Report: World Bank losing war on poverty

from The San Francisco Chronicle

Peter Goodman, Washington Post

Despite an intensified campaign against poverty, World Bank programs have failed to lift incomes in many poor countries during the past decade, leaving tens of millions of people with stagnating and even declining living standards, according to a report released Thursday by the bank's autonomous assessment arm.

Among 25 poor countries probed in detail by the bank's Independent Evaluation Group, only 11 saw reductions in poverty between the mid-1990s and the early 2000s, while the other 14 suffered the same or worse rates over that term. The group said the sample is representative of the global picture.

"Achievement of sustained increases in per capita income, essential for poverty reduction, continues to elude a considerable number of countries," the report declared, singling out as particularly ineffective programs aimed at the rural poor. Roughly half of such efforts from 2001 to 2005 "did not lead to satisfactory results."

During that period, new loans and credits aimed directly at rural development totaled $9.6 billion, or about one-tenth of total World Bank lending, according to the group.

In a statement distributed with the report, World Bank management rejected its assessment as "overly bleak," arguing that the overall trend is improving in every region except Africa. Bank administrators noted that reducing poverty requires economic growth, something they said the world has been enjoying: Over the past two years, developing countries collectively grew by about 5 percent to 6 percent per year, excluding swiftly developing China and India. Even sub-Saharan Africa has grown by more than 4 percent annually over the past five years.

But the evaluation group study found that growth has rarely been sustained, exposing the most vulnerable people -- the rural poor -- to volatile shifts in their economic fortunes. Only two in five of the countries that borrowed from the World Bank saw per capita incomes rise continuously from 2000 to 2005, the study reported, and only one in five saw increases for the full decade from 1995 to 2005.

The study emphasized that economic growth is, by itself, no fix: How the gains are distributed is just as important. In China, Romania, Sri Lanka and many Latin American countries, swiftly expanding economies have improved incomes for many, but the benefits have been limited by a simultaneous increase in economic inequality, putting the spoils into the hands of the rich and not enough into poor households, the study concludes.

In Georgia, the bank has helped foster growth by lending in support of the oil industry, but this has created few jobs, so the impact on poverty has been negligible, the study found. Brazil, on the other hand, has seen little growth -- but significant advances against poverty because wealth has been distributed more evenly.

"For a sustained reduction in poverty over a period of time, it really pays to worry about both growth and distribution," said Vinod Thomas, director-general of the Independent Evaluation Group. "It has been a mistaken notion that you can grow first and worry about the distribution later."

Overall, between 1990 and 2002 the percentage of the world's people who subsist on less than one dollar per day declined from 28 percent to 19 percent, according to World Bank research. By the bank's reckoning, 1.1 billion people were subsisting at that level in 2001.

"The sheer numbers of people living under the $1 a day definition of poverty has been stubbornly high," Thomas said.