Urbanization is helping power people out of extreme poverty and assist delivering on the MDGs, says report

April 17, 2013 - The move to cities goes hand in hand with human progress, but urbanization must be harnessed in ways that support low-income people, otherwise slums will proliferate and key development goals will not be met, according to the Global Monitoring Report: Rural-Urban Dynamics and the Millennium Development Goals, a new report released today.

New data highlight stark rural-urban disparities.

Absolute poverty rates are lower in urban centers, i.e. 11.6 percent versus 29.4 percent in rural areas, where 76 percent of the developing world’s poor lived in 2010, says the joint World Bank and International Monetary Fund (IMF) report. The line for extreme poverty is set at $1.25 a day, a measure that has been the yardstick for the MDG1, of halving the rate of absolute poverty from its 1990 level, a goal that was met in 2010.

Disparities are also large between rural and urban areas for the other MDGs. For example, in South Asia, 28 percent of people living in rural areas have access to sanitation facilities, compared with 60 percent in urban areas or settlements. In the Middle East and North Africa, South Asia, and Sub-Saharan Africa, infant mortality rates in rural areas are 10-16 percentage points higher than in urban areas. East Asia has the highest differential, at 21 percentage points.

“Urbanization is helping pull people out of poverty and advancing progress towards the MDGs, but, if not managed well, can also lead to burgeoning growth of slums, pollution, and crime,” says Jos Verbeek, lead author of the GMR and World Bank lead economist. Consequently, the report calls for an integrated strategy to better manage the planning-connecting-financing nexus of urbanization.

With over 80 percent of global goods and services produced in cities, countries with higher levels of urbanization, such as China, and many others in East Asia and Latin America, have played a major role in lowering extreme poverty worldwide. In contrast, the two least urbanized regions, South Asia and Sub-Saharan Africa, have significantly higher rates of extreme poverty and continue to lag on most MDGs.

The report finds that people, poverty, and service delivery are located along a spectrum from rural to urban, with many types of settlements from small to large towns. The smaller the town, the higher the incidence of poverty and less stellar access to MDG related services.

Despite the very welcome gains made in extreme poverty reduction, the world will still have 970 million people living in extreme poverty in 2015, underscoring the need to fight poverty and improve the living conditions of the poor where ever they live.

With less than 1,000 days before the expiration of the MDGs, progress continues to lag on reducing maternal and child mortality, achieving universal primary education, and providing access to basic sanitation facilities, targets which will unlikely be met by the MDGs’ 2015 deadline without a fast acceleration of effort.

Regional Highlights:

The East Asia and Pacific region has achieved all the MDGs, well ahead of the 2015 deadline. The region’s record in poverty reduction is also unique. In 1990, it had nearly 1 billion people (50 percent of world share) living below $1.25 a day and the highest poverty rate (56 percent). In 2010, driven by success in China, the region’s poverty rate had decreased to 12 percent and is projected to decline to 6 percent by 2015. Stellar progress has also been made in narrowing rural-urban poverty differentials, with the urban poverty rate down from 24 percent in 1992 to 4 percent in 2008, and the rural poverty rate declining from 67 percent in 1990 to 20 percent in 2008. However, the region is lagging the rest of the world on infant mortality, with a 21 percentage point differential between rural and urban rates.

The Europe and Central Asia region is highly urbanized and has been successful in reducing extreme poverty from an already-low 2 percent of the population in 1990 to 0.7 percent (or 3 million people) in 2010, the lowest number amongst all developing regions of the world. The region has also met or is making sufficient progress to achieve 5 of the 9 MDG targets by 2015. However, the region is lagging by significant margins on the MDGs related to undernourishment, primary and secondary school completion, gender parity in primary education and access to basic sanitation facilities.

The Latin America and Caribbean region is also highly urbanized and has reduced the share of the extremely poor from 12 percent in 1990 to 6 percent (32 million) in 2010. The performance of Latin America and the Caribbean in attaining the nine MDG targets is impressive. However, at the country level, many countries will miss the 2015 deadline for many of the MDGs. Progress is weakest on the health and sanitation targets and no country has achieved the MDG on reducing maternal mortality, while only Peru has met the MDG on infant mortality. Progress is also lagging on the safe water and sanitation targets.

The Middle East and North Africa region stands out in its progress on the MDGs. Extreme poverty in the region has declined from 6 percent in 1992 to 2.4 percent (8 million people) in 2010. However, while the region has achieved five of the nine MDG targets, progress is lagging significantly on targets on undernourishment, primary school completion, gender parity in primary education, and access to safe water. At the country level, progress is varied, with 19 countries, including fragile and conflict affected states, which have either met or are making sufficient progress on poverty reduction. However, only two countries are making sufficient progress on infant mortality and only four have met the MDG on safe water.

South Asia is on track to achieve three MDGs by 2015 – halving extreme poverty, reducing maternal mortality and providing access to safe water. However, the region is lagging on all the other targets by a significant margin. In particular, it has made only about 50 percent of the progress required on the sanitation target. And even though the region is on course to achieve the poverty target, progress has been weak. As a result, South Asia will be home to almost 400 million of the developing world’s 970 million poor in 2015. The region is also amongst the least urbanized in the world.

The Sub-Saharan Africa region will miss all of the nine MDG targets by a significant margin, with progress lagging the most on the targets related to poverty reduction, reducing infant and maternal mortality and providing access to sanitation. Along with South Asia, Sub-Saharan Africa is amongst the least urbanized regions and poverty is concentrated in rural areas, where 75 percent of the poor reside.