cent fared better than the whole country, the World Bank declares shared prosperity is on the rise. This year’s GMR calculates data for 86 countries between 2006 and 2011. According to the results, the bottom 40 per cent fared better than the average in 58 of the countries (67 per cent), leading the World Bank to declare shared prosperity is rising globally. Below, I argue for why this is an inadequate indicator. Instead, I recommend the World Bank compare changes in growth between the poorest 40 per cent and richest 10 per cent, or fewer. Continue reading