Reaching the Bottom 40 Percent: Do National Goals Translate Subnationally?

Promoting shared prosperity is at the center of the new World Bank Group Strategy. To this effect, a shared prosperity index will help monitor the income growth of the bottom 40 percent of the population in every developing country. However, many developing countries exhibit substantial economic and demographic heterogeneities across subnational regions. Does the national target of the bottom 40 percent translate to a target of the bottom 40 percent in each subnational region? This note discusses how regional disparities can lead to contradictory results in the interpretation of a shared prosperity index with a national and subnational focus. Accordingly, policy lessons that are derived from nationwide analyses may be misleading for subnational regions, and vice versa.