Ex-World Bank chief says growing global income gap

from Forbes

MANILA (Thomson Financial) - A widening rich-poor gap in countries around the world could lead to a rise in class conflicts, former world bank president James Wolfensohn said here Wednesday.

Despite sharp growth in countries like China and India, the absolute number of poor in the world was still growing, particularly in Africa, he told a public forum in the Philippines capital.

Fifteen years ago, there were about 5 billion poor people in the world -- a number that 'will grow to 8 billion people in the next five years,' he said.

The increasing income disparity between nations and within their borders 'will ensure you will have growing conflicts between the rich and the poor,' he told business and civic leaders.

Unlike in the past, the poor in undeveloped countries were well-informed and knew about the comforts and jobs out of their reach.

'Young people want to get jobs and if they can't get jobs, they will go out and kick you,' he said. 'If you want your kids to live in peace, you cannot ignore this problem.'

Wolfensohn, who is credited with anti-corruption efforts at the World Bank, criticized the weak record of developed countries in channelling aid to the needy.

'Shareholder governments of multilateral institutions have done a terrible job of (using) the money for development,' he said.

Wolfensohn said of the 130 billion dollars supposedly allocated by multilateral institutions for development, only one-third of that amount was used to help the poor while the rest went to overhead and other costs.

'The system is in poor shape and needs a revamp,' he said, suggesting that they should 'get rid of multiple organisations with multiple overheads' that perform the same functions.

Although he praised the Asian Development Bank for its efforts to ensure its funds help the poor, he said the World Bank should 'look at itself as it (looks) at others' when it investigates alleged misuse of aid funds.

Aside from poverty, the other major issue facing the world was the environment, Wolfensohn said, noting businessmen had realised that 'a good environment can have an input on economic growth.'