Shared prosperity is a term that describes the extent to which economic growth is inclusive, focusing on household consumption or income growth among the poorest population relative to the overall population. It is the annualized growth rate in the average consumption or income per capita of a country’s poorest 40 percent (the bottom 40). Shared prosperity is an indicator of inclusion and well-being that correlates with reductions in poverty and inequality.1 Because this indicator monitors the growth in average incomes of the bottom 40 percent of the income distribution, it is relevant even in higher-income countries where extreme poverty is lower.2
Between 2015 and 2020, there were large differences in shared prosperity across countries. The bottom 40 in many European countries experienced positive annualized growth in average consumption or income per capita. The gains ranged from a few percentage points (Sweden, Germany, Italy) to double-digit percentage gains (Romania, Serbia, Bulgaria). However, many countries in South America had very low or negative annualized income growth for the bottom 40.
At low levels of energy use per capita, small increases in energy use can generate significant benefits to people, as measured by the Human Development Index, GDP per capita, and social progress. Does access to more energy lead to greater shared prosperity? This chart compares shared prosperity and the annualized growth rate of energy use per capita from 2015 to 2020. Generally, a faster growth rate in energy use per capita is associated with greater shared prosperity, and vice versa. For example, China, Thailand, and Vietnam exhibited high growth rates of energy use per capita and positive income growth rates. Conversely, Costa Rica, Egypt, and Argentina had negative growth rates in both energy use per capita and income growth.
Very few countries fall in the lower right quadrant of the chart. This means that very few countries with positive growth rates in energy use per capita had negative income growth rates.
Higher growth rates of per capita energy use do not guarantee improvements in shared prosperity. This is illustrated by many countries with low or negative growth rates in energy use per capita and positive income growth rates. These countries are in the upper left quadrant of the chart. Note that many of those countries are European. The European Union (EU) has set ambitious energy efficiency targets and directives. Energy prices tend to be higher in Europe which encourages greater energy efficiency. Many European economies have a large service sector that is less energy-intensive than manufacturing.
The results show that improving the incomes of the bottom 40 percent results from diverse forces beyond energy use. Countries with strong shared prosperity also share some of these drivers: strong overall economic growth, robust social safety nets, progressive tax systems, good education systems, equitable access to financial resources, gender equality, and strong rural development programs.
1 World Bank, “Shared Prosperity: Monitoring Inclusive Growth,” accessed May 22, 2024, Link
2 Carlos Sabatino, Carolina Diaz-Bonilla, Danielle Aron, Cameron Haddad, Minh Cong Nguyen, Haoyu Wu, “November 2023 Update to the Global Database of Shared Prosperity,” Global Poverty Monitoring Technical Note 33, World Bank Group, https://tinyurl.com/mpv2nraw
