The UN Department of Economic and Social Affairs (DESA) has issued a policy brief on steps to redistribute income to support progress on SDG 1 (no poverty). Using modelling evidence, the brief recommends a strategy known as “economic growth with equity” while also ensuring the growth is environmentally sustainable.

In September 2021, DESA released the 2021 edition of ‘Sustainable Development Outlook,’ which said governments can achieve positive results on multiple SDGs by pursuing structural transformation aimed at growth, equity, and environmental protection. In addition, amid the pandemic and recovery period, countries have the ability to “consider solutions previously considered too difficult to implement.”

The policy brief titled, ‘The critical role of income redistribution for poverty reduction: Alternative scenarios,’ released in October 2021, argues that the specific approach to distributing income “matters for poverty outcomes,” as the same rate of economic growth can result in varying levels of poverty reduction, depending on the levels of inequality. 

The brief presents six scenarios in combining economic growth with reduced income inequality. DESA’s Global Economic Monitoring Branch produced the forecasts using its World Economic Forecasting Model. The results show that inequality reduction can drive poverty reduction, and has the greatest results when combined with robust growth.

The authors highlight the need for the growth to be environmentally sustainable, which will require improved management of water and other natural resources, together with movement towards low-carbon technologies. They also state that reaching better outcomes on SDG target 1.1 will require progress on both SDG 8 (decent work and economic growth) and SDG 10 (reduced inequalities). 

In sum, the brief advances a strategy known as “economic growth with equity.” By this approach, poverty reduction efforts are “anchored in both strong economic growth and income redistribution.” This will vary by country based on context, but must consider both equitable distribution and protecting the environment.

The strategy emphasizes policies that focus on:

• Creating jobs, progressive taxation, and more comprehensive public service provision;
• In largely agricultural countries, raising the productivity of the farming sector, while also encouraging smallholder farmers and rural households to increase their nonfarm income, such as through agricultural extension services;
• Establishing social protection floors, bolstering them against shock, and using digital technologies to overcome resource constraints to achieve universal protection;
• Prioritizing school quality in national human capital development strategies; and
• Incorporating other SDG areas, such as good health and wellbeing (SDG 3), clean water and sanitation (SDG 6), to enable people to rise out of poverty and achieve higher income and productivity.

[Publication: DESA Policy Brief 119: The critical role of income redistribution for poverty reduction: Alternative scenarios]