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Economic Growth Not Sufficient to Cut Poverty, Says New Report
Sep 12 (IPS) p In a shift from the World Bank's previously held position
the institution's latest World Development Report says that economic growth
is crucial, but often not sufficient to create conditions that end poverty.
Bank President James Wolfensohn says the new report, released Tuesday, attempts to expand the understanding of poverty and ''builds on our past thinking and strategy and substantially broadens and deepens what we think is necessary to meet the challenge of reducing poverty.''
The view within the Bretton Woods institutions is that poverty does not only mean low incomes and low consumption rates, but also lack of education, poor nutrition and health. The new view now incorporates powerlessness, voicelessness, vulnerability and fear as aspects of poverty.
The report notes that actions are needed in three complementary areas:
- promoting economic opportunities for poor people through equitable growth, better access to markets, and expanded assets.
- facilitating empowerment by making state institutions more responsive to poor people and removing social barriers that exclude women, ethnic and racial groups, and the socially disadvantaged.
- enhancing security by preventing and managing economy wide shocks and providing mechanisms to reduce the sources of vulnerability that poor people face.
''These different dimensions of poverty interact in important ways,'' says World Bank Chief Economist and Senior Vice President, Nicholas Stern. ''We know that economic growth is crucial to sustained poverty reduction. But we also recognise the fundamental role of institutional and social change to the strength of development processes and the inclusion of poor people.''
The report draws on examples such as a Moroccan project called the 'Virtual Souk' that allows poor traders and artisans to sell their goods around the world over the Internet. A new approach to land reform in Brazil and affirmative action against caste-based discrimination in India are also highlighted as examples of providing opportunities to poor people.
WDR also urges developed countries to open up their markets to nations of the South and promote the production of public goods that benefit poor people such as vaccines for tropical diseases and agricultural research, combating HIV/AIDS and enhancing global financial stability.
This year's report, which has been more than two years in the making, has been eagerly awaited by the development community following the resignation of its chief author Ravi Kanbur in June. In his resignation letter, Kanbur cited unreasonable pressure to tone down sections of the report on globalisation.
The first draft of the WDR was released in January to an online discussion forum by the Bretton Woods Project, at Kanbur's request. It was discussed by 1,500 people from 80 countries and many had hoped the report would break new ground by opening up debates on free trade and its impact on different population groups.
Many felt that the draft reflected real progress compared to previous reports, with its increased examination of non-income dimensions of poverty and recognition of insecurity, voicelessness and powerlessness.
Respondents had also hoped the final report would be bolder in its conclusions and challenge the political obstacles to implementing pro-poor policies in developing countries, and the need to press Northern countries to do more on trade and environmental degradation.
Despite its shortcomings, the report is the Bank's most detailed investigation of global poverty. It solicited responses from think- tanks, private business groups, and NGOs and sought the personal accounts of more than 60,000 men and women living in poverty in 60 countries.
Even though human conditions have improved more in the past century than in the rest of history, almost half of the world's population, some 2.8 billion people live on less than 2 dollars a day, the report notes.
Progress in poverty reduction has varied widely across regions. In East Asia the number of people living on less than one dollar a day fell from around 420 million in 1987 to around 280 million in 1998. But in Sub-Saharan Africa, South Asia, and Latin America, the numbers of poor people have been rising steadily.
The Bank produces WDRs every year. The ones at the start of each decade are regarded as the most influential as they take an overall look at the preceding decade.
The millennium edition of the WDR has been released just before the World Bank/IMF annual meetings in Prague to be held Sept 19-28 where some 20,000 demonstrators are expected to take the globalisation debate to the streets.
The WDR is
not an official document of the Executive Board of the World Bank, and
thus not an official policy document. It is prepared by the Chief Economist's
staff and therefore ultimately represents the views of staff and management.
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