Shah on Eradicating Extreme Poverty

USAID Administrator Shah’s speech at Brookings this week set forth his vision for why eradicating extreme poverty is achievable over the next two decades. Shah’s speech follows on President Obama’s 2013 State of the Union Address, which pledged that the United States “will join with our allies to eradicate such extreme poverty in the next two decades.”

Eliminating $1.25 a day poverty is no simple task (check out Laurence Chandy at Brookings’ analysis and range of projections here). And some, including CGD’s Lant Pritchett, have questioned if this narrow emphasis on eradicating extreme poverty, even if achievable, means that development agencies are giving up on development? Nancy Birdsall, CGD president, has taken a different tack, suggesting that it makes sense to have an absolute poverty target, but it is not enough.  People are still poor well above today’s poverty “line;”  median consumption per person is a better country measure of material well-being, and a better overall  measure of development. She also points out that reaching those in extreme poverty will require far more than official aid.

Regardless, the emphasis on eradicating extreme poverty from the Obama administration, the World Bank, the UN High-Level Panel on the Post-2015 Development Agenda, and others isn’t going away. So what does the US plan to do?

CGD’s Charles Kenny set out what he hoped to hear from Shah in the speech earlier this week, falling under the rubric of realism (is this goal achievable?), humility (USAID alone can’t do it), focus (figuring out where USAID is best suited to work on extreme poverty), and context (ending extreme poverty isn’t an end to horrific poverty). I’d say he got what he asked for, along with an impressive vision.

Shah’s speech primarily focused on the big picture of what this increased focus on eradicating extreme poverty would take, including an emphasis on public-private partnerships coupled with recipient country reforms, increased efforts in fragile states, and a renewed emphasis on resilience.

Nancy Birdsall gave the speech an A+ on Twitter and later said she thought the speech was “great because it made clear that ending extreme poverty requires getting on with development” and didn’t imply narrow targeting or a focus solely on basic needs.

I was particularly pleased to hear Shah emphasize the following points:

• Eradicating extreme poverty is not about the $1.25 a day measure; instead, it’s about the denial of basic freedoms and human dignity.
• A focus on extreme poverty will also mean driving inclusive growth beyond the bottom billion, and for those living on $2 a day; $3, $4; and so on.
• Ending extreme poverty means more than traditional foreign aid—it means looking at trade policies, at migration patterns and remittances, at private investment, at innovation, and at partner country reforms.

Now that Shah has laid out his vision, I hope we’ll hear from him and others in the coming months precisely how USAID will work to end extreme poverty (the “focus” Charles writes about). And I’ll be listening for far more specifics on how USAID will work with other partners, from USG agencies, to the MDBs, to country partners, to private enterprise.

I was pleased to hear that Shah is looking to the think tank and policy communities for new ideas. I hope we here at CGD will be part of that conversation. There are things to be skeptical about on USAID’s extreme poverty emphasis—not least of which are the constraints on USAID preventing it from driving its own development agenda, on extreme poverty or otherwise—but if the Administrator, Brookings’ Homi Kharas, and USAID’s Alex Thier are right, the charge to eradicate extreme poverty could be the beginning of a politically salient development agenda at a time when it’s desperately needed.