Is it possible that the poor can be envied? Well, if the words generated by the current global debate on poverty could be converted to a dollar each, the 1.2 billion of world's poor would have become richer many times over. By mid-September, when the World Development Report (WDR) - the World Bank's prestigious annual publication which has poverty as its theme this year - is published, they might even give the rich a run for their money!
Included in this heated debate of course are India's 350 hungry millions, who still form the largest concentrate of the global poor (see box next page). It all began very innocuously in May when the staff director of the WDR "Attacking Poverty" project, Ravi Kanbur, resigned, ostensibly because of irreconcilable differences with US treasury secretary Larry Summers on the impact of globalisation on poverty. That made the world sit up. Especially development workers wary of the World Bank's role in pushing the Washington Consensus. For one, Kanbur's resignation came soon after the protest departure in November of Joseph Stiglitz, vice-president and previous chief economist who looked after WDR 1999-2000, one who had criticised the Bank for its failure in handling the Asian crisis - he even blamed the Bank for precipitating it. For another, Kanbur had tried to be different, very different.
For the Bank, whose dream is "a world free of poverty", the WDR at the start of a decade acts like a milestone in terms of future policy direction. It's not an official policy document but prepared by the chief economist's staff; so it's a manifesto. The 1990-91 WDR was buoyed by the East Asian miracle and went along with the idea that growth and poverty eradication with equity worked together if the right policies were in place. That is, liberalise markets, develop labour-intensive industries, give private sector incentives and take care of education and health. It's a policy that has worked like a dream with the Bank, at least till Stiglitz questioned it. It's a policy that came too close to being shaken to the core, experts say, thanks to Kanbur.
Kanbur's resignation was indeed unfortunate for the Bank, especially for its president James Wolfensohn's Partnership Approach to development issues, outlined in 1998. Kanbur, a UK citizen who went on to become the T.H. Lee Professor of World Affairs at Cornell in 1997 after an eight-year stint at the World Bank, was appointed in Spring 1998 to write this report, a draft of which was posted on the web. It attracted people from over 80 countries. Kanbur's response was that his team was looking to strengthen its lines on key issues like empowerment and rich nations' role to "revise the concluding recommendations to bring global actions to centrestage". Then the penny dropped.
Regretting Kanbur's departure, the Bank has said: "...Ravi said he had some reservations on the emphasis of the main messages...in the final version. We believe these to be unfounded.... The key themes of opportunity, empowerment and security will be at the heart of the WDR." But development workers are unwilling to buy the assurance. Alex Wilks, coordinator of London's Bretton Woods Project, which works with NGOs to monitor Bank-IMF activity, says: "It raises questions of who really calls the shots at the World Bank and what evidence or opinions about the impacts of globalisation they're trying to suppress."
Is it true that despite Wolfensohn's claim that "we should not just be reciting generic answers but raising fundamental questions to which there are no easy answers", the Bank brooks no dissent? We have to guess, for Kanbur isn't telling.He didn't reply to our e-mails - we had been warned - nor was he available on the phone; even a copy of his photograph was unobtainable from the Bank. Economists in India declined comments saying it was an internal matter of the Bank. Some even welcomed Nicholas Stern's appointment as chief economist since he's more clued into India - his latest work relates to Himachal's Palampur district.
However, Surjit S. Bhalla, Oxus Research president and ex-Bank staffer, feels that "the draft WDR correctly reflected the Bank's (read, senior management) ideology about what needs to be done for alleviating world poverty". The basic aim, he says, was to expand the role of governments and global organisations like the Bank, which critics and experts saw through. Some, notably trade specialist T.N. Srinivasan, called the WDR not even fit for a dog's breakfast.
Many in the developing world feel the questions Kanbur threw up (see box) made the Bank uncomfortable, the most important of which are:
- Despite reforms, 40 per cent of the people without access or resources may be unaffected and big companies may corner the gains. So nations should sequence reforms.
- Liberalisation may lead to crises. WDR 1990 listed Indonesia as a spectacular success in poverty removal. But the financial crisis has wiped out 10 years of gains.
- The poor lack political access, which is linked to economic power, notably assets; so they need empowerment. Aid givers should leave funds with governments and not bother with monitoring and efficiency.
The message of the WDR debate is liberalisation is effective but dangerous. So, didn't Larry Summers know?
