WDR 2000/1

1. WDR 2000/1

2. What follows is a useful set of notes (with paraphrasing, quotes, and figures from World Bank, World Development Report, 2000/1, Attacking Povertywhich articulates an influential global orientation toward policy making geared toward the reduction of poverty. OVERVIEW 1 (italics added) • “Poor people live without fundamental freedoms of action and choice that the better-off take for granted.” • capabilities, rights? • Poverty is multidimensional: it includes inadequate food, shelter, health, education; vulnerability to disease, dislocation, disaster; and often mistreatment by state and society. • “The experience of multiple deprivations is intense and painful.” The Voices of the Poor study, which informs this report, gives a first-hand glimpse of poverty. • participatory approach • “Of the world’s 6 billion people, 2.8 billion – almost half – live on less than $2 a day, and 1.2 billion – a fifth – live on less than $1 a day, with 44 percent living in South Asia.” • monetary poverty • “In rich countries,” less than 1 in 100 children die before age 5; while “in the poorest countries,” as many as 20% do. In rich countries, <5% children < 5 yrs old are malnourished; in poor countries, as many as 50%  ten times the percentage. • Inequality, comparison, as definition of poverty

3. WDReport 2000/1. OVERVIEW 2 • Global wealth increasing • “But the distribution of these global gains is extraordinarily unequal. • ”The average income in the richest 20 countries is 37 times the average in the poorest 20 – a gap that has doubled in the last 40 years.” • Regions of the world differ greatly. • “In East Asia the number of people living on less than $1 a day fell from 420 million to around 280 million between 1987 and 1998 – even after the setbacks of the financial crisis. • “Yet in Latin America, South Asia, and Sub-Saharan Africa, the numbers of poor people have been rising. • “And in the countries of Europe and Central Asia in transition to market economies [ie: former Soviet Block], the number of people living on less than $1 a day rose more than twentyfold.”

4. WDReport 2000/1. OVERVIEW 3: International/Millennium Development Goals to reach by 2015 • Income • Reduce by 50% the proportion of people living in extreme income poverty, on < $1/day • Education • Ensure universal primary education • Eliminate gender disparity in primary and secondary education • Health • Reduce infant and child mortality by two thirds (ie in 2015 it will be 33% level in 2000) • Reduce maternal mortality by three-quarters (2015 level will be 25% 2000 level) • Ensure universal access to reproductive health services • Environment • Implement national strategies for sustainable development in every country by 2005, so as to reverse the loss of environmental resources by 2015.

5. WDReport 2000/1. OVERVIEW 4: But how to reduce poverty in all dimensions? Answers have changed over time. • 1950s and 1960s, “large investments in physical capital and infrastructure” • 1970s, “health and education” • 1980s, “improving economic management and allowing greater play for market forces.” • 1990 WDR promoted labor intensive growth through economic openness and infrastructure and providing basic services • 1990s, “governance and institutions moved toward center state – as did issues of vulnerability at the local and national levels.”

6. WDReport 2000/1. OVERVIEW 5: • This report builds on cumulative learning • Proposes a strategy for attacking poverty in three ways, by • Promoting Opportunity • Facilitating Empowerment • Enhancing Security

7. WDReport 2000/1. OVERVIEW 6: Focus 1: Promoting Opportunity • For poor people, material opportunities mean jobs, credit, roads, electricity, markets for produce, schools, water, sanitation, health services  note: capability + participatory approach • “Overall economic growth is crucial for generating opportunity. • “So is the pattern or quality of growth. (growth = money = PCGDP) • “Market reforms can be central in expanding opportunities for poor people, but reforms need to reflect local institutional and structural conditions. • “And mechanisms need to be in place to create new opportunities and compensate the potential losers in transitions. (exclusion) • “In societies with high inequality, greater equity is particularly important for rapid progress in reducing poverty. • “This requires action by the state to support the buildup of human, land, and infrastructure assets that poor people own or to which they have access.” • [NOTE: high and increasing inequality AMONG national economies in global economic growth system is NOT part of this discussion.]

8. WDReport 2000/1. OVERVIEW 7: Promoting Opportunity 2 • Core policies and institutions for creating more opportunity involve complementary actions • to stimulate economic growth, • make markets work for poor people, • and build their assets – • including addressing deep-seated inequalities in the distribution of such endowments as education”

9. WDReport 2000/1. OVERVIEW 8: Promoting Opportunity 3 • Growth requires encouraging effective private investment. • Investment and technological innovation are the main drivers of growth in jobs and labor incomes • Fostering investment requires reducing risk for private investors: • with stable fiscal and monetary policies, • in stable investment regimes, • with sound financial systems, • and a clear and transparent business environment. • It also involves ensuring the rule of law and taking measures to fight corruption • Special measures are frequently required to ensure that small and micro-enterprises participate effectively in markets. • credit (financial deepening), • lowering transactions costs of reaching consumers by expanding access to Internet technology, • promoting trade at fairs, etc.; • improving transportation in disadvantaged localities

10. WDR 2000/1, discussion • The next set of slides presents figures from WDR 2000/1, chapter 3, on “opportunity,” • The chapter stresses the productive role of overall economic growth in poverty reduction. • It also indicates how various national economies have channeled additional wealth (acquired through economic growth) into poverty alleviation

11. WDR 2000/1, discussion • The WDR does argue that aggregate (or general) economic growth (increasing total national wealth/capita) facilitates poverty reduction. • But does economic growth CAUSE poverty reduction? • Is increasing wealth a necessary or sufficient condition for poverty reduction? • Keep in mind the multidimensional character of poverty: growth might reduce poverty in some dimensions (e.g. income) more than others

12. WDR 2000/1, discussion • The WDR does not argue that increasing wealth is a necessary, let alone sufficient, condition for poverty reduction • Interpreting WDR figures below indicates why • We can explore the relationship between data and arguments by looking closely at these figures • The are excellent examples of data revealing more on close examination than first meets the eye.

13. Note the statement atop this figure presents a correlation, a statistical pattern; it ALSO implies causality: more wealth means less poverty. Thus policies to increase wealth might tend “in general” to reduce policy. (note sample)Q1: National wealth data and income poverty are measured quite differently. What is the difference? Does it matter for interpreting these data?Q2: These two graphs can be interpreted to mean that on average, poorer people live in poorer countries. Do these data suggest anything else?

14. A1: National wealth data derive from national accounts. X axis values are percapita consumption = (GDP - inventory – savings – exports + imports)/ total populationPoverty data and hence quintiles of consumption cost (y axis values) derive from sample survey data.Hence some incommensurability appears in each data point.More serious problems arise for cross country comparisons.PPP = purchasing power parity. A calculation designed to compensate for variations in value of money and cost of goods and services across countries.PPP figures reduce problems of cross country comparisons to acceptable level for such analysis.

15. Reading trick:interpret the three oval and three rectangular clustersovals: richer and poorer societies have similar consumption levels for poorest 20%rectangles: societies with the same total wealth have lower and higher consumption levels for poorest 20%; and range of variation is smallest in poorest societies.

16. Thus, the “in general” statement is true (blue trend line) But data ALSO point in other directions: (1: ovals) more wealth does not always mean more consumption for poorest 20%; and (2: rectangles) the poorest 20% have higher and lower consumption levels in societies with the same percapita wealth. Red line indicates an axis of national wealth increase with decline in poorest 20% consumption.

17. Interpret in words(1) the clustering of these data points around 0:0 and(2) statistical differences among countries in(a) each quadrant separately, and(b) each quadrant comparatively.

18. What can you say comparatively about countries, based on this figure?(see next slide)

19. General statement:Health performance varies greatly among countries with similar PCGDP.Provide details.Q:Where on this chart is the poorest country with health performance comparable to rich countries?

20. The winner

21. Compare (1) South Asia and Sub-Saharan Africa(2) China and Thailand

22. Note the two timescales. What is their implication for current trends?

23. Interpret the distribution of countries in this figure. Drawing concentric circles might help.

24. If this general statement applies inside countries, might it also apply across countries?

25. Q1: What does the ratio in this figure indicate? Q2: What does a ratio >100 mean? Q3: Does this data indicate literacy levels?Q3: What are other useful interpretations of this data? Consider the range of ratios among countries with $1,000 PCGPD  Consider the PCGDP range among countries with and full gender equality in literacy rates.

26. WDR 2000/1 summary, continued • WB national strategy has three parts • Promoting Opportunity (Chapters 3-5) • Facilitating Empowerment (Chapters 6-7) • Enhancing Security (Chapters 8-9) • National strategy supplemented by International Action (Chapters 10-11)

27. 1. Promoting Opportunity • Chapter 3 summary last week • Focus: • the primacy of economic growth • Growth and inequality • Income growth and nonincome poverty

28. WDR 2000/1Chap 4: Making Markets Work Better for Poor People

29. THE IMPACT OF INFLATIONAn Extreme Cast:Collapse in Real Wage (entitlement to food) caused starvation in The Great Bengal Famine

30. Wage and price trends affect income groups differently

31. Note Rice accounts for 60-70% of inflation rate Female Daily Agr Wage is 75% male wage Current Trends in Bangladesh(from Daily Star 16 July 2005)

32. Wage trends favor skilled workers and industry in general over agriculture

33. Economic Growth and Overall Increase in National Wealth includes Upward shift in commodityvalue/prices(Daily Star 19 July 2005) • Higher Value Labor • 19% decrease in labor exports from Bangladesh in Jan-May 2005 compared to same period in 2004 • 19% increase in receipts remitted from export labor • Reason: increasing demand abroad for skilled labor; declining demand for unskilled labor; hence lower numbers, higher wages • High Value Agriculture. IFPRI research • Per capita grain consumption declining or growing at less than 1% per year in eight Asian countries (Bangladesh, Pakistan, India, Indonesia, Philippines, Thailand, Vietnam, and China) • Per capita consumption of HVA (fruits and vegetables) increasing at 2-10% per year • In Thailand and Philippines, >50% of all food is sold in supermarkets • In Dhaka city, about 15% of food sold passes through supermarkets • Market-connections-finance direct links between retailers and producers through supply systems generate specialized production-consumption commodity chains (e.g. BRAC in Chandina, where 30% poor farmer income is in vegetables.)

34. Chap 5: Expanding Poor People’s Participation

35. Joint forest management brings poor people into process of state control over forest resources

36. 2. EmpowermentChap 6: Making State Institutions More Responsive to Poor People

37. Localizing Governance

39. Chap 7: Removing Social Barriers and Building Social Institutions

40. Public investment

41. CHT in BangladeshUNICEF/BRAC/BBS 2004lbw anemia study:LBW (<250g) Bdesh = 33.7%urban children (6-59 mo)= 56% CHT children = 62%CHT infants (6-11 mo) = 90%Anemia urban adolescent girls = 29%urban adolescent boys = 17% (lowest of all groups)CHT adolescent boys = 40%CHT adolescent girls = 50%

42. 3. Enhancing SecurityChap 8: Helping Poor People Manage Risk

43. Dealing with Types of Risk (previous slide): Means of Reduction, Mitigation, Coping(note )

44. Non-State, non-market asset transfers for dealing with risk and crisis

45. Social Program Expenditure

46. Using communities to allocate benefits

47. Creative examples

48. Chap 9: Managing Economic Crises and Natural Disasters

49. Crisis impact on HDI indicators

50. The burden of disasters greatest where national assets for coping, prevention, and mitigation lowest