The new millennium, with all its promise of change, presents us with a profound challenge: how to stem the rising incidence of global poverty. It is surely a major piece of unfinished business carried over from the previous century—how to give the poorest people of the world real hope for a better life.
The urgency of this task cannot be disputed. While recent decades have seen major improvements in the health and education of many people, reflected in falling infant mortality rates, rising life expectancy and increasing literacy rates, three billion other people, half the world’s population, live on less than $2 a day. By 2025, that figure may rise to four billion. As many as 110 million children, most of them girls, do not attend primary school. More than 30 million people live with H.I.V.-AIDS.
It is clear that unless we in the worldwide community can show more tangible results in the battle against hunger and deprivation, against the continuing human devastation caused by communicable diseases, against unsustainable debt for the poorest countries and against the digital divide with its threat of keeping developing countries disconnected from the wealth of the digital revolution, this new millennium of ours, from which we expect so much, will almost certainly produce a more fractured, unequal and turbulent era.
Despite years of relative peace and prosperity in industrialized countries, global poverty is getting worse. More troubling still is the massive and widening gap between rich and poor. There are those who argue that global economic integration is behind these alarming numbers. And to be sure, the benefits of globalization are not evenly spread. This needs to be addressed, but simply blaming globalization does not help.
Over the last century, the forces of globalization have been among those that have contributed to a huge improvement in human welfare, including raising countless millions out of poverty. Going forward, these forces have the potential to continue bringing great benefits to the poor, but how strongly they do so will also continue to depend crucially on factors such as the quality of overall macroeconomic policies, the workings of institutions and social safety nets, among many others.
There is much to be done, therefore, if we are to ensure that all countries, especially the poorest, benefit from this process. We cannot turn back globalization; our challenge is to make it an instrument of opportunity and inclusion, not of fear and insecurity.
To meet this challenge, we at the World Bank have deepened our understanding of what poverty is and how to generate equitable development.
We have learned that poverty is about more than inadequate income or even low human development. Poverty, as discussions with 60,000 poor people in 60 countries have taught us, is multidimensional and complex. It is about lack of fundamental freedom of action, choice and opportunity. It is voicelessness, powerlessness, insecurity and humiliation.
We have also learned that market-oriented reforms, if combined with social and institutional development, can deliver economic growth to poor people. Growth is the most powerful force for sustained poverty reduction. It is crucial, but it is not enough. Experience has shown us that growth leads to larger and quicker reductions in poverty if measures are taken to empower the poor and to enhance their security.
To be successful, development must be comprehensive. It needs to embrace sound economic policies and infrastructure, but also education, health, good governance, the fight against corruption, legal and judicial reform and environmental protection. All these elements depend on and reinforce one another. Without a comprehensive approach that is crafted and adopted in each country, we will not achieve the development that is vital for a peaceful, equitable world.
To improve our work we are applying what we have learned, and we are changing our institution and the way we do business to deliver more effectively, transparently and with greater accountability. We are working with our colleagues in the United Nations system and the other multilateral development banks on selectivity and the division of labor among us. We are working with governments, helping them to take forward their policies and institutions rather than simply implementing our projects.
Last year we launched the Comprehensive Development Framework—a holistic, long-term and country-owned approach that is being implemented in a dozen countries. With the International Monetary Fund, we began supporting our partner countries in their work on poverty reduction strategies—strategies that are country-driven and focused on poverty. Our comprehensive framework and the poverty reduction strategies embody an approach to poverty reduction that is gaining strong recognition in the development community.
We have increased our lending in social sectors. In 1980, investment in the power sector accounted for 21 percent of bank lending. Today, that figure is down to 2 percent. By contrast, lending for health, nutrition and education has expanded almost fivefold from 5 percent in 1980 to over 22 percent today. The bank is also doing more on social protection—on safety nets in particular—and other key issues like gender.
The World Bank is also working to ease the crippling debt burden the poorest countries face. In 1996, the bank and the I.M.F. launched the Heavily Indebted Poor Countries initiative (H.I.P.C.), the first international response to provide comprehensive debt relief to the world’s poorest, most heavily indebted countries. Under the initiative, the debt of more than 30 eligible countries will be cut by $50 billion, with the World Bank reducing its debt claims by nearly $11 billion.
We are also working to stamp out the cancer of corruption, a major inhibitor of development. Corruption in all its forms is a crippling tax on the poor, diverting public services from those who need them most and undermining public support for development aid by creating a false perception that all assistance is affected by corruption.
It is two years since the board of the World Bank endorsed an anticorruption strategy, and the attention given to governance issues inside and outside the bank has increased dramatically. Our dialogue with client countries on these issues has become notably more open, and more than 600 specific anticorruption programs and governance initiatives have been undertaken in almost 100 borrower countries. This is a substantial achievement.
Corruption, by its very nature, will persist as a complex and difficult problem, and the bank and its member countries have to be prepared for a long, hard struggle. In accordance with its role as a development institution working in poor countries that have weak controls and capacities, we can and have helped to bring corruption to the forefront of international attention and are helping to confront the challenge corruption represents. But fighting the cancer of corruption is a challenge not just for the bank, but for the entire development community—international financial institutions and development agencies, civil society, the private and public sectors. If we all move forward with momentum, we have a real chance to make a difference.
As the fight against corruption has shown, most of the issues we face require that we build a concerted coalition of partners ready to supplement national actions with measures at the global level.
Control of communicable disease, for example, is a global public good critical for successful poverty reduction strategies and for development more generally, which requires a major international effort. The bank continues to play a full part in this undertaking—by expanding the scale and flexibility of lending, by tackling disease prevention and control at the source and multisectorally, and by intensifying the engagement with governments to encourage strong nationally driven programs that our lending can then support.
The bank has funded more than 80 H.I.V.-AIDS projects and components around the world totaling nearly $1 billion, and recently made available an additional $500 million in flexible and rapid funding for several projects to fight the epidemic in sub-Saharan African countries.
We acknowledge the fact that high aid dependency can seriously weaken a government’s ability to attend to some of the more pressing social needs of its people. Addressing the H.I.V.-AIDS crisis is one of the most urgent concerns of developing countries today. We have a moral obligation to come to the immediate assistance of these countries—not by encouraging countries to borrow to finance H.I.V.-AIDS programs, but by integrating AIDS into debt relief programs. In fact, many of the countries that will benefit from debt relief are countries that are severely affected by the AIDS epidemic.
A second global public good where the bank can make a big impact is in the use of new technology to deliver knowledge where it is needed. Bridging the digital divide is an issue we must all address.
Today we have a unique tool at our disposal to enable involvement of all, on a scale undreamed of just a few years ago. Technology alone will not solve the problems of the developing world, but we believe it can play a major role in helping meet the challenges of poverty. And so, over the last five years, we have been focusing on how we can harness the power of information and communications technology and of knowledge to accelerate development.
The World Bank is working with governments to foster policy, regulatory and network readiness, through our analytical and advisory work and through our grant facility, infoDev. We have established direct communications through the African Virtual University, which we created, which is operating in 14 countries, as well as through the partnership for capacity-building in Africa. We have already linked 35,000 school children in 15 developing countries with partner schools in developed countries through our World Links program, providing training and information exchange and joint projects between teachers and students. We have linked the world’s leading research institutions with local and regional research institutions in developing countries through the Global Distance Learning Network, providing the possibility of Internet communication and joint research.
The information and communications revolution offers us an unprecedented opportunity to make empowerment and participation a reality. There is no reason why hundreds of millions of people living in Central Asia, Latin America or Africa should be cut off from the ideas that are changing the rest of the world, or why these ideas should not be enriched by their local experience simply because of a lack of readily available cable or satellite technology. The capacity of the Internet—yet to be fully imagined—to eliminate forever the knowledge gap between rich and poor countries may be the single most important determinant of what our world will look like in 50 years.
Education is also key to harnessing knowledge as a major driving force for development. The World Bank will continue to push for a global consensus on the centrality of education for economic and social development and for poverty reduction. We are partnering with others to support countries that are committed to achieving the Education for All goals much sooner than the 2015 timeline and will intensify its efforts to help countries identify priorities and finance and implement national action plans. We will leverage stronger partnerships on core topics such as improving girls’ education and providing basic education for the poorest.
The World Bank is committed to working with its partners, including other donors, to ensure that no country with a credible, viable and sustainable education plan will be unable to implement it for lack of external resources.
In assessing which direction to take in the new millennium and how we will harness the forces of globalization to ensure that the opportunities it creates are shared by all, everyone should have a voice, most importantly the poor themselves.
Our challenge is to move beyond the rhetoric and recognize that we live in a time of astonishing possibility. Whether it be immunizing all children against preventable disease or linking every school in Central Asia to the Internet, solutions to problems that seemed insurmountable just a few years ago are now within reach. But in order to provide real solutions to our seemingly intractable problems of poverty and disease, we need to enlist the help of everyone. We must work together to harness the benefits of globalization to deliver prosperity to the many, not just the few.
