World Bank Group President James D. Wolfensohn on Tuesday put governance issues at the center of development and called for “coalitions for change” to address global poverty, saying that the causes of financial crises and poverty are one and the same.
“Countries may come up with sound fiscal and monetary pocy,” Wolfensohn warned, “but if they do not have good governance, if they do not confront the issue of corruption, if they do not have a complete legal system which protects human rights, property rights and contracts, which gives a framework for bankruptcy laws and a predictable tax system; if they do not have an open and regulated financial system and appropriate regulation and behavior that is transparent, their development is fundamentally flawed and will not last.”
He said that the Bank would give great emphasis in the years ahead to working with governments to strengthen structure and governance. “With poverty reduction front and center of our agenda, our work at the rockface must be governance, institutions, and capacity,” he added.
The Bank plans to work with United Nations Development Programme and others in the next few months to look at what each is doing on governance and capacity building, assess strengths and experience, and decide how to move ahead.
The Bank already spends over $5 billion a year on governance issues—civil service reform, budget management, tax administration, legal reform, judicial reform, and institution building, he said. The institution is also now working with more than two dozen countries on anti-corruption programs, including training judges, organizing public national workshops, and training investigative journalists.
In his speech to the 1999 World Bank/IMF Annual Meetings in Washington, DC, the Bank’s president also said that “we need global rules and global behavior” and called on the global community to build “a new international development architecture to parallel the new global financial architecture.”
Such an architecture, he said, should focus on breaking the chains of debt, but should go further and break the chains of poverty. It should work towards a trade system with rules and norms that are fair, comprehensive and inclusive—“a development round for the 21st century.” The architecture should focus on harnessing new vaccines to eradicate AIDS, malaria, TB and polio; and should work to make the information revolution truly universal.
Calling on all players to build “coalitions for change,” Wolfensohn said, “Globalization can be more than the unleashed forces of the global market. It can also be the unleashing of our combined effort and expertise to reach global solutions.”
Wolfensohn reminded his audience that last year in his Annual Meetings speech he called for social and structural issues to be taken together with macroeconomic and financial issues. He said he welcomed the “historic agreement with the IMF to have a common Poverty Reduction Strategy developed with client governments. We will take a balanced approach linking macroeconomic and financial parameters with the human, structural and social aspects in one document that will guide the programs of each institution.”
The World Bank’s chief reported that the Comprehensive Development Framework (CDF), which the Bank launched last year, is now being piloted in 13 countries. “After discussions with many ministers, I believe that the approach of the CDF is now widely supported. Not as a blueprint, but a process through which we pursue long-term, results-driven development with the country in the driver’s seat and in partnership with the broad development community.” Wolfensohn added that through the CDF, “we are joining with others to build a new generation of genuine partnerships.”
Wolfensohn also reviewed what the development community has learned about development. “We have learned that development is possible but not inevitable, that growth is necessary but not sufficient to ensure poverty reduction. We have learned that we must take the social and the structural hand-in-hand with the macroeconomic and the financial. We have learned that for development to be real and effective, we need local ownership and local participation. Gone are the days when development can be done behind closed doors in Washington, or Western capitals, or any capital for that matter.”
Quoting President Mkapa of Tanzania who recently said in Stockholm that it is the people in developing countries “who must be owners of their development; not just the beneficiaries, but doers of development,” Wolfensohn said that “local ownership and involvement must be central to our architecture.” He interspersed his speech with excerpts from “Voices of the Poor”—a year long study the Bank has undertaken with NGOs to talk to over 60,000 poor men and women in 60 countries about their hopes and aspirations and the issues they have identified as being most central to their lives.
Helpful links: Click here for the transcript of Wolfensohn’s speech. To see the transcript of IMF Managing Director Michel Camdessus’ address to the Board of Governors at the 1999 World Bank/IMF Annual Meetings, click here.
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