ECONOMY: World Bank Touts Globalisation’s Anti-Poverty Record

By Emad Mekay Reprint | | Print |

Emad Mekay

WASHINGTON, Dec 6 2001 (IPS) - Globalisation and free trade are emerging as antidotes to global poverty and inequality, the World Bank said Wednesday with more than a hint of ‘we told you so’.

“The benefits of integration and free trade are real and powerful,” Nicholas Stern, the Bank’s chief economist, told reporters as the lending agency launched its latest study, “Globalisation, Growth and Poverty: Building an Inclusive World Economy.”

“Globalisation often has been a very powerful force for poverty reduction, but too many countries and people have been left out,” Stern acknowledged.

The reasons have had less to do with the cut and thrust of the global marketplace, he asserted, and more to do with weak governance and policies in two sets of countries: Those poor countries which, by opting out of integration, must rely increasingly on dwindling development assistance and those wealthy economies which maintain high tariffs and other barriers against poor ones.

The Bank’s 158-page report set out to show that 24 developing countries that increased their integration into the world economy over the two decades up to the late 1990s – China and India being the prime examples – have achieved higher income growth, longer life expectancy, and improved education as a result.

These countries, home to some three billion people, enjoyed five percent average growth in per capita income in the 1990s compared to two percent in rich countries.

At the other end of the spectrum, the report said, are some two billion people – particularly in sub-Saharan Africa, the Middle East, and the former Soviet Union – who live in countries that are being left behind.

The “non-integrators”, as Bank officials call them, have seen their economies shrink and their poverty rates rise, according to the report.

“Some people claim that this process of integration is bad for poor people and that puts you up in favour of protectionism. What we are saying is wait a minute, the evidence is that this process has been very positive for many developing countries,” said David Dollar, co-author of the report.

The Bank’s triumphalism missed the point, said Rick Rowden, of the Washington-based pressure group Results.

“Timing, pacing, sequencing of trade liberalisation and many other qualities of the character of the policies states choose in their process of integration are the real issues at hand in this debate, not whether or not to integrate,” Rowden said. “So, it’s really an unfair and disingenuous way they [Bank officials] are attempting to frame this debate.”

“Its like asking, ‘Is eating good for you?’ Well that’s absurd, because it depends how much and what you are eating – grains, fruits and vegetables in three balanced meals or only snacking on potato chips all day,” he added.

Numerous anti-poverty activists have voiced frustration with the dominant vision of economic globalisation, saying it lacks a humane face. Rather than balance the agenda, they have long said, the World Bank merely helps to expand opportunities for and the influence of Western multinational corporations – often at cost to cash-strapped nations ill-prepared for rapid liberalisation.

Rowden argued that countries seek to liberalise only after they have achieved a certain level of domestic industrial development and “not before – unless it’s imposed on them by IMF (International Monetary Fund) and World Bank loan conditionality or WTO (World Trade Organisation) membership requirements.”

Some intellectuals, civil society groups and developing countries also have contended that, contrary to the Bank’s advice, open trade and the process of globalisation are widening gaps between rich and poor, both within and between countries.

Others also have complained that globalisation encroaches on domestic policy-making space even as it cuts a wide swath across the social and cultural terrain.

Bank officials would have none of it. They maintained that countries that introduced reforms in many areas as they opened up to trade, including protection of property rights and universal education, succeeded in improving their economic performance, narrowing the gap with rich countries, and avoiding any systematic increase in inequality within their own borders.

“The special interest groups want to fight for their own interests and that’s fine. This is democracy. But do not pretend you are helping poor people in the Third World. You are not,” said Dollar. “Getting this message out, we hope, will have some effect on the debate.”

In the study he co-authored with Paul Collier, the bank’s spokesperson on development economics, Dollar laid out a seven- point plan to help all developing countries take more practical steps to benefit from globalisation while managing the risks.

The plan – which closely resembles previous blueprints issued by the lender – calls on poor countries to improve their investment climates and social safety nets. It urges rich countries to open their markets to exports from developing countries and to slash their large agricultural subsidies, which undercut poor country exports. And it argues for a substantial increase in development assistance, particularly to address problems in education and health.

“What this means is simply more of the same of what they’ve already been pushing for 20 years,” said Rowden. “Ask the Jamaicans, who’ve had their industries totally wiped out by multinational corporations, if what they think they need is yet more free trade.”