Washington, DC, April 20, 2002
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MS. ANSTEY: Welcome, ladies and gentlemen, to the press conference launching the World Development Indicators, which is our annual look at the state of development around the world.
This year, we are also releasing a supplement on tracking the progress report on reaching the Millennium Development Goals, and we have--let me showcase our wares--we also have a little data book and a World Bank Atlas showing progress by maps.
Let me remind you that this press conference is embargoed until 11 a.m., and let me introduce you to our distinguished panel.
To my left is Nick Stern, who is Chief Economist at the World Bank, and he will be giving you an overview of the report and what it means. To his left is Eric Swanson, who is program manager for the Development Data Group, who has helped put together this volume of indicators; and to his left is Shanta Devarajan, who is the Chief Economist for the Human Development Network, which covers education, health, population, nutrition, and social development.
So let me open it up by asking Nick to make some comments.
MR. STERN: Good morning. Let me also thank you very much for coming.
As Caroline said, this is about the World Development Indicators, this volume here, and what I want to do is to place this quantitative statistical analysis in the context of Monterrey and moving forward from Monterrey, because the scene this weekend--and you'll hear it from many and certainly from us--is that this meeting is about going from the words of Monterrey, the successful words of Monterrey, to action.
I'll make five brief points. First, what was Monterrey?
Well, it was a commitment, a deepening of the commitment to partnership for development, with mutual responsibilities--responsibilities in the poor countries for policies, institutions, and governance. That is one part of the story, and let's recognize how strongly developing countries have been moving ahead on that front. Policies and governance have gotten a lot better. Inflation rates, for example, are half what they were 10 or 15 years ago; markets are much more open; and growth rates in developing countries in the 1990s of income per capita on average have been above those for the richer countries.
The developing countries are fulfilling their part of the mutual responsibility.
The other two parts of mutual responsibility are trade and aid, and I will have a little to say about both of those. But let us recognize that in Monterrey, there was a turnaround on the aid front. Aid levels in real terms from the richer countries had been declining during the 1990s; that was turned around in Monterrey, and that is a very important step forward. And actually, $12 billion a year was promised from the rich countries in Monterrey compared with aid levels currently around a little above $50 billion. So that was a significant step forward; it was a step in the right direction, when previous steps had been steps on the aid front in the wrong direction.
But let us recognize that that it is considerably smaller than the $50 billion or so that would be required with the changes in the developing countries to reach the Millennium Development Goals, so it was a small step in the right direction, but only a small step, and we have to go further.
But my second point is that because aid is scarce, and it is less than we need to reach the Millennium Development Goals, it has to be used wisely and well. That means getting aid behind those who use it well, those who can use it for growth and poverty reduction, but it also means helping to change policies and governance in countries where those are not so conducive to growth and poverty reduction.
So we have to use aid well; we have to allocate it better. And it is the case that aid has been allocated better during the 1990s, and it has become still more effective because it has been allocated better in the 1990s.
But we have to go beyond the allocation, and we also have to think about how it is used, and it is particularly important to harmonize. There are many multilateral donors, there are many bilateral donors. Small developing countries often have to make thousands of reports, several thousands of reports, a year on the aid that they use. There are hundreds of thousands of projects. The importance of coordination is fundamental if we are to use aid still more effectively than it has been used in the past.
My third point is that aid is not just about growth and the poverty reduction that growth brings. What we must also do is to use aid, use external resources, help promote policies so that we make progress on the human development front also. That is why the Action Plan on Education which will be discussed at the Development Committee tomorrow is so important, and what we propose there is something like a third or a quarter of these new resources of $12 billion that I mentioned should be allocated to education, and we have a lot to say on how that will be well-spent. That is another example of what we mean by "from words to action."
My fourth point concerns trade. We made a small step on aid in the right direction. Let's make a big step on trade. Doha opened the doors, and it is very good that it opened the doors. But the difficult work lies ahead, and we have to make strong progress. We do not have to wait for the detailed negotiations of the WTO important, of course, as those are. We can make progress directly.
And let me give you a feel for just what making progress means. Currently, subsidies on agriculture in rich countries are well over $300 billion a year. That is roughly the same as the GDP of Sub-Saharan Africa; it is around six times what the rich countries have been giving in aid. These are enormous. They are a big drain on the taxpayer--on the taxpayers of the rich countries--and they are seriously damaging to the interests of poor countries. It is time for really serious work on the reduction of agricultural subsidies for the benefit of the rich countries themselves, because they can use those resources much better, but particularly important in this case for the benefit of poor countries.
Let me give you another feel for just how big this problem is. Half of United States tax revenue comes from clothes and from shoes--sorry--half of the tariff level, half of the tariff level, half of the revenue on tariffs, comes from clothes and shoes. Those are particularly important of course in the budgets of poorer households. So it is a regressive tax from the point of view of the consumers of the United States. Single-parent families spent roughly twice as much on these items as a fraction of the budget as two-parent families. So it is a regressive tax, this tariff on clothes and shoes that I am talking about from the point of view of the U.S.
Tariffs also in the U.S. are two to three times on the products of poor countries than they are on average, so it is a regressive tax, these tariffs in the U.S. from the point of view of poor countries as well.
Now let me tell you a bit about nontariff barriers, because it is not just about tariffs. And here, let me choose an example from the EU.
Mauritania, the very poor country in Africa, was getting quite successful at making cheese from camel's milk; they won prizes in a German cheese fair and had good prospects in selling camel's milk inside the EU. That camel's milk comes from nomads, 70 percent of whom--70 percent of whom--live on below $1 a day. There was some searching as to what tariff level was appropriate for camel's cheese, and it was decided that it was one of the highest tariff levels on cheeses that should be imposed.
But that wasn't the main problem. The main problem was that it was decided that the hygiene requirements were such that these camels had to be milked mechanically--a bit of a challenge for a nomad in Mauritania. I don't believe there is any evidence that camels can have foot-and-mouth disease, or hoof-and-mouth disease as you call it here, and nevertheless, essentially what was a very promising export line in a very poor country was stopped on that kind of technicality. That is a nontariff barrier.
Let me give you another one also from the EU. Very recently, there has been a requirement that pesticide levels have to be monitored across a whole range of foods. Now, African countries on the whole don't use much pesticides, but they have not got the technical ability to monitor those pesticides. The result is that food exports from 43 countries, many of them African, were essentially closed in the European Union. That is what we mean by a nontariff barrier.
The EU, the United States, and Japan can act on all these things right away. They don't have to wait for WTO negotiations to do this. That is what we mean by "words to action" on the trade front.
So let me make my fifth point and pass on to my colleagues. In order to translate words to action effectively, we have to know where we are and where we are going, and we have to know how to measure results. That is why this kind of publication is so important. It is key to this process of moving from words to action. It is part of the leadership that the World Bank offers in moving from words to action.
So let me thank you and pass over to Eric Swanson.
MR. SWANSON: Thank you, Nick, and thank you all.
The World Development Indicators comes out each year. We view it as a tool that we are giving you, putting in your hands, to help you do a better job of monitoring what we do, and this report this year on "Progress on the Millennium Development Goals" is very much in that spirit, to give you more information and to let the whole world really understand better what we are doing.
The Millennium Development Goals, you are going to be hearing a lot about, I think, in the next decade up until 2015. The significance of them is that this is a set of goals that have been agreed by all the member states of the United Nations and by all the major development agencies. We have pledged to work together toward these very specific goals.
There are eight of the goals--and I want to take you through a quick tour of them using some of the illustrations from the WDI. We can't spend much time, but I think it is important to begin to get the word out.
The first goal is one we have already talked about a lot. We have been monitoring progress on reducing poverty since 1990, and what we know now is that we have made progress. There are 125 million fewer people living in extreme poverty, living on less than $1 a day, than there were in 1990.
If we achieve the goal we have set for ourselves, there will be 260 million more people lifted out of poverty by 2015. And if growth continues at the rate we are currently projecting, we could do better than that still--a total of 400 million people above the $1 a day poverty line by the year 2015.
But Africa remains a big problem. Africa would have to grow much faster than it has grown in the last decade to even come close to achieving the goal, and there is yet a lot of work to be done in many countries.
Malnutrition goes with poverty. The Bank recently did an assessment on progress toward the malnutrition goal, and what you see up there are the results. The green areas are places where we are fairly confident that we can cut the rate of malnutrition amongst children in half or do better by 2015. Some places have already done that. The red is areas where we think we are not going to succeed.
I point out on the map that the other big gap is all those gray areas in Africa, Latin America, and Central Asia, where we don't have enough data at the moment to be monitoring progress on that goal.
The goals deal with poverty, they deal with education, they deal with health, and they deal with environment. For a long time, the world has said every child should have a chance to go to primary school, to complete a primary school education. We have set that goal for ourselves before, and we have not achieved it. It is time that we get very serious about achieving it.
The Bank has recently done a study looking at the ability of children to complete primary school, and what we found is that in 36 developing countries, more than 95 percent of children are able to complete a full primary education. We think about 30 more could do it on the basis of current progress by 2015, but that still leaves us 88 countries that are falling short, and at least 29 of those where it seems unlikely that we will achieve full primary completion by 2015.
Education is also a very important step in promoting gender equality and empowering women. What happens is that fewer girls go to school, fewer girls stay in school, and the result is that fewer girls are literate than boys. That is especially true in Sub-Saharan Africa and in South Asia.
There is one exception to that--in Latin America, where we have actually seen girls' enrollment rates in primary and secondary school move ahead of boys, and the literacy figures also bear that out.
Probably the most compelling goal we have is to reduce child mortality. The goals say "reduce to two-thirds the 1990 level by 2015," and that is an ambitious goal, but countries have done it. Something like 37 countries right now are on track to make that kind of reduction in their child mortality rates. That would mean cutting the current 11 million child deaths each year significantly by 2015.
Again, our big concern is in Sub-Saharan Africa. It is the only region in the world where mortality rates have increased since 1990.
Along with reducing child deaths, we have set a goal of reducing maternal deaths. There are approximately 500,000, half a million, maternal deaths each year from complications of pregnancy and childbirth, and about half of those are in Africa.
One thing we know that could help is to provide skilled birth attendants for mothers before birth and then during birth, but in some countries, fewer than one birth in four is attended by a skilled health professional.
The goals call for us to turn back the epidemic diseases that are devastating developing countries. HIV/AIDS is the leading cause of death in Sub-Saharan Africa, and it has left something like 13 million orphans from parent deaths. That is a number that could double by the year 2010 if we are not successful in changing the pattern in Africa.
The goals also call our attention to malaria, which is one of the largest killers of children in Africa, and to tuberculosis which, as you know, is a problem not only in Africa but in Asia and in parts of Europe.
We are not going to achieve sustainable development unless we learn how to manage our environment better. Access to a safe and convenient source of water is essential for improving health and productivity.
Today there are about one billion people who lack access to a minimally acceptable source of drinking water, especially poor people in rural areas of Africa and Asia. There has been some improvement in the 1990s, and I think you will find it easier to study that slide or the data in the book than on the screen up here, but the basic story right now is that we are not keeping up with the growth of the population, and we are going to have to do a lot better in getting water services to people in the next decade and a half.
Finally--and I haven't been counting for you, but this is eight--the Millennium Development Goals call on all of us to build a global partnership for development. This is the really big goal. This is the goal that talks about how we are going to achieve the first seven. It is the goal about the sorts of things that Nick was talking about a moment before, about getting our trade policies right, about increasing aid to countries, about helping countries share in the benefits of technology globally.
These graphs tell part of the story from the 1990s. One hopeful sign is that more trade from developing countries entered the high-income countries--Europe, Japan, the United States--free of tariffs over that period. Those are the red bars going up over there. What they don't tell you--and it is important to look more closely into the data--is that there is still a picket fence of tariffs, so you get more goods coming in at zero tariff, but you still have tariffs that are keeping out key developing country exports.
The other graph tells you the story about aid--very little progress in the nineties; in fact, a slight downward slope--and what you see there is that about half of the aid went to middle-income countries. Some of them need aid, no doubt, but they are much better off than the low-income countries, and the low-income countries only got half.
So that is the story as quickly as I can tell it to you today. There is a lot more information on our website which is being launched today with the book and all the other materials. You will find it through the Bank's main website, and if you need any help, there are people around the room here who can direct you further.
I'd like to turn it over now to Shanta, who has some specific thoughts.
MR. DEVARAJAN: Thank you very much, Eric.
I'm going to make three points that try to tie together some of the data about the Millennium Goals that Eric mentioned with the broader point about the post-Monterrey consensus that Nick alluded to.
First, the important thing about the Millennium Development Goals is that they are multidimensional. Development is no longer simply a matter of reducing income poverty, but there are other aspects of human well-being that we consider equally important, like child mortality or child health or education. And these goals tell us quite precisely what are those aspects of well-being that we think are important.
Secondly, they are quantitative targets. These are no longer just "feel good" ideas, but actual specific targets that we are trying to reach such as universal primary education by 2015.
And thirdly, they reflect a change in the development business of becoming more results-oriented. We are trying to achieve the goals rather than measuring our progress in terms of the inputs.
This, of course, then leads naturally to the question which policymakers around the world are asking which is how are we doing with respect to these goals, and I think that is what Eric was pointing out, and let me just reiterate a couple of points.
First, if we just look at the world as a whole in terms of the income poverty goal, we are likely to reach it. But that is thanks to rapid economic growth in India and China, the two largest populations.
We are not going to reach along current trends even the income poverty goal in Sub-Saharan Africa. So if you try to disaggregate and look at individual countries, there is a serious problem in Sub-Saharan Africa in terms of income poverty, whereas there is rapid growth and poverty reduction in China and India.
But even if you accept that, the world as a whole is still not likely to reach the other goals--child mortality reduction by two-thirds, universal primary education. So it tells us also that while rapid economic growth is important, it may not be enough to reach some of these other goals. So even in countries like China and India, there are concerns about the progress in the other indicators like health and education while they are making progress in income poverty reduction.
Of course, the situation, as Eric pointed out, is even more serious in Africa, which already has low levels of health and education to start with.
I also want to mention that this is not just a problem of low-income countries, because even in middle-income countries, while the country as a whole might be making rapid progress toward these goals, there are pockets of poverty in the country, regions within the country, that still have very low levels of income poverty, low levels of education, and high levels of child mortality.
So we should not be complacent by looking even at country aggregates in some cases.
Now, that, of course, then leads to the question what should we do about it given that we are at risk of not reaching these goals unless some concerted action is taken. And I think Nick pointed out that this involves at least three pieces of action, if you like.
One is concerted action by the countries themselves, by the developing country governments, to improve the conditions under which progress can be made--improve the policies, improve the delivery of public services so that health care can be delivered, so that children are actually taught in schools, that children actually get enrolled in schools, to improve the governance structure so that aid can be more productive.
If these countries can make these changes to accelerate progress--and they are; and many are making rapid changes in this direction--we have also calculated that the amount that the donor community needs to then give in terms of additional aid is about $50 billion per year; so that is a doubling of foreign aid from what it is today.
If countries make the appropriate changes in policies and institutions, an additional $50 billion of aid per year will help us reach the Millennium Development Goals.
But also I want to end by pointing out that there is a third piece of action that is very important in this area, and it is pointed out by the gray areas on Eric's maps. These are the countries where we have no data or where we lack data to even monitor our progress toward these goals. So even if we have said that we have committed ourselves to these goals, and we are undertaking policies to achieve them, we also need to build capacity to monitor the data, to monitor our progress.
If I were to summarize, I think data used to be considered as an input into the development, as something that people used, and it was somewhat of a backwater. I think what the Millennium Development Goals, with the multidimensional nature of the goals, shows is the importance of having to take action urgently toward progress on the goals, data has now become the driver of the development process.
MS. ANSTEY: Thank you, Shanta.
We'll now throw it open for questions, and there are microphones around the room. If you could announce your name and media outlet, that would be very helpful.
Yes, sir--the gentleman in the third row.
QUESTION: Thank you. Peter Willett, Social Development Review.
Could you please give us a few words on how the Millennium Development Goals were translated into targets and specific measures so that--my previous understanding is the UN General Assembly and the conferences didn't have any specific quantitative targets. Could you go through that, please?
And a couple of sort of datapoints that shout out from the supplement. On the page on maternal health, you've got the regression line with a major outlier of Bangladesh. Is there a big story there as to why they have done so much better than the trend would suggest?
Second, I wonder if you could explain on the global partnership graph how it is that the summing of the two figures for aid comes to more than $50 billion for the year 2000.
MS. ANSTEY: Thank you very much.
Eric, do you want to jump in?
MR. STERN: Can we ask Eric to cover the points on targets and the last point, the technical point, about adding up; and if I could just say a word or two on Bangladesh.
What you have seen in Bangladesh in the last couple of decades is the very effective combination of nongovernmental organization, government action, and external support, and they have made tremendous progress on reducing child mortality, reducing the fertility rate, the number of children per mother, increasing education of girls and women.
As an example of just how strong public action is, where you combine civil society and the NGOs, public sector, government itself, and external support, it shows just how much you can achieve on the human development front, in this case, on the health front, by that kind of action. It shows that there is really a lot that we can do on development if we get the partnership together.
Eric, would you like to comment on the other parts?
MR. SWANSON: In Bangladesh, we have--Bangladesh' maternal mortality rates are not enviable; they should come down. It does not provide skilled attendants at birth. Most mothers in Bangladesh deliver by themselves.
They have done well in reducing child mortality; it is one of the exemplary states. But it could do a lot better on maternal deaths especially if it provided skilled birth attendants. That is what the story in the graph says.
On the goals, the goals come out of the Millennium Declaration that was accepted by the UN General Assembly in September of 2000. The specific targets are built up of the resolutions of various UN summits and conferences that took place during the 1990s. Some of them are mentioned, in fact, specifically, in the Millennium Declaration, and some are not. They come as an outgrowth of what last year, we addressed as the International Development Goals, this agreement on a set of specific targets built from the UN conferences and summits. So they have now been brought into this document; you can actually see a listing of all of them in the back of the book, listing the targets and the suggested indicators for monitoring them.
There is an ongoing process within the UN System that the Bank and the IMF are participating in to try to refine and specify the indicators and targets for measuring progress toward those goals.
QUESTION: [Inaudible; no microphone.]
MR. SWANSON: No, it's not the first time we have had indicators associated with this. Again, for example, if you go to the Millennium Declaration, you will see that it says very specifically "reduce the proportion of people living on $1 a day." It talks about child mortality rates. I mean, those are very specific indicators that are in the Declaration.
QUESTION: The others are goals.
MR. SWANSON: The others are goals, and what they say to us is find a way to measure progress toward those goals--and that is what we are doing the best that we can.
MS. ANSTEY: I think there is a gentleman at the very back. The lights ar very bright; you have to wave.
QUESTION: Good morning. James Crumby from IFR.
What role do you expect the international capital markets to play in achieving your goals?
MR. STERN: The flows on the international capital markets are of course of great importance. Foreign direct investment into developing countries in the last few years has been of the order of $160 or so billion a year, compared with aid flows of $50 or so billion a year. So foreign direct investment is a very important part of the story of growth, and growth is an important part of the story of poverty reduction.
In our publication "Global Development Finance" which came out just ahead of Monterrey, we showed the importance of good policy in attracting foreign direct investment. So that will be part of the story of growth, and growth will be part of the story of meeting the Development Goals.
The non-foreign direct investment part of the flows has been much more volatile, and whereas they were two or three times FDI two or three years ago--sorry, five or six years ago--in the last couple of years, the net non-FDI flows have been rather small, in some cases, negative.
So I think that if you are thinking about the importance of flows in meeting the Development Goals, I would place special emphasis on foreign direct investment. But of course, there are many poor countries which find it very difficult to attract foreign direct investment. In those countries particularly, the aid, the official development assistance, is of particular importance.
MS. ANSTEY: Let's go to the front row here, and then to the middle of the back.
QUESTION: You said that you expect the Latin American region could reduce the number of poor from 77 million to 60 million through the year 2015 if the region can sustain a per capita growth rate of 3.6. And at the same time, you say that most of the poor people in Latin America and the Caribbean are concentrated among minority groups and indigenous peoples, and also, you point out that the collapse of growth in Argentina has exposed millions more to failing living standards.
I wonder how this situation in Argentina could have an eventual impact in this projection.
MR. STERN: The figures that you started with, we are talking about $1 a day, and because Latin America is on average rather better off than most developing countries, the number of people living on below $1 a day in Latin America is quite small, so there is a small reduction in a small figure.
Per capita incomes in Argentina are of the order of $7,000 per year, so it is amongst the richest of the developing countries in the world.
What we are saying with the remark that you made concerns the decline in living standards in Argentina, which has been very tough--it has been very difficult for the Argentinean people.
As regards the influence of that on the rest of Latin America, it has actually been quite striking so far that the contagion from Argentina in Latin America and in other parts of the developing world has been small. The reason for that is that developing countries, as I argued at the beginning, have been improving the policies. Their fiscal policy is in a much better position. Their current account position is much better than it was five or six years ago. And further, the markets themselves analyze more closely what the position is. They are more sophisticated and more selective than they were five or six years ago.
So I think these are the reasons that the contagion so far from Argentina has been quite small. So there is no doubt that the position of the Argentinean people is very tough, and they are seeing declining living standards, but so far, we are not seeing contagion.
MS. ANSTEY: Thank you.
We'll go to the middle of the back there--Charlie.
QUESTION: Charlie Cobb with AllAfrica.com.
We have been hearing with growing frequency now from African leaders something to the effect that countries don't develop with aid; you need investment--something like that--it is phrased one way or the other. And I am wondering, given the rather grim statistics reflected on your chart here, what your assessment is of the prospects of investment and trade in Africa, particularly once you strip away mining and oil. Is this at all realistic as a contribution to African development any time in the near future?
MR. STERN: Countries don't develop only by aid, but where policies are conducive to growth and poverty reduction, aid can be a very powerful force. Aid can also be a powerful force when it is channelled specifically into areas such as health and education and where you have the right kinds of support structures.
So you have to be careful about what we are saying here, not only by aid. That means that you have to be careful with your allocation of aid and use it well and use it where it is not going to be wasted; but we know a lot about that now.
On the investment and trade front, what we need are two sorts of things. We need the kind of reduction in barriers in trade that I was describing right at the beginning, which hit Africa very hard because so much of Africa's exports are in the agricultural sector. Agriculture has been hit by falling prices. It hasn't had the same kind of improvement in agricultural productivity that you have seen elsewhere in the world. So opportunities on the agricultural side are a part of the story.
But another and very important part of the story is working on investments behind the border in Africa so that Africa is in a position to get out those goods effectively, so that it can meet the kind of hygiene and product standards that I was describing earlier, that it has the roads and ports and customs facilities to get the goods out, that it has the security so that the goods are not stopped, as it were, by highwaymen on the way.
These are the kinds of behind-the-border activities that you need. So you do need the aid, but you have to allocate it well. You do need to open up the markets, and you do need to invest behind the border.
We need a combination of those things, and I think you are seeing an improvement in the policies of African governments, and those improvements deserve and should have strong support on the trade and aid front from outside.
MS. ANSTEY: Yes, here at the front.
QUESTION: Emad McKay with Interpress Service.
I am a bit actually unclear on the relationship between aid and performance on the ground. Will the indicators be used in any way to decide which countries get more aid if you are a better performer than others? And also, how are you going to go about monitoring the performance on the ground without risking placing another burden on those developing countries. In one of the Bank's press releases, actually, you mentioned that Tanzania had to report some 300,000 pages to donor countries on how they handle their aid. So if you can explain that to me, that would be great. Thank you.
MR. STERN: When we are talking about getting aid behind those who will use it well, we ask and we do ourselves look at a whole range of indicators concerning governance, investment climate, operation of health and education sectors and so on.
There is no simple mechanical rule there, but the kind of data that are presented here would be part of that story. So when we talk about allocating aid well, we are not talking about abstract judgments. We are talking about real evidence and data and so on. So these kinds of data are important in that decision. And they are not the only data, of course, that are important in that decision. We work very closely on the ground with decisionmakers, and we have to look ahead based on what we know about the country. We have to act early to support good prospects of reform. So we don't just look backward at these data, most of these data; we also look forward, based on our judgments on the ground.
What we are doing at the same time is backing those judgments with concessional aid support and reducing the conditionality. So, having made those judgments and backed countries on the basis of those judgments, what we would like to see and what we are doing ourselves is a reduction in the kinds of conditions and therefore the kind of detailed monitoring that is necessary.
MS. ANSTEY: Yes, in the back.
QUESTION: I am Ed Hamilton, International Trade Finance Report.
We have heard that exports are the engine of growth, but it seems to us, at least, that a significant shortfall particularly in Africa is the want of trade finance facilities due to a rather primitive banking system. But a manufacturer in Africa, which is where you get the value added in your export, has a real problem getting working capital financing. Does the World Bank Group have any plans for providing technical assistance to get such programs operating?
MR. STERN: You are quite right that trade finance is indeed an important part, a crucial part, of the whole process of exporting, and exports are a crucial part--not the only part, but a crucial part--of growth.
The financial sector in Africa is a very important aspect of many of our Country Assistance Strategies and our direct investments in Africa. It is a very important part of the story in our work, and I'm sure we can provide you with some details on specifics of the kind of investment, structural reform in the financial sector that we are working on in Africa.
MS. ANSTEY: Cathy?
QUESTION: Cathy Shalch with National Public Radio.
We have heard different things about the Enhanced HIPC Initiative, that it is working well, but we have also heard that because of external shocks, some of the debt of these countries will in fact not be sustainable unless something more is done.
Could you gauge the success so far of that initiative?
The other question I have if you have time for it is that the Bank has, as you say, been working to be more discriminating in aiding poor countries in the past decade and made progress there, but some of the bilateral donors may need help following suit. To what extent can the Bank share its information and its methods with bilateral donors to see to it that they too put aid where it is going to do the most good?
MR. STERN: The HIPC Initiative, of course, the debt reduction initiative, is of great importance. It was initiated by the Bank itself in the middle 1990s, so it is something which, having started it, we are deeply committed to. Of around 40 countries or so which are eligible in the sense of having very difficult debt positions, more than 20 now are directly involved in this process.
It does depend on policy reform in these countries. We have to be confident that any extra resources that are made available go to health and education, for example, and not to military spending, for example. So it is very important to be very careful on the policy side, but we are very active in pushing for that, and that is something which we will keep active on, and it will be high on our priorities going forward.
The second question concerning the relationship between our activities and bilateral aid--we do work very closely with bilateral donors in developing countries. The World Bank has Country Directors on the ground, living and working in most of the big developing countries and many of the smaller ones as well, with a lot of local staff working there. So we try to work closely with not only local authorities but also with the other bilateral donors on the ground.
One example of that is the poverty reduction strategy process where the World Bank and the IMF are putting their concessionary resources more strongly into countries that are developing themselves a clear strategy for reducing poverty, and in that process itself, the developing countries, who of course lead that strategy, pull together with the bilaterals and the World Bank, and the World Bank is very active in support of those very consultative exercises.
MS. ANSTEY: I would just add one word on HIPC. We now have 26 countries going through the program, and I think the Bank has said in its more recent report that we need to look at sustainability levels for countries exiting the program because of exogenous shocks, chances in the global economy, and that is being looked at. And I think what the Bank and Fund is also saying is that it is important for rich countries to also step up to the plate and make their contributions to the HIPC trust fund. But we can talk about that later.
QUESTION: Het Financielle Dagblad from the Netherlands.
I have a question concerning what you just said. Those countries that are hit by falling commodity prices--for example, coffee exporters, which is a commodity that doesn't seem to have a good prospect of the price going up in the near future--this can make their debt unsustainable, being more than 150 percent of the export income.
What sort of additional measures are thought of to make debt sustainable for these countries?
MR. STERN: You are absolutely right that the falling coffee prices is a very difficult problem for many countries in Africa, Latin America, and East Asia, many parts of the world. And in looking at a country's needs for finance, that is exactly the kind of problem coming from outside that we take very seriously. So in our whole financing packages for developing countries, the kind of support that we give them, that is exactly the kind of problem that we take into account.
We will take it into account, so we are taking into account, as Caroline just said, in terms of our assessment of HIPC sustainability and therefore the kind of debt reduction that is necessary.
MS. ANSTEY: Thank you very much.
In the back, and then we'll take one more in the front.
I want to ask specifically about Mexico. Do you believe that Mexico has made progress in recent years about reducing poverty?
MR. SWANSON: I don't have detailed notes with me on Mexico. I think you can find the current poverty estimates for Mexico in here. To talk about what change there has been in poverty rates over the next decade, I think we have to put you in touch with the people who are specifically tracking Mexico, and I am sure they would be happy to talk to you.
MS. ANSTEY: Yes, ma'am?
QUESTION: Yes, Latin American News Service, DPA.
I was wondering, despite Latin America being a region that is better off compared to other developing regions, as Mr. Devarajan said in his opening remarks, there are pockets of poverty that are very striking. I was wondering what is the strategy of the World Bank to address that; and also about the contagion of the crisis in Argentina, you say there is almost no contagion, but in your report, it says there is contagion in Uruguay. I would like you to address that topic, please.
MR. STERN: Let me give you an example in Brazil, which is a country with an income per capita of around $3,000 or so per year, which is of course a middle-income country, not amongst the poorest countries in the world.
But there are parts of Brazil, particularly in the Northeast, where poverty is extremely severe. So what we have done in the World Bank is focus much of our activity in Brazil on the Northeast. We have opened an office in Fortaleza, and that is where we focus a great deal of our work. And similarly, on the work in Mexico, we think very carefully about the problems of Southern Mexico, where poverty is much more severe than in the north.
So in the allocation of our efforts, always working, of course, with governments themselves, we try to focus on the poor people of those countries. So that essentially is our approach.
Sorry--the second part of your question was--
MR. STERN: Yes. Clearly, Uruguay, with its very close proximity to Argentina, cannot and would not be insulated from the problems in Argentina, and you are quite right to correct me on that; I was really speaking of countries outside Uruguay.
MS. ANSTEY: Shanta, do you want to talk about pockets of poverty?
MR. DEVARAJAN: Sure. Just to add to that, as Nick said, not only does the World Bank have a concerted effort to support pockets of poverty, reducing poverty, in regions within countries, but we try to strengthen governments' own efforts in that area.
For example, there is an education program in Mexico that focus on pari-urban areas where there is actually a lot of under-enrollment, where primary and secondary enrollment rates are very low, and school quality is low. So we have an education program that strengthens the government program to strengthen the pari-urban education program.
Another example--and this comes back to whether poverty in Mexico has been reduced--is programs like Progressa, which is a government program that turns out to be extremely successful in reducing poverty in many dimensions, I might add--child mortality, infant health, and education. It is a program that we try to learn from and strengthen in other areas in Latin America.
MS. ANSTEY: I'm afraid we're going to have to let our Chief Economist go. If you have a couple of other questions you can address to the other gentlemen, and then we can end it there.
QUESTION: My name is Sonia Sala from SSI.
I'd like to follow up on that grim picture about the infant mortality rate in Sub-Saharan Africa. What are you doing to ensure--part of the problem is that the infrastructure is not there, especially when women are having babies or coming into labor. In most areas, there are no clinics, no hospitals. What is being done to ensure that the governments make it a priority to at least put the infrastructure in place, or at least have clinics or hospitals in regions where women can get to these clinics for the health care that they need?
MS. ANSTEY: Shanta?
MR. DEVARAJAN: It's a hard question because it is a hard question. I would say that it's more than just clinics and hospitals. It is actually--we can build clinics, but you need to have the other inputs available in order for the clinic to function.
Again what we are trying to do is to strengthen the fact that this is a multidimensional problem--not just to build clinics but to actually build in place government expenditure programs that would make sure those clinics are well-supplied.
But I should say that there are other dimensions of infant and maternal mortality that should be taken into account. One is simple behavior in the households--things like handwashing and sanitation and improved water quality have an amazing impact on child mortality. So we work on the water side as well.
Then, finally, just one anecdote. We had maternal birth clinics that were so far away that mothers--especially when you go into labor--they didn't want to start walking two miles. What they did, which was very successful, was to put in place a little, like a hotel, right next to the clinic where the expectant mother could come two days before delivery and bring her children with her. That actually made a big difference in the utilization of that clinic.
MR. SWANSON: I'll just add one thing on that. Another example of how one has to take a comprehensive, system-wide approach on this--malaria is one of the leading causes of child deaths in Africa as well as parts of Asia. Vietnam has been enormously successful in supplying insecticide-treated bed nets for children to sleep under; I think the number is now something like 75 percent of children in Vietnam sleep under these nets--much, much higher than anyplace else. But that is another example of something that can be done directly to address this problem, but in the context of a full, functioning health system strategy to reduce child mortality.
MS. ANSTEY: There was one last question. Yes, sir. I think we'll have to call it a day, then.
QUESTION: Ian Campbell at UPI.
You have mentioned the importance of reducing trade barriers for developed country exports. The U.S. has just put steel tariffs up. What is the World Bank doing about that?
MS. ANSTEY: I think the World Bank view is that it is an unfortunate decision. The World Bank focuses on developing countries, and I think the view is that it is tough to ask developing countries to take action on trade, put in place transition costs, and for rich countries not to do it also. And I think that you have heard at these meetings expressions of regret that that decision was made, but that was a decision for U.S. politics, not for the World Bank.
Thank you, ladies and gentlemen, very much.
[Whereupon, at 11:00 a.m., the press briefing was concluded.]Related link: World Development Indicators 2002