World Bank chief speaks on 21st century challenges
Regional-International, Economics, 3/16/2000

The following is a complete transcript of World Bank President James Wolfensohn's opening remarks at the National Press Club in Washington D.C. on March 14:

Well, thank you very much, Mr. President.

And thank all of you for the invitation to address you today on challenges facing the Bank in the 21st century. It's a very good opportunity for me to get my thoughts together about where we are going and try and convince you that the path that we are taking is one that is sensible and that may merit your support.

Let me start by setting the environment for you in which the Bank operates because it's necessary that we get a basis established before we and you can judge what the challenges are and what we should do.

Today, we have 6 billion people on the planet. Three billion of them live -- under $2 a day. A billion two hundred million of them live under -- $1 a day in what we call absolute poverty.

Two billion of them don't have any power. A billion and a half don't have any water. A hundred and twenty-five million kids don't go to school. There are too many people dying due to lack of vaccines. And the world is showing an increasing inequity, not an equity in terms of the disposition of the assets and income; in other words, "The rich are getting richer, and the poor are getting poorer."

We have waves of political problems around the world, which are well reported in the press but which have a significant impact on the poor. And we have also been through a recent financial crisis in Asia, which has challenged our financial system and our economics.

We have seen a turnaround economically in Asia, but we have not yet seen a full turnaround in the impact of that Asian crisis on poor people and on poverty. And it's in this context that we come to the next millennium and the challenges that we face, with one other very, very important component, which is that we are entering a new age of global development, not the agricultural revolution and not the Industrial Revolution, but a digital and electronic revolution, which will have enormous implications on the where we go both in the world in general, and in the developing world in particular.

We are used at this time to talk about the developing world as being the 4.8 billion people, with 1.2 billion living in developed countries.

And in that 4.8 billion people, we often forget that 2.2 billion of them live in two countries, India and China. And for the rest, they're broken up in 150 or so nation states.

And it's into that context that the bank is now working and trying to deal with the questions of poverty and trying to deal with the questions of equity, because that's our job. We're very conscious of the fact that we're the World Bank, not a world government, and that our role is support and to seek to help the developments that will lead to a better world and to less poverty.

But the other part of the suggested subject was not what we're doing now, it's what do we do in the 21st century. Well, I can't go the full length of the 21st century, but let me just take the first 25 years. To give you a sense of where we're at: 6 billion people now; another 25 years, it'll be 8 billion people. We will add 2 billion more people in that period of time. And 97 percent of them, nearly all of them, will go to the developing world. So our 4.8 billion will become 6.8 billion, and the so-called developed world will be a billion-two.

The other thing which is happening as this goes on is a slow but increasing recognition that the divide between developed and developing world is becoming much more narrow. And the first challenge for our institution is to get our donor governments and the developed country governments -- and through them and with them the people of those countries -- to recognize that the challenge of the next 25 years is not a challenge of us sitting in developed countries seeing what we can dole out to developing countries; it is in fact an integrated challenge, because what happens in developing countries affects us in developed countries.

This is a slow recognition, because you can't see it immediately in front of you. But if you think about it for a minute, and you think about the links of finance, the links of economics, the links of health, of migration, of trade, of crime, of drugs, of peace, pretty soon you are forced to the conclusion that what happens in the developing world is a significant issue for our children. In fact, I would say, for my children, that their peace and their future depends on the challenge of what happens with the 6.8 billion people just for the next 25 years. So the first challenge for us is to orient all our shareholders to understand that we have a problem together and an opportunity together.

The second thing is what to do about it. And we look at the world in which we live, and there we come to the World Bank, and look back on our history, and then look future. In our history, 50 years ago, we and the fund were the big guys on the block. We had the money. We were helping to reform a world after World War II and gradually mutated into a development institution to assist in development.

But we are no longer alone, and happily so. We have been joined by bilateral agencies, by regional banks, by institutions such as government-sponsored development agencies.

We've also come to a time when the democratic processes around the world are very different. The number of people living in a so-called democratic or market society has doubled in the last 10 years. We've gone from 1 billion people to 5 billion that live in a market economy. So we have a very different environment in which we're operating than one that is controlled by more dictatorial regimes.

The third thing that you need to realize is that in the space of the last 10 years private sector has taken an increasingly important role in terms not only of our economic life but of development.

Ten years ago the flow of funds to developing countries was $30 billion from the private sector. Nine years later it was $300 billion. Ten years ago official development assistance was $60 billion; ten years later it's $45 billion. So from being half the size of development assistance 10 years ago, the private sector is now five, six, seven times the size, depending on the year.

I give you that by way of background because it's incredibly important that you understand that these are factors which are influencing how one can do things in development and how one can impact the poor with one very large additional development, which is the growth of civil society where you have freedom. So you have no longer just the Bank and the Fund giving a lecture from the mountaintop, you have a series of international institutions. You have the private sector. You have civil society. And you have ever-more responsible, or hopefully responsible governments growing up around the world. So that the challenge for us is no longer what the bank can do; the challenge for us is how one can work with others in the process of development.

So much for the frame in which the Bank operates. Now let's look at the poor, who are the object of our exercise.

We have just completed and will have available for you outside a book that's been published literally today called "The Voices of the Poor." It's been 10 years in the making, and Deepa Narayan, who is here, was the chief editor. And we went around to 60,000 poor people in 60 countries to look at the issue of poverty. What is it we're dealing with? Is poverty something that you fix with a handout of cash? Is the issue financial? What is the nature of the problem that we're seeking to solve? Or if not solve, better put, make a contribution to the governments and to the people of countries to try and bring greater equity in their countries. Let me briefly touch on a couple of things about the challenge.

The first thing you need to know is that poverty is multidimensional. The people didn't talk so much about money, they talked about a state of well-being. They want to be respected, like all of us. They want a sense of family. They want a future for their kids. They want security. They don't want charity, they want opportunity. They want voice. They want the chance to be able to take part in their future. It is very important that we understand that poverty is not just an issue of money. It is multidimensional.

I am just back from a trip which took me to Thailand, Korea, Indonesia, East Timor and Vietnam. And in each of these countries I have been out in the middle of poverty areas: in rural areas and in city areas. The best people you meet on these trips are poor people. They have clarity. They have dignity. They have a sense of themselves and what is right for their future. And what they want is an opportunity to participate in the resolution of their problems.

If you've been in the job five years as I have, I've switched from thinking that poor people are a liability to thinking that poor people are the asset. And what we have to do in terms of all of our thinking is to not think of poor people and poverty as a great burden that we all have to bear. We have to engage the poor people in the resolution of their futures. And so it is that we are, in fact, seeking to direct our activities. Let me quickly review some of the conclusions of this study.

They said first while poverty is rarely about the lack of one thing, the bottom line is that poor constantly live with hunger.

Second, poverty has important psychological dimensions, such as powerlessness, voicelessness, dependency, shame and humiliation.

Third, the poor lack access to basic infrastructure such as roads, transportation, clean water. People realize that education offers an escape from poverty, but only if the quality of education and the economic environment in the society at large improve; in other words, that they have somewhere to go. Illness is feared because of the cost of health care. And when you're living on a dollar a day and you can't go out and earn something, the issue is not just one of being inconvenienced, it's an issue of having nothing to eat.

At last, the poor rarely speak of income but, instead, focus on managing assets and the environment, social and human. We go on to say that they don't know who to trust. The police -- they don't know whether the police are agents of oppression or agents of help, but they typically come down on the side that they're agents of oppression. They don't know, as some said, whether you trust criminals or whether you trust the police. A woman in Brazil said, "I do not know who to trust, the police or criminals. Our public safety is ourselves. We work and hide indoors."

And then there are problems indoors, as we discovered; the problems of households that are crumbling, as the men lose their sense of dignity; the huge impact of gender violence. As a woman said to us in Ethiopia, "Women are beaten at the house for any reason that may include failure to prepare lunch or dinner for the husband. They may also be beaten if the husband comes home drunk or if he simply feels like it."

I tell you these things because a dispassionate look in Washington about the structure of our institution cannot convey to you the realities of what my colleagues are dealing with every day. And it distresses me when we distract ourselves from these front-line issues and discuss it in a dispassionate manner.

For us at the Bank, the challenge in the way ahead is a challenge of humanizing our approach to poverty alleviation. And we have learned from the voices of the poor that the way to approach it is not just with dollars; you have to have a comprehensive approach to your development. It doesn't start just with money, it starts with establishing a framework in which the structure works and in which equity can prevail. It is an issue of having good and clean government; it's an issue of having good officials at the federal, state and local level; it's an issue not only having good laws, but ensuring that you have a justice system that is honest. In my trip to Philippines, Indonesia and Thailand, high on the agenda was getting honest justice systems -- high on the agenda. We regard justice as being equal for us. In so many of these countries, it is not. And imagine your powerlessness if you are poor and you know that any judge can be bought. The same is true of the financial system. If the banks are crooked, small people don't get credits.

So an important element, before you get to poverty, are these structural elements of governance, legal systems, justice systems, financial systems. And as comes out in the poor reports, corruption at the center is the corrosive force. And don't think that corruption is something just for the big people. The people who suffer most from corruption are poor people. If they want to get government assistance and they don't have the dollars to get it, they get nothing. And so then the difference is not between a big car and a small car, the difference is life itself. So the issue of corruption for poor people is not a theoretical issue, it is an issue of survival.

And then you go on and you look at the elements in your process -- education and knowledge. As was said in their remarks, it is a key if you've got somewhere to go, but you must get education, you must get knowledge, and you must have health care, because if you don't have health care for young kids, they come to school already maimed. In Bangladesh, 25 percent of the kids are already physically affected because of lack of food. So the linkage between education and health becomes very clear. And if you build schools and there are no roads and there is no water to the school and there is no power, and you can't get the kids there, and when they get there there's nothing to teach them with because there are no teachers and no curriculum, the point that is made by the poor, and the point that is recognized by us now, is that it is no longer possible to think of what we do in any singular sense by a project here and a project there.

Countries must have a comprehensive view of development. We must have a comprehensive view of development, and you move on to environmental strategies, and cultural strategies, the preservation of culture; a rural strategy, an urban strategy. In the next 25 years, 2 billion more people will move to cities. There will be 19 mega-cities in Asia in the next 15 years, 10 million people or more, presenting whole new challenges in terms of management. And then, of course, for countries, there are special considerations relating to the countries themselves.

The challenge we at the Bank are taking is to try and work with governments, to try and work with poor people, to get community development, because we believe passionately that the future of development and the future of poverty cannot be solved by projects here and projects there. They need to be, in terms of strategy, set by the people themselves, transparently, as to what they need, with appropriate gradations of what you do today, what you do tomorrow, so that you can get an approach that goes forward.

So remember what the poor say. It is not just a question of food; it is a question of a multi-dimensional approach. And here I must pay tribute also to the press, because the poor people do not trust governments. Interestingly, they only trust some NGOs [non-governmental organizations], and the extent of NGOs is less than we expected. We're working with the churches now around the world because churches are everywhere and we need to try and engage the people that are trusted in the communities.

But the simple fact is that as we move forward into this process, we need to be reaching out and getting communal development on an integrated basis. And the press and the media have the capacity to throw light on what is being done in those communities and in those countries. The best fight against corruption is a combination of changing the rules and regulations so people don't have so much opportunity for corruption, but it must be paralleled by light on the truth, and here we at the Bank are working extensively now with journalists around the world in terms of training, in terms of courses on trying to deal with the questions of getting the facts out on the table.

I say this because you are not spectators. You are participants. The point of the challenge for us at the moment is a challenge of participation and a challenge of an approach which is holistic, which engages the people themselves and which is on more than one front at a time -- I should have said earlier, and did not -- but emphasize also the crucial importance of economic policy and growth. It is simply not possible to alleviate poverty without growth.

So central to any consideration are the considerations of our friends across the street in the Fund and ourselves. To try and assist governments with policies and, dare I say, with openness in terms of trade and the ability to get the benefits of hard work, that this economic dimension is at the base of all that I've described to you. And with that, of course, is debt forgiveness and many of the other activities that you know we are deeply concerned with.

So then we come to my final point. The challenge for us in the 21st century is to first of all make all of you and all of us in the Bank and elsewhere recognize that the challenge of the 21st century is a challenge of equity, is a challenge of poverty. This is not an issue just for the poor countries. We may avoid it as having an impact on us, but our children will not. And you will not see it in neon lights, because it happens slowly.

We need you to help us put the light of reason on this slow burn of what is going to happen inevitably, inevitably, in the next 25 years.

Secondly, I would say that we have to work together -- with governments, with private sector and civil society. We've had far too much name calling. We've had far too much putting people in boxes, saying the Bank is no good, the Fund is no good, NGOs are no good, private sector's no good, nobody's any good. It's a moment to try and work together and see what is good with all of us.

And the third thing I would say to you is that it is the moment to be supportive not only of governments but of the people that we're trying to assist, the 3 billion people living under $2, and the 1,200,000,000 living under $1, and the 2 billion who are coming in the next 25 years. Let's think of poverty as a challenge for all of us, and let our nation give the lead in terms of humanity, in terms of trust, and in terms of social justice.

Thank you.

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