Folks,
Sorry for flooding your mail boxes with these stuff but this one is just
too good for me not to forward it on. It is a brilliant piece by the FT's
Martin Wolf. If it clutters your mail box, please excuse my enthusiasm.
Hamjatta Kanteh
+++++++++++++++++++++++++++++++++++++++++++++++
The World Bank is not Oxfam. If the resignation of Ravi Kanbur, head of this
year's team for the World Development Report, serves any purpose it is to
underline that fact. The World Bank must represent the views of its
shareholders, not those of non-governmental organisations that are suspicious
of economic growth, the market and globalisation.
The institution's dilemma is that too many of those who support aid dislike
development, just as too many of those who like development oppose aid. Yet
the Bank must be in favour of both development and aid. James Wolfensohn, its
president, has done his best to create the largest possible constituency for
this middle ground. But, with this resignation, the strains are beginning to
show.
Prof Kanbur is an excellent economist and an honourable man. It is a great
pity that he has felt unable to complete his work. Senior people at the Bank
insist that he was mistaken: the report's themes of "opportunity, security
and empowerment" do, they argue, remain intact.
Yet there have been fierce debates, both within the Bank and outside it, on
the relative weight to be placed on "opportunity" - for which read economic
liberalisation and growth - and "empowerment" - for which read redistribution
of income and other interventions to assist the poor. Presumably, Prof Kanbur
felt he was being asked to shift the emphasis too far towards the former.
Whatever the truth, this dispute demonstrates that the Bank cannot run with
both the pro-growth, pro-market hares and the anti-growth, anti-market
hounds. It has to choose between them. This does not mean it has to adopt
what opponents condemn as "free market fundamentalism" - far from it. It does
mean that the Bank is a component part of the western system of
market-oriented institutions and ideas. It must not cut itself off from these
roots.
Is it likely to do so? There have been moments in recent years when one had
to wonder. The draft of this year's WDR certainly downplayed the benefits of
rapid growth.* Equally, it questioned the benefits of market-oriented
liberalisation. In short, it came closer than is either right or sensible to
the anti-development, anti-liberalisation position espoused by many NGOs.
Since some in the NGO community saw this as the crowning success of a long
and successful campaign of entryism into the Bank's inner sanctum, they view
Prof Kanbur's resignation as a sign of betrayal. Kevin Watkins of Oxfam
stated, for example, that the resignation "marked the ultimate triumph for
the Neanderthal tendency within the World Bank group". His departure was, he
said, "a clear signal to developing country governments that they should go
for growth above all else".
This is absurd. Watkins is senior spokesman of an organisation based in a
country with average incomes per head, at purchasing power parity, of more
than $20,000. The vast majority of the world's poor live in low-income
countries with average incomes of $2,000 a head. Imagine what would happen to
a party that told the British people that it placed little weight on greater
prosperity. Yet western NGOs, which have no chance of making their
anti-growth policies acceptable at home, feel entitled to impose them on
poorer countries abroad. Worse, they expect the Bank to help them.
This is, alas, not at all unprecedented. Over the half-century of official
development policy, western advisers have repeatedly persuaded developing
countries to follow policies they had no chance of implementing at home.
Quantitative planning, autarky and comprehensive nationalisation - developing
countries tried them all. It took almost four decades of disaster to persuade
governments - not excluding communist China and long-socialist India - of the
errors of their ways. Now, alas, many NGOs wish to push them back into the
trap from which they have only begun to escape.
The governments of the world's poorest countries must "go for growth above
all else". It is no accident that east Asia saw the biggest reductions in the
number of people with incomes below a dollar a head (at PPP) between 1988 and
1997 (see chart). That, after all, was the region with the fastest growth.
Moreover, as the paper by David Dollar and Aart Kray of the World Bank, cited
here on April 12, noted, the incomes of the poor tend to rise in the same
proportion as those of the population as a whole.**
Growth means more goods and services, greater choice and more resources for
governments. Discussions of poverty alleviation that do not lay primary
emphasis on growth are, therefore, "like Hamlet without the prince", as Larry
Summers, US Treasury secretary, has said.
This does not mean either that growth should be the sole objective, or that
it is easily achieved. On the contrary, as is shown in a paper by Paul
Collier, David Dollar and Nick Stern, all now or soon to be at the Bank, we
have a far more nuanced view of how to achieve development and poverty
alleviation than previously.***
The paper presents four central lessons of experience. First, growth can
unleash poverty reduction, though it is neither necessary nor sufficient on
its own. Second, macro-economic stability, open trade regimes and a vibrant
private sector facilitate growth. Third, good governance and good policy have
a central role. "With weak institutions, poor governance and unsound
policies, market reforms can go badly awry with great costs, particularly for
the poor." Finally, combating poverty requires more than fostering
market-oriented growth. It involves enhancing the capabilities, particularly
the education and health, of poor people; it means increasing the ability of
poor people to influence their environment; and it includes reducing their
vulnerability to disaster.
This is sensibly balanced. If the World Bank is to secure the support it
needs not from anti-growth NGOs, but from the governments of its principal
shareholders, it can only be around such a broad agenda.
What is impossible is to expect governments of rich countries that promote
growth at home to support the opposite abroad or, even if the rich were
persuaded, to expect poor countries to embrace perpetual poverty. Oxfam can
support whatever it likes. But the Bank has to start from market-based
growth. It has no acceptable alternative.
* Attacking Poverty, www.worldbank.org/poverty/wdrpoverty/
** "Growth is good for the poor", March 2000, mimeo
*** Fifty Years of Development, mimeo
A forum on the subject of this column is open at
www.ft.com/forums/martinwolf/.
Contact Martin Wolf
hkanteh
----------------------------------------------------------------------------
To unsubscribe/subscribe or view archives of postings, go to the Gambia-L
Web interface at: http://maelstrom.stjohns.edu/archives/gambia-l.html
----------------------------------------------------------------------------
|
