Tanzania experienced remarkably fast growth from 2004 to 2014 - Here is what happened


The market isn’t going to naturally effect that kind of reduction; it requires government intervention and, ideally, lots of redistribution. And when countries have tried that approach, it’s worked. The report includes a case study on Tanzania, a country that has experienced remarkably fast growth from 2004 to 2014: about 6.5 percent per year, on average. Poverty has fallen substantially as well, from about 60 percent in 2007 to under 50 by 2012.

But most of Tanzania’s poverty reduction isn’t attributable to economic growth. Most of it was due to redistribution:

What happened? Well, the Tanzanian government took measures designed precisely to reduce poverty. One, called MKUKUTA II, focuses on expanding access to public services like health care, primary school, water, and sanitation, while the second, the Tanzania Social Action Fund, provides conditional cash transfers and public works programs.

This isn't the whole story (the country also diversified its agricultural industry in a way that aided in poverty reduction), but it's a significant factor. "From a fiscal point of view," the World Bank report concludes, "Tanzania tends to redistribute more than anticipated based on its relatively low income level."

It's not just the World Bank pointing this out. Economists Andy Sumner and Chris Hoy have estimated that redirecting public subsidies for fossil fuels alone could eliminate up to 70 percent of extreme poverty. Doing that in concert with lower military spending and higher taxes would do even more. "Growth is good, but it will take quite some time for it to raise everyone above a minimal income floor," Sumner notes. "Redistribution is possible right now and could accomplish that goal much faster — and be good for future growth and prosperity."

It could be good for health, too: The Center on Global Development’s "Millions Saved" project has found that cash transfer programs in countries like South Africa, Honduras, Kenya, andPakistan can improve access to health services, reduce teen birth rates and risky sexual behavior, and boost nutrition.

Read the full article at: vox.com