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Poverty reduction calls for job creation, economic reforms and new business promotion: WB report
10/14/2005
WASHINGTON, Oct 13 (Reuters): Economic growth and higher wages in much of eastern Europe and the
former Soviet Union after the collapse of communism reduced poverty and narrowed the rich-poor divide, a
World Bank (WB) report said yesterday.
It said that between 1998 and 2003, more than 40 million people were lifted out of poverty across the
region, mainly in the Commonwealth of Independent States (CIS) of Russia, Kazakhstan and Ukraine.
Still, more than 60 million people remained poor across the region, living on less than $2.0 a day, and about
150 million were vulnerable to poverty at the end of the study period in 2003, the report added.
It said poverty fell to around 12 per cent of the population of the region at the end of 2003 from about 20
per cent, a trend it said is likely to continue.
"While this growth has helped pull a lot of people out of poverty, there are many ... quite vulnerable to
downturns and shocks," the report's lead author, Asad Alam, told the news agency.
The report found that outside the CIS, few countries had been able to create enough jobs to meet the
demands of a growing labour force, leaving employment rates either stagnant or falling.
For poverty reduction to continue, Alam said countries should deepen economic reforms and encourage
new businesses.
He said investment would need to be strengthened to encourage more productive companies and stimulate
investment in agriculture, since most of the poor live in rural areas.
"Even in some of the richer income countries, governments need to accelerate their efforts to try to create
not only more jobs but also better quality jobs, jobs that provide a decent salary," he added in an interview.
The report suggested that for poverty to diminish further, growth rates of between 6.0 and 10.0 per cent
were needed, above what is currently forecast.
"We call for a serious effort to accelerate growth rates-even doubling them in some countries-if they want to
make a sizable difference," said Alam.
Despite the fall in poverty in former Soviet states, the bank said access to education, health care, clean
water and heating was no better.
"Many people have thus come to have more income in their pockets, but in access to services and quality of
services they may be no better off," the report said.
The report said the sharpest reduction in poverty in the CIS, where the bulk of the poor lived, was prompted
by Russia's economic turnaround from a 1998 financial crisis and the positive effects of reforms in
countries.
But the study of 27 countries found that in Poland and Georgia poverty increased because economies were
unable to create enough employment to replace jobs lost in the transition from communism.
"This reduction in incomes for the poor coincided with significant employment reduction in the economy as
a whole and for the poor," the report said.
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