Growth, Poverty, and Inequality

The countries of the Eastern Europe and Central Asia region have made significant progress in reducing poverty in the past five years. More than 40 million people moved out of poverty during 1998-03. Much of this poverty reduction derives from the growth rebound in the CIS countries. But poverty and vulnerability still remain a significant problem. More than 60 million are poor and more than 150 million are vulnerable. Most of the poor are the working poor. Many others face deprivations in terms of access and quality of public services. Regional inequalities both between and within countries are large. The highest levels of absolute poverty are found in the poor countries of Central Asia and the South Caucasus, but most of the region's poor and vulnerable are in middle income countries. Notwithstanding the tremendous heterogeneity among countries in the region, reducing poverty and vulnerability requires an acceleration of shared growth across the region. If this is to be achieved, public policies need to focus on at least three areas common to all countries: fostering job creation and raising productivity, improving public service delivery, and addressing spatial inequalities. Within each of these areas, recommendations need to be tailored to country-specific circumstances.