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8/2/15

Global Poverty: The best ways to fight poverty - by Bjørn Lomborg

Better economic outcomes mean empowering entire populations with better health, more education, longer life and less vulnerability to challenges like natural disasters.

Many of the United Nations’ proposed 169 development targets for the next 15 years are, at their heart, concerned with poverty reduction. But not all targets are equally good.

The Copenhagen Consensus Center, of which I am director, recently asked 60 teams of economists to evaluate the benefits and costs of these proposed targets, which will come into force to replace the Millennium Development Goals in September.

One of the least desirable targets seems laudable at first: full employment for all. Unfortunately, this is a dream, not a target. Economies need some unemployment to allow workers to change jobs, and most governments already focus on job creation.

Research suggests that politicians and interest groups would use a full-employment target to support expensive, protectionist policies that generate great jobs for some but drive many into the informal economy. So it would probably end up doing less good than it would cost, and it is certainly not the way to reduce extreme poverty.

About 14.5 percent of the world’s population, or one billion people, live on less than US$1.25 a day. So why not end extreme poverty by simply transferring enough resources to this billion people to get them to at least US$1.26 a day? The world’s poorest would be able to feed and educate their children better and become healthier.

But, in addition to the financial cost, there would be huge administrative challenges, along with corruption and institutional deficiencies.

When these factors are weighed against the benefits in monetary terms, each dollar spent ending extreme poverty with cash transfers would achieve about US$5 worth of social value. That is not a bad return at all, but there are many better ways to help.

One possibility is to triple mobile broadband penetration in developing countries. This would provide small-scale businesspeople such as farmers and fishermen with market information, enabling them to sell their goods at the highest price — and to boost productivity, increase efficiency and generate more jobs.

Read more: The best ways to fight poverty | Shanghai Daily

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