Equity to reduce poverty<\/p>\n
The central message of the World Development Report (WDR) 2006
\nof the World Bank, titled Equity and Development, is extremely
\nrelevant to Indonesia, where almost 50 percent of the population
\nof 220 million live on less than US$2 a day and 62 million people
\nare so deeply mired in absolute poverty that they are virtually
\nuntouched by the development process.<\/p>\n
The annual report virtually abandons the trickle-down theory
\nof development traditionally held by the World Bank, and instead
\nrecommends the promotion of equal opportunities for the poor by
\nbroadening access to justice, health care, education, jobs,
\ncredit, secure land rights and economic infrastructure such as
\nroads, power, water, sanitation and telecommunications.<\/p>\n
The new concept essentially boils down to the economics of
\npopulation quality.<\/p>\n
The report, issued last week to coincide with the annual
\nmeetings of the World Bank and the International Monetary Fund,
\nsuggests that developing countries correct persistent
\ninequalities in opportunities by leveling the economic and
\npolitical playing fields, investing more in people, promoting
\nfairness in financial, labor and commodity markets, and expanding
\naccess to justice.<\/p>\n
The report, based on case studies in numerous developing
\ncountries, cautions that equity is not the same as equality of
\nincome, but is rather the quest for a situation in which
\nopportunities are equal, where personal effort and initiative --
\nnot family background, caste, race or gender -- account for the
\ndifferences between people's economic achievements.<\/p>\n
The WDR 2006 complements the conclusions of the WDR 2004 on
\nthe poor's access to public services and the WDR 2005 on the
\nimprovement of the investment climate. But its central message,
\nwhich is strikingly different from the Bank's traditional stance,
\nwill still go a long way toward improving the reputation of the
\nWorld Bank as the \"spokesman\" for the poor.<\/p>\n
Credit for this should go to the new president of the Bank,
\nPaul Wolfowitz.<\/p>\n
When U.S. President George W. Bush nominated Wolfowitz, then
\ndeputy secretary of defense, to succeed James Wolfensohn as the
\npresident of the World Bank last April, Wolfowitz was strongly
\ncriticized by non-American shareholders in the Bank. There was
\nconcern that President Bush intended to make the multilateral
\ndevelopment agency an instrument of U.S. foreign policy.<\/p>\n
However, as the central message of the WDR 2006 demonstrates,
\nWolfowitz has succeeded in walking the fine line between
\nreconciling the real and powerful global economic and political
\nclout of the G-7 nations -- the Bank's controlling shareholders
\n-- with the equally powerful moral arguments of a development
\ninstitution dedicated to fighting poverty and improving living
\nstandards in developing nations.<\/p>\n
The report also serves to reject allegations by many NGOs that
\nthe World Bank is merely the vanguard of the \"Washington policy
\nconsensus\" on market-oriented reforms such as trade and
\ninvestment liberalization, deregulation, privatization, floating
\nexchange rates, fiscal discipline and property rights.<\/p>\n
The WDR 2006 maintains, through well-documented development
\nsuccess stories in several countries, that growth-led development
\nwith its trickle-down effect is not sufficient to reduce poverty.
\nOn the other hand, poverty cannot be reduced without growth
\nbecause economic growth is always one of the two forces behind
\npoverty reduction, with the other force being the one that
\ndetermines the distribution of income among the population.<\/p>\n
The problem is how to strike a good balancing act between the
\ntwo pillars of development strategy: A good investment climate
\n(all those factors responsible for growth, entrepreneurship and
\ninvestment) and the empowerment or human development, which is
\nreally about empowering the poorest people in society.<\/p>\n
Higher growth will bring about more opportunities, but better
\ndistribution of those opportunities to the poorest people will
\ngenerate faster growth. This means that equity must be sought
\nbecause it is a vital complement for economic development and
\ngrowth.<\/p>\n
The report sees the poorest people in society not as the
\nrecipients of charity (trickle down), but rather as people with
\nenormous potential to contribute to the development of their
\ncountries.<\/p>\n
As such, the World Bank sees retargeting and refocusing public
\nsubsidies and policies toward the poorest people -- what the
\nIndonesian government is now doing with its huge fuel subsidy --
\nas a very sensible investment.<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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