Extreme Poverty Escalates in Conflict-Ridden and Unstable Economies

By The World Bank Group

Development Setbacks Mount as Frequency of Conflict Surges to 25-Year High

Conflict and instability are taking a devastating toll on the 39 economies afflicted by them, driving up extreme poverty faster than anywhere else, intensifying acute hunger, and pushing several key development goals farther out of reach, according to the World Bank’s first comprehensive assessment of their plight in the aftermath of COVID-19. 

 

As conflicts have become more frequent and deadly in the 2020s, these economies are falling behind all other economies in key indicators of development, the analysis finds. Since 2020, their per capita GDP has shrunk by an average of 1.8% per year, while it has expanded by 2.9% in other developing economies. This year, 421 million people are struggling on less than $3 a day in economies afflicted by conflict or instability—more than in the rest of the world combined. That number is projected to rise to 435 million, or nearly 60% of the world’s extreme poor, by 2030.  

 

“For the last three years, the world’s attention has been on the conflicts in Ukraine and the Middle East, and this focus has now intensified,” said Indermit Gill, the World Bank Group’s Chief Economist. “Yet more than 70% of people suffering from conflict and instability are Africans. Untreated, these conditions become chronic. Half of the countries facing conflict or instability today have been in such conditions for 15 years or more. Misery on this scale is inevitably contagious.” 

 

The new study underscores why the global goal of ending extreme poverty has been unattainable so far. It is now concentrated in areas of the world where progress is hardest to achieve. Of the 39 economies currently classified as facing conflict or instability, 21 are in active conflict. 

 

In developing economies in general, the extreme-poverty rate has been whittled down to single digits—just 6%. In economies facing conflict or instability, however, the rate is nearly 40%. Their GDP-per-capita levels, currently about $1,500 a year, have barely budged since 2010—even as GDP per capita has more than doubled to an average of $6,900 in other developing economies. Moreover, unlike other developing economies, economies struggling with conflict or instability have been unable to create enough jobs on average to keep pace with population growth. In 2022, the latest year for which such data are available, more than 270 million people were of working age in these economies—but barely half of them were employed.  

 

“Economic stagnation—rather than growth—has been the norm in economies hit by conflict and instability over the past decade and a half,” said M. Ayhan Kose, the World Bank Group’s Deputy Chief Economist and Director of the Prospects Group. “The global community must pay greater attention to the plight of these economies. Jumpstarting growth and development here will not be easy, but it can be done—and it has been done before. With targeted policies and stronger international support, policy makers can prevent conflict, strengthen governance, accelerate growth, and create jobs.” 

 

On a five-year basis, the frequency and lethality of conflicts have more than tripled since the early 2000s. The toll has been evident across the spectrum of development indicators. At 64, average life expectancy in economies suffering from conflict or instability is seven years lower than in other developing economies. Infant mortality rates are more than twice as high. Acute food insecurity afflicts 18% of their population—18 times the average in other developing economies. Ninety percent of school-age children do not meet minimum reading standards. 

 

Once they get started, conflicts tend to be persistent—and their economic effects are both grave and long-lasting, the research shows. Half of economies facing conflict or instability today have faced those conditions for 15 years or more. High-intensity conflicts—those that kill more than 150 out of every 1 million people—are typically followed by a cumulative drop of about 20% in GDP per capita after five years. 

 

Under the circumstances, efforts to prevent conflict can yield high returns, the report says. It notes that “early conflict-warning systems—particularly those that detect real-time shifts in risks—can enable timely interventions, which are far more cost-effective than responding after violence erupts.” Preventing conflicts also means reducing “fragility”—weaknesses in government institutions that limit their ability to drive sustained economic progress, maintain peace, and uphold justice. 

 

Despite their challenges, these economies hold several potential advantages—which, with the right policies, could help reignite growth, the analysis finds. Profits from natural resources—minerals, forests, oil, gas, and coal—amount to more than 13% of their GDP on average. That is three times the share for other developing economies. Several economies—especially the Democratic Republic of Congo, Mozambique, and Zimbabwe—are rich in minerals needed for renewable-energy technologies such as electric vehicles, wind turbines, and solar panels. 

 

A youthful, expanding population is a long-term advantage. In most advanced and developing economies, the working-age population has already begun to stabilize or shrink. Not so in economies afflicted by conflict or instability, where the working-age population is expected to expand steadily for most of this period: by 2055, nearly two out of every three people will be of working age—a larger share than anywhere else in the world. Reaping a “demographic dividend,” however will depend on ramping up investments in education, health, infrastructure, and building a vibrant private sector that can generate more and better jobs, the report says.  

The World Bank contributed this story, and it remains unedited by IndraStra Global Staff.

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