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Also available: Press Conference Transcript

WASHINGTON, September 12, 2000  Major reductions in poverty are possible but achieving these will require a more comprehensive approach that directly addresses the needs of poor people in three important areas: opportunity, empowerment, and security, according to the World Bank's latest World Development Report 2000/2001: Attacking Poverty.

The new study - the World Bank's most detailed-ever investigation of global poverty - adds that economic growth is crucial but often not sufficient to create conditions in which the world's poorest people can improve their lives.

"This report seeks to expand the understanding of poverty and its causes and sets out actions to create a world free of poverty in all its dimensions," World Bank President James D. Wolfensohn writes in the foreword to the report. It both builds on our past thinking and strategy and substantially broadens and deepens what we think is necessary to meet the challenge of reducing poverty."

More than two years in the making, the World Development Report 2000/2001 draws on a large volume of research, including a background study, Voices of the Poor, which systematically sought the personal accounts of more than 60,000 men and women living in poverty in 60 countries. In addition, the report's authors conducted extensive research and consultation with a wide array of governments, non-governmental organizations, civil society groups, universities, development think-tanks, private business groups, and others around the world. An on-line discussion of an early draft of the report produced hundreds of responses from 44 countries.

Listening to the voices of the poor

The experiences of poor people, described in their own words, underpin the three main themes:

• "At first I was afraid of everyone and everything: my husband, the village sarpanch, the police. Today I fear no one. I have my own bank account, I am the leader of my village's savings group . . . I tell my sisters about our movement. And we have a 40,000-strong union in the district. - From a discussion group of poor men and women, India, 1997
• "Poverty is humiliation, the sense of being dependent on them, and of being forced to accept rudeness, insults and indifference when we seek help." - A woman in Latvia, 1998
• "We face a calamity when my husband falls ill. Our life comes to a halt until he recovers and goes back to work." - A woman in Egypt, 1999

The report builds on the view that poverty means not only low incomes and low consumption but also lack of education and poor nutrition and health. Based on the testimony of poor people themselves, and changes in thinking about poverty, the report goes further and expands the definition of poverty to include powerlessness, "voicelessness," vulnerability, and fear.

"These different dimensions of poverty interact in important ways," says World Bank Chief Economist and Senior Vice President, Nicholas Stern. "We know that economic growth is crucial to sustained poverty reduction. But we also recognize the fundamental role of institutional and social change to the strength of development processes and the inclusion of poor people."

The report recommends that developing country governments at all levels, donor countries, international agencies, NGO's, civil society, and local communities, mobilize behind three priority areas:

• Opportunity: Expanding economic opportunity for poor people by stimulating economic growth, making markets work better for poor people, and working for their inclusion, particularly by building up their assets, such as land and education.
• Empowerment: Strengthening the ability of poor people to shape decisions that affect their lives and removing discrimination based on gender, race, ethnicity, and social status.
• Security: Reducing poor people's vulnerability to sickness, economic shocks, crop failure, unemployment, natural disasters, and violence, and helping them cope when such misfortunes occur.

"Advances in these areas are complementary. Each is important in its own right, and each enhances the others," says Nora Lustig, Director of the World Development Report 2000/2001. "We hope that this framework will be helpful to countries in developing their own poverty-reduction strategies according to their own circumstances. There is no universal blueprint."

According to Lustig, these priorities can allow the poor to have greater independence and security in their day-to-day lives. For example, empowering women and other socially disadvantaged groups expands their range of economic opportunities. Furthermore, strengthening poor people's organizations and their involvement in decision-making processes, enables them to press for improved services and for policy choices that respond to their needs. Finally, making poor people less vulnerable makes it easier for them to take advantage of potential market opportunities.

Poverty in a world of plenty

At a time of unprecedented wealth for many countries, 2.8 billion people - almost half the world's population - live on less than $2 a day. The report says that of these people, 1.2 billion live on the very margins of life, on less than $1 a day. In high-income countries, fewer than one child in 100 dies before reaching five years of age, while in the poorest countries, the number is five times higher. In well-off countries, fewer than five percent of children under the age of five are malnourished; in poorer countries, as many as 50 percent of the children suffer from eating too little food.

"This destitution persists even though human conditions have improved more in the past century than in the rest of history," the report notes. "Global wealth, global connections, and technological capabilities have never been greater."

But the distribution of these gains is extraordinarily unequal. The average income in the richest 20 countries is 37 times the average in the poorest 20 - a gap that has doubled in the past 40 years.

Progress in poverty reduction has varied widely across regions. In East Asia the number of people living on less than $1 a day fell from around 420 million in 1987 to around 280 million in 1998. But in Sub-Saharan Africa, South Asia, and Latin America, the numbers of poor people have been rising steadily. In the countries of Eastern Europe and Central Asia in transition to market economies, the number of people living in poverty has risen 20-fold.

Within countries, too, poverty rates often vary enormously. In some African countries, infant mortality rates are much lower among politically powerful ethnic groups. In Latin America, indigenous groups have far less schooling than non-indigenous groups. In South Asia, women have only about half as many years of education as men, and middle school enrollment rates for girls are only two-thirds those of boys.

The report's three main sections on opportunity, empowerment, and security include examples of successful initiatives that address these and other problems afflicting poor people. These include such diverse examples as a Moroccan project called the "Virtual Souk" which allows poor traders and artisans to sell their goods around the world on the Internet; a new approach to land reform in Brazil; "affirmative action" against caste-based discrimination in India; a stronger female voice in policymaking through women's budget initiatives in southern Africa; providing a social safety net and other emergency protections for people at times of crisis in South Korea; and social pensions in Chile and Namibia.

Global initiatives to reduce poverty

Action at national and local levels will often not be enough for rapid poverty reduction. There are many areas that require international actionespecially by high-income countriesto improve the prospects for poor countries and their people. An increased focus on debt relief and making development aid more effective are part of the story.

Equally important are actions in other areas, such as expanding the access to developed country markets, promoting the production of public goods that benefit poor people such as vaccines for tropical diseases and agricultural research, combating HIV/AIDS, enhancing global financial stability, closing of the digital and knowledge divides, enabling the participation of poor countries in international discussions, and fostering global peace.

"I expect the deeper understanding of poverty in this report will lead to new areas of action and new policies," says Chief Economist Stern. "Expanding economic opportunities overall - that is, promoting growth that directly benefits the poor - remains central. Market-oriented reforms, institutional development and investments in health, education and infrastructure are crucial to its delivery. But we must go further and act directly to increase empowerment and security if we are to accelerate the benefits of growth for the poor."

In conclusion, Stern says if the developing world and the international community work together to combine these insights with real resourcesboth financial and those embodied in people and institutionsthe 21st century will see rapid progress in the fight to end poverty.