Global Policy Forum

By Shirin

The level of equity in a country is a major determinant in its long-term development, says the World Bank's Chief Economist and Senior Vice President for Development Economics, Franí§ois Bourguignon.

Speaking at the release of the Bank's World Development Report (WDR) 2006 in Washington, Bourguignon said that "there is a complimentarity between equity and the rate of growth" and that "by generating more equity, we can generate a more efficient society". The WDR is an annual publication of the Bank that sets the tone for debate over sustainable development issues and policies. It is a reflection of the thoughts of Bank economists for its development policies in the future and their recommendations for countries around the world. The theme of this year's report is equity and development.

According to the Bank's President Paul Wolfowitz, equity can be defined as "equal opportunity" irrespective of "race, gender, social and family background, or country of birthí  [and] avoidance of deprivation in outcomes, particularly health, education, and consumption levels". The report uses several examples and case studies to argue that equity has a significant bearing on development. For instance, it considers the lives of two South African children born on the same day who end up living two totally different lives.

One child is black, female and from a poor family, while the other is from Cape Town and is white and male. The first has a life expectancy of 18 years less than the other, and just one year of schooling as opposed to 12 years for the second. With respect to disparities between different countries, one of the comparisons given is between infant mortality rates of the United States and Mali. Of every 1,000 children born in the U.S., seven die in their first year -- while 126 of every 1,000 Malian children meet the same fate.

The report also analyses the role of social stigma and stereotyping on people's performance. For instance, in a case study from India, children of lower castes performed poorly in tournaments when their caste was announced publicly. "If a similar inhibition of talent occurs in the real world, this implies a loss of potential output owing to social stereotyping," the report says.

The report cites markets as mechanisms that can address the problem, saying that inequity most often happens "when markets are missing or imperfect", and that "[C]orrecting the market failures is the ideal response". But some critics disagree. "Here we have the fundamental contradiction of the World Bank on display for all to see," said Soren Ambrose of the 50 Years Is Enough Network based in Washington.

"Brazil has been cited as an example of where equity is at the lowest. Interestingly, Brazil is one of those countries where Bank and its market-oriented policies have been practiced. With this report, the Bank tells a story that makes it seem as though it is a spectator, when its policies are largely responsible for the inequity in the first place."

The discussion at the release of the report focused on differing development strategies of industrialised countries. Notably Scandanavian countries were singled out as success stories for social benefits. "But these countries were able to invest in social spending in ways that countries in Africa cannot, due to IMF policy conditionality which limits spending on health care and education," pointed out Rick Rowden, a policy analyst at ActionAid USA. "Privatisation of water, health care and education means that they are not accessible to the poor. This means that the poor do not have the same opportunities as the rich in an economy that promotes privatisation."

"If the goal is equality and equal opportunities, it will not come through IMF and World Bank privatisation policies," Rowden added in an interview. One of the most important determinants of a person's development is gender. The report says that women have less chance to excel than men due to the limited opportunities available to them. This is an outcome of the gender bias in society that delegates different roles to women and men.

"Unless there are policies in favour of the poor of which the majority is women, nothing will really change," Ritu Sharma of the Women's Edge Coalition based in Washington told IPS. "Institutions like the World Bank should do research before launching their programmes to ensure that their policies are poor-friendly. It is common sense and logic. After all, they are supposed to have all the top economists."

It seems that a world in which equal opportunities lead to equal development will only come with a serious shake-up of the present economic system that favours rich countries and people. What the WDR is proposing can become a reality only if people-friendly and not profit-friendly policies are put in place, development activists stress. Indeed, as a journalist commented at the release of the report, it requires a "revolution" to do so. In the words of one of the two lead writers of the report, Francisco H. G. Ferreira, the Bank is "asking for a revolution but a patient, peaceful and pro-market revolution".

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