The overlooked role of public goods in global poverty reduction

Existing poverty statistics focus on household disposable income or consumption, ignoring the large share of national income accruing to individuals in the form of public goods. How has access to public services evolved worldwide in the past decades, and what are the implications for global poverty reduction?

Amory Gethin constructs the first estimates of global poverty and inequality that incorporate the consumption of public goods. Three main findings emerge from his analysis:

1. There have been considerable improvements in public services received by the global poor. Between 1980 and 2019, the share of global GDP received by the world’s poorest 20% in the form of education, health care, and other public goods more than doubled.
2. Public goods have played a key role in poverty reduction, accounting for 20% of the decline in the share of the world’s population living in extreme poverty since 1980. Total government redistribution, including cash and in-kind transfers, accounts for 30%.
3. Low-income countries suffer from a triple curse of public goods provision: they spend less on public services, distribute them more unequally, and provide them in more inefficient ways. As a result, the share of the global poor living in poor countries is greater than we thought, because citizens of poor countries benefit from public services of much lower quality than those in the rich world.

AUTHORS

• Amory Gethin, Paris School of Economics

MEDIA CONTACT

•  Press[at]wid.world