Giving Compass' Take:

• Samuel Freije-Rodriguez, Aleksandra Posarac, and Apurva Sanghi share scenarios in which Russia could halve their poverty rate by 2024.

• How can funders help countries address poverty at scale? What unique challenges does Russia face in addressing poverty? 

• Learn about global poverty reduction in 2019. 

Here’s something unusual about Russia. Extreme poverty, as measured by the international poverty line of $1.90 per day is… zero! But the poverty rate under the national definition, i.e., the population share with income below $12.80 per day in 2017 (both poverty lines are in terms of 2011 purchasing power parity), is in double digits: 13.2 percent. This translates into around 19 million people living below the national poverty line—unacceptably high. So, it is no surprise that the poverty rate needs to be reduced. Specifically, the Decree of the President on May 7, 2018 called for “reducing poverty in the Russian Federation by half by 2024.” But can Russia really halve its poverty rate from 13.2 percent to 6.6 percent in the next six years?

The starting point is economic growth. Can growth alone accomplish this goal? The good news is that growth does reduce poverty in Russia. Strong growth reduced the poverty rate from about 30 percent in 2000 to just under 11 percent in 2012. Periods of high growth are associated with lower poverty rates.

This is also true today. We estimate that at current annual growth rates of 1.5 percent, the poverty rate would indeed reduce poverty—from 13.2 percent to 10.7 percent by 2024. But 10.2 percent is still short of the target rate of 6.6 percent. Growth is necessary but not sufficient.

The question is whether Russia can achieve halving poverty even under more realistic and modest growth scenarios. Our analysis finds that the answer is “yes.” The poverty rate target of 6.6 percent by 2024 could indeed be achieved even under a scenario of 1.5 percent annual growth. This can be done via additional redistribution, for example, in terms of social assistance and transfers. We estimate such additional redistribution to amount to around 0.27 percent of GDP per year. Of course, accelerating economic growth would make the task of poverty reduction easier.

Read the full article about halving poverty in Russia by Samuel Freije-Rodriguez, Aleksandra Posarac, and Apurva Sanghi at Brookings.