Global Policy Forum

World Development Indicators 2000

Washington - The goal of halving by 2015 the proportion of the world's people who live in extreme poverty can still be reached if economic growth resumes and inequality does not increase. But progress is uneven: while the poverty rate is falling in some large countries, especially China, in many other countries, especially in Africa, the proportion of people living in extreme poverty is rising. Moreover, the absolute number of people in poverty has remained stubbornly high, according to a new World Bank report released today.

According to World Development Indicators 2000 (WDI), the World Bank's annual statistical portrait of people and the state of their world, a sixth of the world's population primarily the people of North America, Europe, and Japan received nearly 80 percent of world income, an average of $70 per day, in 1998. At the same time, the 57 percent of the world's population in the 63 poorest countries received only 6 percent of world income, an average of less than $2 per day.

Each year the WDI reports on progress toward a wide range of international development goals. These include halving the proportion of people living in poverty; reducing infant and child mortality rates by two thirds; cutting maternal mortality rates by three quarters; and enrolling all children in primary school by the year 2015. Aims also include achieving equal enrollments of boys and girls by 2005 and providing access to reproductive health care to all who require it. The goals also call for all countries to adopt plans to arrest and reverse environmental degradation.

"This year's World Development Indicators tell us that achieving those goals will be difficult but still attainable in many countries. Progress in reducing poverty rates stalled, especially in Asia, as a consequence of the financial crisis, and in Europe and Central Asia income distribution worsened. Even so, the goal of reducing poverty rates to half of their 1990 levels can still be achieved in most regions, if growth resumes without further increases in inequality, " writes World Bank President James D. Wolfensohn in the foreword to the new report.

Progress has been much more rapid in some countries than in others. In East Asia, the proportion and number of people living in extreme poverty has fallen sharply since 1987, mainly because of progress in China. But almost all other regions saw the number of poor people increase: in South Asia the number of people in extreme poverty rose from 495 million to 522 million, while in Sub-Saharan Africa the number of very poor people increased by about 48 million, to 291 million.

Worldwide, a staggering 1.2 billion people subsist on less than a dollar a day. This number has remained roughly constant from 1987 to 1998, the most recent year for which data are available. But because world population surged by nearly a billion to six billion people in 1999, the proportion of people living in such extreme poverty has declined, from 28 percent to 24 percent.

Other measures of poverty tell a similar story. The proportion of underweight childrenan indicator of malnutritionfell during the 1990s from an average of 32 percent in all developing countries to approximately 27 percent. Such progress is encouraging, but slower than hoped for. The largest absolute decrease was recorded in Asia and the largest relative decrease in Latin America. But in Africa, the proportion of underweight children increased over the decade.

Most countries have succeeded in reducing infant and under-5 mortality ratessometimes substantially. Between 1990 and 1998, 17 developing countries reduced their under-5 mortality rate fast enough to meet the international development goal of cutting mortality rates by two thirds by 2015. But over the same period, 13 countries experienced worsening rates; many of these were located in Africa where civil strife and the spread of HIV/AIDS have compounded the effects of poverty.

"The numbers in this book tell us that people in most places are living longer, but that in countries gripped by the HIV/AIDS epidemic, life expectancies are going down. Average incomes continue to rise for most developing countries, but some of the poorest have slipped backwards...we can also see that the developing countries are becoming more important participants in the global economy," said Shaida Badiee, the director of the World Bank's Development Economics Data Group, which compiles the annual WDI. "Without good statistics, the development process is blindpolicymakers cannot learn from their mistakes, and the public cannot hold them accountable."

Economic trends

The world's two most populous countries achieved impressive growth in Gross National Product (GNP) per capita in 1998: China registered 6.4 per cent and India registered 4.3 percent. Both countries are estimated to have achieved similarly high growth rates in 1999. The highest growth in 1998 was tiny Equatorial Guinea, where GNP per capita soared 31.2 per cent due to oil production.

In 1998, South Asia's 3.7 percent growth of GNP per capita was highest among the six developing country regions, helped by India and Bangladesh's (4.2 percent) high growth. Even though China did well, the financial crisis in East Asia caused contractions in several neighboring countries, resulting in a decline in real GNP per capita in the region (-2.6 percent) for the first time since 1990. Latin America and the Caribbean as well as the Middle East and North Africa registered small gains, whereas the developing and transition economies of Europe and Central Asia and Sub-Saharan Africa registered a small decline.

Even so, over the period 1990 to 1998 the fastest growing region in terms of GNP per capita was East Asia and Pacific (6.4 percent), followed by South Asia (3.8 percent). Latin America and the Caribbean grew by about 1.8 percent, whereas the Middle East and North Africa managed to keep up with the population growth (.4 percent), and Sub-Saharan Africa fell slightly behind (-.3 percent).

The service industry has been growing in developing countries. Not only are the fast growing regions of East Asia and South Asia shifting towards services from agriculture, but the Sub-Saharan African countries have also shifted towards the production of services. However, the shift in Sub-Saharan Africa has been at the expense of industry, with the share of agriculture remaining more or less constant at 17 percent. This trend is also reflected in the growth of service exports.

Both in terms of total GNP and value added in manufacturing, China, Brazil, Korea, Mexico, and India rank in the top 15 countries of the world. China ranks 7th in terms of total GNP, and 4th in terms of value added in manufacturing. Luxembourg had the world's highest incomes, with per capita GNP of $45,100, while Ethiopia had the lowest, a mere $100 per capita GNP.

Globalization and the Poor

The numbers in the WDI underline that while globalization is creating new opportunities for the poorest people in the world to improve their lives, it has also brought new risks that could further widen the immense gap between the haves and have-nots. In general, despite the setback in the late 1990s, the world's economy continues to become more integrated, and developing countries are realizing the benefits. Lower trade barriers in industrialized countries have stimulated developing country exports, creating the jobs and economic growth needed for sustained poverty reduction. They are exporting more manufactured goods to high income countries and expanding trade with other developing countries.

Developing countries that have opened their markets for telecommunications services have benefited from improved access to a rapidly growing global communications network. But there is an emerging "digital divide," not just between rich and poor countries, but among developing countries themselves. High income economies have more than 300 personal computers per 1000 people, while developing countries have only 16. Among lower-middle income countries, Jamaica has 39 PCs per thousand while Guatemala has only 8.

But other aspects of globalization-especially too rapid liberalization of the financial sector-have sometimes hurt the poor. Recalling the impact of the global financial crisis that began in East Asia in 1997, the WDI 2000 concludes that "opening financial services can lead to disaster if the ground isn't properly prepared."

Debt relief and aid

The WDI 2000 says that more rapid reductions in poverty will require improved policies in developing countries, especially those that are lagging farthest behind, as well as increased support from the industrialized countries for poor countries that adopt the necessary reforms. To reduce the debt of poor countries with good policies, donors launched the Heavily Indebted Poor Countries Initiative (HIPC) in 1996, the first time that the World Bank and the International Monetary Fund (IMF) have forgiven debt. The WDI reports that the program was intensified last year: the number of potential beneficiaries expanded from 29 countries to 41, and the net present value of potential debt reduction more than doubled, from $12.5 billion to $27 billion. According to the WDI, the World Bank write-off could pass $12 billion.

Fresh aid to the HIPCs now exceeds their debt service, the report says, leaving them with net inflows per person among the highest in the world. In 1998, net aid amounted to $117 per person in Nicaragua, $82 in Guinea-Bissau, $68 in Mauritania, and $61 in Mozambique. In contrast, it was only $10 dollars in Bangladesh and $2 in India. Even so, the share of industrialized country GNP provided as aid to poor countries has declined over the past decade. For example, the share of GNP given as aid by 22 members of the Development Assistance Committee of the Organization for Economic Cooperation and Development (OECD) has fallen from 0.3 percent in 1993 to 0.22 percent in 1997, and has only turned up slightly to .24 percent in 1998.

Environment

The international development goals also call for reversing trends toward environmental degradation. More than one fifth of the world's tropical forests have been cleared since 1960. According to the WDI, more than 100,000 square kilometers of forest are lost each year worldwide, threatening the habitats of both animals and plants. Water withdrawals have increased tenfold in this century, and now water stress and water scarcity affect almost half a billion people; in 25 years this number will rise to 3 billion. Today, more than 46 percent of the world's population lives in urban areassome 60 percent increase over the 1980 figure, contributing to more traffic, congestion and pollution. Although the number and proportion of poor people in cities are expected to grow rapidly in the next decade, the majority of the poor will continue to live in rural areas, depending to a large extent on agricultural production.

Clare Short, U.K. Secretary for International Development, describes the value of the statistics contained in the World Development Indicators 2000: "We live in a time when it is possible to make massive reductions in poverty. But to do so, we must turn the development efforts of the international community from an obsession with inputs and generalized rhetoric about poverty to a clear focus on outputs and year-on-year effectiveness...measured against our agreed goals in each and every country," said Short.

World Development Indicators contains more than 800 indicators, organized in six thematic areas: World View, People, Environment, Economy, States & Markets, and Global Links. The data cover 148 economies and span more than 30 years. A supplemental table for 58 smaller economies is also included. Selected tables are available on the World Bank's web site

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