Washington, D.C, April 23, 2004
Video in Realvideo & Windows Media formats
MR. NEAL: Good morning, ladies and gentlemen.
My name is Chris Neal, and I'm External Affairs Officer for the Development Economics Department here at the World Bank, and we're here this morning to present the World Development Indicators for 2004. And here to present the book, which I should mention has some new and very revealing data about the global poverty and inequality in the world today; the book is available, I think, widely in the press room, but I should point out that there is a handout going around which has updated figures.
As you know, statistics is an ongoing process. It changes every day, and we just have updated figures. That is to say that the figures in the book are not incorrect; they are correct figures. It's just that there are even more recent ones in the handout, so that I draw that to your attention.
In the coming weeks, also, there will be a CD-ROM available and a little data book, which I know is a popular item for a lot of you, and also the little green data book, which looks at environmental data.
Okay; now, speaking today on this are on my immediate left, François Bourguignon, the Chief Economist for the World Bank and Senior Vice-President for Development Economics; to his left, Martin Ravallion, who is Manager of the Poverty Research Program here at the World Bank; and to his left, Eric Swanson, who is the Manager of the World Development Indicators project. I'd also like to mention that Shaida Badiee, who is also here, is Director of the Bank's Development Data Group and also a key player in this as well.
There is an embargo on this until 11:00 a.m. today at the end of this press conference. And having said that, I'll pass the floor to François Bourguignon.
MR. BOURGUIGNON: Thank you very much, Chris.
Good morning, ladies and gentlemen. This year's issue of the World Development Indicators opens on the latest estimates of poverty in the world and the MDGs, the Millennium Development Goals, and what has been achieved on them. There is good news, which is that global poverty, according to our latest estimates, is falling in the world and rather quickly. You'll see that the main figure is that between 1980 and 2001, on a 20-year period, the proportion of poor in developing countries went down from 40 percent to 21 percent; that is, almost halving in 20 years.
And from that point of view, if you remember that the first Millennium Development Goal is to halve poverty between 1990 and 2015, you can see that definitely, this figure obtained for the previous two decades is quite encouraging and suggests that this Millennium Development Goal is within reach.
And as a matter of fact, if we look at the figures starting in 1990, we observe that the proportion of poor in developing countries went down from 28 percent to 21 percent, and if you extrapolate that evolution, we should be on target in 2015.
Now, these figures confirm that even though other factors are important in poverty reduction, economic growth is the driver of poverty reduction. And you can see on the slide that indeed, China is responsible to a very considerable extent for the drop in global poverty. This is not a surprise, first because of the size of China but second because of the rate of growth in China, which has been, on this 20-year period, 8.5 percent per year.
And because of that, poverty in China, absolute poverty in China has decreased by 400 million people. We will have a high figure for India as well. Now, the problem is that behind this very good news and behind these very satisfactory aggregate figures, we have huge regional disparities, which you can see on this new slide. And at the other extreme of the range, we find the Sub-Saharan African region, where growth has been negative, as a matter of fact, over the 20-year period that we are considering here; GDP per capita growth has been going down overall during those two decades by almost 14 percent, and not surprisingly, poverty has been going up both in terms of the proportion of people being poor in Sub-Saharan Africa, the figure going up from 41 percent to 46 percent and, of course, in terms of absolute numbers, with the total number of poor in Sub-Saharan Africa going up from 164 million to 314 million.
Given that evolution, we may expect that Sub-Saharan Africa will soon be the region where most of the world poor will concentrate. Twenty years ago, poverty was an Asian problem. In a few years, poverty will be an African problem.
Now, what can we do in order to improve things? Now, let me move slightly away from pure statistics to make a few points on what is necessary to reduce poverty more quickly. We know what are the growth determinants behind the Chinese and the Indian experience. It is economic reforms, openness to markets and competition, the focus on private initiative and market mechanisms.
This simply shows that it is possible with these kinds of policies to achieve good performance on the growth front, and many other countries in the world are applying the same policies, and given the global recovery, we may expect that they will be able to benefit from that favorable evolution.
In some other countries, and particularly in Africa, the situation is much more dramatic. It is possible that the increase in the poverty that was just mentioned and also the deterioration on some other fronts, like the impact of HIV/AIDS, which reduced, as you will see in the WDI, the life expectancy in a dramatic proportion from 50 years in 1990 to 46 years of life expectancy in 2002. It is possible that this evolution is putting many of those countries into some kind of trap. And it is not clear that even though those countries, in many cases, are undertaking very ambitious and courageous reforms, it is not clear that this will be sufficient to get them out of the trap.
And in order to help them, it is absolutely necessary that the international development community and in particular the rich countries give some help. And this help must come from certainly two fronts. One is on the trade front, we insist, we have insisted for awhile in the World Bank on the problem caused by the market protection of agriculture in developed countries, which amounts today to something like $300 billion, which is absolutely enormous.
If you remember that, again, a figure that we will find in the WDI that 70 percent of the poor in developing countries draw their earnings from agriculture, you can see what is the loss of poverty reduction that is behind this $300 billion of market protection in developed countries.
And the other front is, of course, aid. We have an increase in aid, which was observed in 2002 and again, given the recent figures of the Development Assistance Committee in 2003, but it turns out that this is not sufficient; this increase, it is favorable and satisfactory to see that we have a move which is in the right direction, but we are very far away from what is needed to reach the Millennium Development Goals.
Outside poverty, we are very far from what is needed to make sure that instead of having global poverty being halved, as was the case in the past 20 years, for the whole world but not necessarily in all countries, we need this increase in aid. We need this modification of trade barriers in order to make sure that before 2015, we will certainly be able not only to halve global poverty but to make sure that this will take place in all countries.
And I will stop on these remarks, turning the floor to Martin Ravallion, who will be a little more precise on the poverty figures.
MR. RAVALLION: Thank you.
I am going to talk about the income poverty numbers, and Eric will be talking about non-income dimensions of welfare, the social indicators.
This is the first major update of the Bank's global poverty numbers since the 2000 World Development Report, previously updating the numbers from the 1990 World Development Report. It reflects a major effort on the part of the Bank to update and improve data on the world's poor, and data on poor people is absolutely key. It is one of the things you need to know to do something effective in fighting poverty.
The latest estimates draw on over 400 surveys from 100 developing countries, representing 93 percent of the population of the developing world. The latest numbers come from effectively a random sample of 1.1 million households in the developing world, drawing on the resources of statistical offices in developing countries throughout the world.
This is also the first time that we have taken the numbers back to the early 1980s, and this itself is a difficult task. The main poverty line is the famous dollar-a-day line. It's exactly $32.74 per month at 1993 purchasing power parity. This is not an arbitrary line. It is based on the poverty lines found in low-income countries. So we must be clear at first that we are measuring poverty in the world by the standards of what poverty means in poor countries.
In middle-income countries, naturally, the concept of poverty is not quite so frugal as we find in low-income countries. And the $2-a-day line is probably more appropriate for middle-income countries.
Of course, the data are never ideal. They are getting better over time, but there are still continuing concerns. There have been improvements in survey data and in survey data quality and in coverage, but at the same time, as well as producing numbers like this, the Bank is very actively engaged with government in improving the quality of their data, improving the quality of household surveys, both through our own efforts, through things like the Living Standards Measurement Study in the Bank and through efforts of governments themselves through their own statistical capacity.
Okay; first, we will summarize the overall picture. It's good news in the aggregate, but it's important to break that good news down a bit: more progress in some periods than others; for example, the late 1980s and early 1990s were a difficult period for the world's poor, and certainly, the regional picture is quite uneven.
The composition of poverty has changed noticeably, numbers of poor falling in Asia but rising elsewhere; dramatic progress in East Asia. I mean, the fact that East Asia has gone from the poorest region, 58 percent poverty rate in the early 1980s to the least poor amongst the developing, really, amongst the developing world at around 16 percent in 2001 is dramatic and very important.
A lot of that progress was in China. A staggering 400 million people escaped poverty by this dollar-a-day standard in China alone over that period, and roughly half of that was in the early 1980s, associated, we think, with very important agricultural reforms, the Household Responsibility System, the decollectivization following from Premier Deng's reforms in the late 1970s.
The number of poor has fallen in South Asia. It has remained fairly constant in Latin America, around 10 percent for a dollar a day, 25 percent for $2 a day. Rising incidence and numbers of poor in Eastern Europe and Central Asia, particularly during the 1990s; very few people living below a dollar a day in that region but rising to around 20 percent living below $2 a day around in 2001.
Some recent signs of progress for the poorest in Eastern Europe and Central Asia, which is good news, but we've got to watch this carefully.
For the developing world outside China, the gains have roughly matched the losses. The number of poor increased slightly over the period outside China, so it's very important to keep that in mind. Now, Sub-Saharan Africa stands out enormously in these numbers. There's no question. The poverty rates in Sub-Saharan Africa has been about 45 percent and has remained fairly constant. It's fluctuated over this period. The number of poor has doubled, as François mentioned.
I think a staggering number here is that if we go back to the early 1980s, we're looking at one in 10 of the world's poorest people living in Sub-Saharan Africa. Around 2000, it had risen to one in three. Projecting forward, we think it will be close to one in two of the world's poorest living in Sub-Saharan Africa by around 2015.
It's also important to note that there's a much greater depth of poverty in Africa, and the depth of poverty is increasing. It's becoming deeper over time. The depth of poverty is very important. It means that poverty is going to be less responsive to economic growth in Africa compared to both the past and compared to other regions, and we are certainly going to have to worry about the possibility of rising inequality in that region.
A great many poor people remain poor and vulnerable in all regions, and I think that is important to realize. We are projecting in the aggregate, the developing world will reach the MDG of--will halve the 1990 poverty rate by 2015. We are projecting with current patterns continuing, we're projecting around 15 percent poverty rate for 2015. That still leaves, that will leave 900 million people below the dollar-a-day poverty line. Even if we achieve the Millennium Development Goal, we're looking at over 800 million people living in extreme poverty in 2015.
There has been less progress by the $2-a-day standard; in fact, we are seeing rising numbers of poor by that measure. And that's important, and a rising bunching up, a considerable bunching up of poverty between a dollar and $2. That points to vulnerability. That means that the developing world, the poor in the developing world are going to be vulnerable to economic downturns. We could easily see reversals unless economic growth continues.
Better knowledge about poverty, as I emphasized in the beginning, is key; is important. It's one of the factors for fighting poverty, and this is a continuing effort at the Bank. Associated with this update of the numbers, we have also produced a new Website, an interactive computational tool, that allows anybody to replicate our numbers from the primary distributional data and to try different assumptions, different poverty lines.
So we've achieved a degree of transparency in these numbers that has not been possible before, and that has involved cooperation from a number of developing countries and a substantial on our part to try to make these data accessible and to improve data quality in the longer term.
I'll hand over to Eric Swanson now.
MR. SWANSON: Thank you, Martin.
This is the eighth edition of the WDI, and we hope that you find it a useful tool. There are a lot of statistics that get flung around during these meetings, and the source of many of them is here in the WDI. It covers a wide range of topics: education, health, economic growth, government performance, aid and trade; some of these, you've already heard about. And it gives you a detailed look at the national level at important social and economic trends.
I'm just going to comment on a couple of more of those trends, ones that are related to achieving the targets of the Millennium Development Goals. One of the first and most important of the MDG targets is equity in education. And, in fact, that's the target that comes due the next year. In 2005, the world community said let's enroll an equal number of girls and boys in primary and secondary school.
And the good news is that, in fact, more girls are attending school. In Latin America, girls, in fact, slightly outnumber boys' enrollments in primary and secondary school, and there has been big progress made in East Asia, big progress made in the Middle East and North Africa. We think that these regions have potential to reach the goals, even on time. We lag, still, in South Asia and in Sub-Saharan Africa, where traditionally, girls' enrollments have been low.
Besides enrolling kids in school, we need to keep them in school if they're going to become productive participants in their economies. And the news there is that we are seeing higher completion rates in primary school in the poorest countries. On this chart, the red line represents the average for all IDA borrowers, the 81 poorest countries in the world that participate in the Bank's concessional lending facility, the International Development Association.
Their rates are rising. They've actually been rising a little faster recently in the past, and that's all good news. Sub-Saharan Africa, not so good, although many of those are, in fact, IDA countries, but the continent as a whole lags behind. The dotted line represents the path we'd like to see them on. The dark blue line underneath is the path they're on. There's going to still be a lot to done to accelerate growth. I think in the meetings, you'll hear more about the Education for All Fast Track Initiative. It's one of the efforts currently underway to try to push that path up faster.
Reducing child mortality represents a broad test on the whole health care system. And that's why we think it's such a good indicator of success or lack of success. What you see in this somewhat complex slide is a rendering of country-level data, and I remind you that what the WDI has is data at the country level, so you can really bore in and look and see what's happening in one country versus another country; compare it to regional norms or compare it to the targets that we've set for the Millennium Development Goals.
That red line is the path towards the MDG target of reducing under-five mortality rates by two-thirds between 1990 and 2015. All the dots above that line represent countries that are off that track, where poverty is not falling enough. You can see highlighted there Sierra Leone, for example, which was involved in a massively disruptive civil conflict. Children are often the first to suffer in conflict situations.
You see Iraq farther over, which started in the 1990s with a reasonably low rate but where the rates rose over the decade. Below the line are some countries that are actually making good progress towards the goals. Large ones like Bangladesh or Egypt have accelerated the reduction in child mortality over the last decade.
Another thing that you see when you look through these data is the enormous disparities between one region and another, one country another. Nowhere is it clearer than when we look at maternal deaths. The chances of a woman in Sub-Saharan Africa dying during childbirth are 175 times greater than a woman in North America or Western Europe: 1 in 16 chances for African women; 1 in 2,800 if you live in a rich country. Mothers remain seriously at risk.
I might call this little slide a word from your sponsors. As Martin noted, our poverty estimates and most of the other data in the WDI depend on the resources and the capacity of national statistical services. We wouldn't be able to bring you the WDI if there wasn't work going on on a daily basis in countries to produce the statistics. Turning statistics into action also depends upon the capacity of governments to use statistics to guide their policy making.
This map provides a rough estimate of statistical capacity in the world as we see it, with the red countries being those places where capacity is lowest; the yellow countries, places that are intermediate; the green, countries that are doing relatively well both in producing statistics and in making use of them in policy making. It's the red areas where we need to focus our attention, particularly amongst the poorest countries in the world.
And so, I'm glad to conclude by saying that there is something being done about this, that there is increasing support for statistics amongst donors, amongst international agencies, and at the World Bank itself. In the past few years, donor-funded projects administered by the Bank have been underway in more than 60 countries to help them improve their statistical systems, and the Bank has begun a lending program specifically for increasing statistical capacity in countries.
There is a massive program being launched now which has required cooperation at all levels for a new round of international price comparisons. That will be getting underway this year. It won't produce results until 2006, but when it does, it is going to help us once again revise, overhaul and take a much closer look at these poverty or income welfare comparisons between countries. We'll have a whole new set of information allowing us to compare standards of living from one country to the next.
Finally, there has been much discussion in the international community about how we can work better together, an agreement on a global action plan setting medium-term targets for improving national statistical systems and improving international cooperation. And that plan and the actions that follow from it will be on the agenda for discussion at the Development Committee this year. They are--they will be discussed in conjunction with the Global Monitoring Report, which you heard presented yesterday.
So, let me wrap up by saying, again, with the Eighth Edition of the WDI, we hope we are continuing to provide a service to you, to the rest of the international community, in better understanding development trends. We have always benefitted from your questions, comments, feedback of all sorts, and so, I encourage you to keep coming back to us.
MR. NEAL: Thank you, Eric.
And now, we can go to questions. Over here on the right. Could you identify yourselves and your media, too, when you're--
QUESTION: Maria-Isabel Rivera, DPA, the German Press Agency.
Yesterday in the report on how we are on track or not to achieve the Millennium Development Goals, one of the goals that they said should be pursued was empower the poor. I would like to know how that is done; what is the role of the state in that?
And especially in Latin America, which is the area I cover, I would like to know if it would be correct to state that the state has a big role and that a strong state is needed and that maybe some of the measures of the early 1990s that shrunk the state have to be undone.
MR. BOURGUIGNON: Okay; thank you very much.
Yes, empowering the poor is absolutely central in the Millennium Development Goals. The only thing is that it is reflected by some of the goals, certainly by the goal on education, which is to bring the schooling rate and the completion rate in the primary to 100 percent by 2015, which is universal primary schooling. Certainly, on the health front, when we refer to infant mortality, you know that in order to reach or to reduce infant mortality, we must improve the health sector in such a way that the whole population is benefitting from it, in particular the kids.
So this is definitely at the center of the Millennium Development Goals. What is not considered in the goals is whether--the way in which these goals are pursued within countries, what we do while monitoring the progress being made in those goals; we are making sure that resources necessary to reach those goals will be made available to the countries, but the way in which the policy is conducted is the responsibility of the countries, and there is no direct involvement of the international community on the structure of the decision process within countries.
MR. NEAL: Paolo Sotero?
QUESTION: Good morning; Paolo Sotero from Estado de Sao Paolo.
I wanted you to comment a little bit on the fact that with those comparisons--I'm from Brazil, and I am interested particularly in the fact that two continental nations, China and India, achieved all this progress in 20 years. Brazil is a continental nation, but I'm wondering how relevant, and India--I'd like to focus more on India, because India is a democratic nation.
Does that--is that a relevant factor, the fact that the political system of India is or Brazil is more similar to the one of India, the fact that India is a pluralistic society with competitive politics, do you have any comparisons of that sort? Because I don't know if the comparison with China for Brazil is very useful. And that's my question. I'm always wondering how, you know, what this opening for Brazil, for instance, that China did or that--and well, then, there is India, which is a more open society, complex, pluralistic, where they also achieve progress.
So what are the lessons that are really valuable for a country like Brazil?
MR. BOURGUIGNON: I will not tell you that I know exactly, or that we in the Bank can know, exactly, where the difference between India and Brazil is and what change should be made in Brazil to make sure that Brazil follows the path of India in terms of growth rates.
What is really very impressive in terms of India is that, as you said, this is a country which is democratic, and from that point of view, the comparison is much easier and much more justified with Brazil. What is striking is the fact that there (in India), you have a country which had been stagnating for many decades.
And starting sometime during the eighties, some reforms were undertaken which improved the investment climate, which freed some resources and some energy in the market sector. Those reforms were deepened in the early nineties, in particular, in terms of opening up to trade, and very progressively, the system, getting too large, and India was able to reach the growth rates that we have seen, 6 percent, more or less, over the last 15 years.
Now, does this mean that what is missing in Brazil or in other countries is exactly this kind of reform? We cannot say that. What we simply observe in the case of India is that reforms were made and led to an acceleration of the growth rate.
And from that experience, what we are concluding is that in countries where the rate of growth is not satisfactory, there must be reform, there must be bottlenecks which must be identified and where the emphasis of policy makers should be put.
One very quick and obvious remark which comes to mind when comparing India and Brazil is probably the fact that there is more equality of resources, very ambitious social programs in India which have taken place for a very long time when we compare with Brazil. I'm not saying that Brazil didn't do anything on the social front; quite the contrary, there were a lot of extraordinary initiatives, but from that point of view, they lagged behind India.
This is one way or one possible direction for thinking, but I'm not saying that this is the solution.
MR. RAVALLION: I want to chip in there.
We've got to remember these are large economies. I mean, India, if you look at the geographic composition of poverty reduction in India, for example, it's a very uneven story. Some parts of India have done much better than other parts. You've also got to unpack that. Just like in Brazil, you've got that diversity of regional experience, and you can learn from that. Brazil can learn from it. Brazil can also learn from the diversity experience within China.
I think it's not just a matter of democracy here. The lessons are also about the ways, the things that governments need to do in combination with the reforms needed to promote growth, and those are things, investing in poor people, investing in the physical infrastructure, the human infrastructure needed to allow them to take up the opportunities afforded by a growing economy.
And there are lessons of the regional diversity in experience in India, Brazil and China that carry that message to policy I think quite clearly. It's growth, plus it's investing in poor people.
MR. NEAL: There's a lady right here in the third row.
QUESTION: Elizabeth Becker, the New York Times.
Could you put a figure on how much improvement would result from either the elimination or reduction of that $300 billion in agriculture support and subsidies? If that were to happen, how would that improve the poor people, particularly in Sub-Saharan Africa?
MR. BOURGUIGNON: I had the figure somewhere, but this was, as a matter of fact, a figure which was emphasized in last year's Global Economic Prospects report. Then, if we look at the total gain in terms of at the world level in terms of welfare, eliminating this $300 billion market protection would increase world welfare by more because of the increase in the trade volume between developing countries and developed countries.
Now, if I remember well, the impact on the world poverty was extremely substantial. If I remember well, we were talking about 50 or more, probably 100 million people who could be taken out of poverty because of this. But let me insist on the fact that this is by memory, and you will be finding the figure on the--
MR. NEAL: We'll get it for you in Global Economic Prospects.
This gentleman here on the end; well, the man with his hand up. I'm sorry. I'm trying to get to everybody.
QUESTION: I'm Serge Marti with the French newspaper Le Monde in Paris.
Mr. Bourguignon, in your introductory remarks, you mentioned many times growth as the main reason for the reduction of poverty in the last 20 years. What about two other factors you didn't mention? First one is the level of debt, and the second one is wars and conflicts, mostly about Africa. Do you think that could explain the bad results of this region?
MR. BOURGUIGNON: Yes, on the first point, I simply said that what we observe in the data that definitely differences in growth rates play a major role to explain disparities in poverty reduction across regions and across countries.
Now, we can get into what are the reasons for those disparities in growth. I mentioned, I started from good performers, excellent performers, and simply said that there were difficulties in other countries. You just mentioned two possible sources of problems for growth: the level of debt is certainly in several countries in the world an obstacle for growth; an obstacle to growth because essentially, it has been responsible for much macroeconomic instability over the recent past, and if we look at middle-income countries in particular, this would certainly be the case, in Latin America in particular, that because of a very high level of debt, it was difficult to manage the equilibrium of the economy, and any shock could disentangle or could cause big effects on the macroeconomic front.
So certainly, the debt is a problem, and trying to reduce the debt, trying to get more fiscal space, which is what is sought for the moment by several middle-income countries, is certainly quite important. In other countries, in particular, in African countries, it is also true that the debt has been an obstacle for growth, simply because it took away resources which could have been devoted to infrastructure and other productive investment, for example, empowering more quickly the poor.
The HIPC Initiative is certainly making things much better. As you know, we already have several countries which are crossing the completion point of the debt reduction initiative.
Now, you mention conflict. Again, it is certainly a cause for slow growth in many countries; in particular in Africa. What I want to insist upon is the fact that it is difficult to know what is the causality relationship there. We have conflicts, and conflicts are definitely not a good thing for growth, because investment climate is, of course, terrible. Before macroeconomic stability, political stability is the most important factor required by growth.
But we must also keep in mind that the reason why there are conflicts may be precisely because the rate of growth is not high enough. And if this is the case, then this is an illustration of the type of trap in which many Sub-Saharan African countries may be caught, and this is the reason why it is important to make sure that the international community will give some aid to help them get out of the trap.
MR. NEAL: Mr. Ikeda, I think?
QUESTION: Nestor Ikeda, Associated Press reporter for Latin America.
In your today's report, you said that poverty is down by half in the past 20 years or so. But when you talk about Latin America, the progress is about zero. Could you tell us what is the most difficult field for Latin America to make progress in this particular field?
MR. RAVALLION: The biggest factor, as François has mentioned, is economic growth. But I think we also have to recognize that in Latin America, there's a distributional problem, and it's acute. The high level of inequality is worrying. It's worrying from a number of perspectives. Can Latin America achieve the kind of growth it needs with that level of inequality? And how much will the poor be able to participate in that growth process? I mean, when the poor have a small share of the pie initially, they tend to have a small share of its expansion as well, so the growth process, growth in Latin America is less effective in reducing poverty.
You need more of it because of that, because of the high levels of inequality; so that's a key factor. Unpacking that, going down, we're going back to the same set of issues about delivering public services to poor people; all the issues we talked about, investing in physical and human infrastructure; all the things that are complementary to the types of reform needed to promote economic growth in the region.
MR. NEAL: Ana Baron?
QUESTION: Ana Baron, Clarin, Argentina.
The situation of poverty in Argentina, of course, has deteriorated terribly since the crisis. I was wondering, Argentina faces a dilemma between paying the debt and attending to social demands and fighting poverty. How do you think the Argentinean Government should deal with this problem, and what should be the priority in the poverty fight?
MR. BOURGUIGNON: I'm afraid that I don't have any direct answer about the way in which Argentina should be getting out of the present crisis situation, although the latest news is that Argentina is doing quite well in recovering from the major economic disaster of 2002.
About the issue of whether there is a choice between debt and poverty, I think it is quite important to note that, in this crisis, very quickly, the emphasis was put on the need to develop safety nets, to make sure that poverty, which was already increasing in the years preceding the crisis, that poverty would not worsen too much, and the social programs, which are, as a matter of fact, partly funded by the World Bank, helped in that direction.
Now, clearly, this was not enough, given the importance of the crisis. It is probably the reason why there is an attitude toward the situation in Argentina, which is such that if we can make sure that poverty is satisfactorily addressed in Argentina, then, the negotiation everywhere in international circles will be much easier, and I think this is the main point that we may have in mind.
But Martin has worked for a long time on Argentina and safety nets.
MR. RAVALLION: The only thing I would add to that is we've got to remember that Argentina does have a lot of social spending. But it has a lot of social spending that doesn't reach poor people. And when you talk about the constraints on the macro side and particularly arising out of the debt, you've got to keep that in mind, and there's a lot of potential for reform within social spending in Argentina that I think could make it more effective within the existing fiscal envelopes, more effective for reaching poor people.
And also, there's good experience here. Programs like Trabajar, programs like the Jefes de Hogares program that Francois mentioned, they've got problems; they're not perfect programs, but Argentina has also demonstrated that you can reach the poor.
MR. NEAL: There is a question over here, lady over here on this side.
QUESTION: I'm Katrin Schneider from the NGO WEED in Germany.
I just wanted to ask, like, in 1996, the World Bank and the IMF identified 42 countries eligible for the HIPC Initiative, and so far, only 13 of the 42 countries have reached the completion point, and most of the countries that have not been able to reach the completion point--
MR. NEAL: Excuse me; is it a question on the WDI?
MR. NEAL: This is a press conference. There are opportunities for NGOs to interact with the Bank in other venues. I'd like to--
QUESTION: I know, I'm writing for NGO Press, so I'm here as NGO Press. Thank you.
And most of the countries that have not reached the completion point are in Sub-Saharan Africa, and at the same time, you were mentioning before that the high level of indebtedness is a challenge to achieving better poverty eradication. So does the World Bank see any possibilities of going further and going more quickly within the HIPC Initiative but, at the same time, like, beyond HIPC at linking the achievement of the MDGs with more debt relief in the framework of HIPC or beyond HIPC?
MR. BOURGUIGNON: Yes; as was just said, this issue of HIPC and the debt relief initiative will be taken up several times in the coming days and in several other occasions. So I don't want to spend too much time on this.
On the figures you had mentioned, to be totally clear, out of the 42, 11 countries didn't pass the starting point of the debt relief program, which means that the reason for this is simply that those countries often are countries which are in conflict or which are just out of conflict, and one of the conditions to get into the program is to make sure that institutions are in place so that the debt relief that will be provided will indeed be used to reach the MDGs and to increase social spending.
And so from that point of view, we are back to our main theme of today, which is poverty reduction. There is a sunset clause which says that after the end of 2004, it will not be possible for any country to get into the HIPC system, and it is a problem for those countries; certainly, the international community will have to find a way of extending the--because we will certainly not leave outside of the HIPC Initiative countries which will show their good will in developing the institutions necessary for poverty reduction.
MR. NEAL: The gentleman right here in the front?
QUESTION: Thank you; I am Paolo Cabral from the Brazilian Service of the BBC.
And actually, you have noted on several instances, in some other press conferences and presentations, about the really huge difference or inequality in Latin America of income distribution.
What I want to ask is do you have any historical precedent of peaceful distribution of income, where the higher classes would allow this distribution to happen in contemporary history? Or what leads you to think this might happen in Latin America now?
MR. BOURGUIGNON: Very simply, there was a huge redistribution and huge changes in inequality levels in most countries which are today developed. When you look at the evolution of the distribution of income in the U.S., in the U.K., in France, in Germany, in all these countries, starting from the end of the Nineteenth Century and going to the pre-war and post-war, post-World War II period, then, you will find a huge drop in inequality.
And it is something which is totally reachable by Latin American countries. There are things like an income tax; there are things like cash transfers which represent an important part of GDP. These kinds of programs are starting to be implemented in many Latin American countries, in Mexico with Progresa, in Brazil with Bolsa Familia, which is going--or succeeding to other programs.
The point is that for the moment, these programs are not important enough in relation to GDP to make a huge difference. If you make the comparison with European countries and with the U.S., you will find that those programs represent 10 or 15 times more than what you can observe in Mexico and Brazil. And if you go in that direction, no doubt, inequality will be reduced.
Martin, do you--
MR. RAVALLION: I have nothing to add.
MR. NEAL: The gentleman from India here? Can we move on to India here? There are a lot of questions.
QUESTION: Parasuram with the Press Trust of India.
I was just wondering whether, in addition to numbers, the Bank gets feedback on the quality; for instance, what I have in mind is that if you have schools which don't teach well, quality is poor, and also, a health clinic which is not attended by the doctors in time, or there's no medicine; I wonder whether the Bank also gets a feedback not only in the numbers but also in quality.
MR. SWANSON: That's a very good point, and in fact, the Bank is very concerned about this. I think you'll remember that in the World Development Report that came out last September, its focus was on delivering services to the poor, and it looked specifically at the quality of education and health services that were being delivered.
Some of that information is coming about through specialized statistical studies, going into schools, for example, and counting the number of teachers that are actually present on a given day. There's also considerable discussion going on right now with UNESCO and with the UNESCO Institute of Statistics about ways to improve our measurement of educational outcomes. We're certainly aware that what we're measuring right now is on a sort of flow through the system, how many people get in, how many people get out. We haven't yet put our finger on the quality of education they're achieving, but that's our target, that's the direction we're headed.
MR. NEAL: The gentleman in the back has been very patient.
QUESTION: Yes; my name is Jim Cason, and I write for a newspaper called La Jornada, published in Mexico. And I guess I'm also, like many people from Latin American papers, trying to tease out what it is that Latin America is doing differently from China and India.
You talk about trade and growth, and now, you raised inequality. These are issues that, of course, Latin Americans think they have been working on for some years as well. Could you just tell us where in the book we might be able to look to see more of the kind of details about what they're spending on poverty in India per capita compared to what they're spending in, let's say, a country like Mexico, for instance? The comparison that you made just with Europe in terms of spending 10 to 15 times as much to deal with inequality was very useful in this regard.
And then, the other thing was just is there any way you could compare what's happened with poverty or look at what's happened with poverty in the World Bank's major clients? It seems like we're at the World Bank. It might be good not to just look at the whole of the developing world but look at where has the World Bank spent money, and what's happened to poverty in those countries over the last 20 years?
MR. SWANSON: Well, I'll just say briefly that although broadly, I don't think we have a category that covers all spending on poverty reduction, there are data on levels of public and private spending on health in the WDI and also spending on education, and those provide at least useful background.
Again, we have to be careful about measuring inputs and forgetting about the outputs. It's pretty easy to demonstrate that there's not much correlation between spending and results in many countries, and it's improving that linkage between the inputs and the outputs that the real trick in development lies.
MR. RAVALLION: It's also important to realize that these global aggregates and the big picture is just the tip of the iceberg. There's also a number of country reports; in fact, all Bank countries have to have a poverty assessment, a poverty expenditure review which looks at precisely these questions in the country context, using concepts of poverty relevant to that country, looking at the link with social spending, looking at the link with macroeconomic policy and so on.
QUESTION: But the report is trying to make a comparison, which is what's useful for us as journalists.
MR. RAVALLION: Yes, but I'm also saying for country knowledge, you should go to the country reports.
MR. NEAL: The lady here in the third row
QUESTION: Sylvie Gauthier with Reuters.
I know you said you couldn't really establish causality, but I was wondering if you could perhaps talk a little bit more about the effect of AIDS on poverty in Sub-Saharan Africa, and has that been taken into account when you've projected poverty reduction in China and India to countries where the AIDS growth rate is expanding?
MR. BOURGUIGNON: On the effect of AIDS on poverty, we certainly can see and guess--maybe estimating is more difficult--effects on poverty. If we take, for example, the problem of kids, of orphans in Africa, kids who have no family, who are left alone, this is a huge problem, and a recent paper by World Bank authors insisted on the fact that this might mean that the process of human capital accumulation, which very much goes through the contact between parents and kids, could be lost because of that. And this might, dynamically produce a huge negative effect.
But there are others; for example, when we talk about education, we know that many teachers in several Sub-Saharan countries died of AIDS, and this means that the human capital needed to train kids is simply disappearing. So we can see very directly that some of the bases for human capital accumulation are--to some extent, preservation is disappearing in some countries, and this will undoubtedly have and has already had an impact on poverty.
There is more than that. There is really a very important issue, which is that to some extent, our poverty figures are not giving the true extent of the impact of AIDS on poverty, because we are missing simply the effect of mortality on the figures. We are looking at people who are remaining alive, and we are looking at the evolution of poverty among them.
What do we do with the people who are dying because of AIDS? Should we simply ignore them? Certainly not. And this is a reason, again, why HIV/AIDS is one fundamental Millennium Development Goal.
Now, about the other countries, it is true that the prevalence of HIV/AIDS is substantial; I mean, it's 1 percent, something like that, in India; a little less in China. There is a concern about what will be the evolution of the pandemic in those countries, but we are certainly at this moment very, very far from the situation we observe in Africa.
MR. NEAL: Yes, we have time for one more question right here in front.
QUESTION: Patricia Cosma [phonetic] UN Wire.
We know that Sub-Saharan Africa, obviously, is back in the Millennium Development Goals, and more than 90 percent, 80 percent of the population, the poor population by 2015 is going to be living there. What is the main solution to that problem in terms of practical solutions for Sub-Saharan Africa? Because obviously, it's a continent that suffers different issues, you know, if you compare with Latin America or even Asia.
MR. RAVALLION: Just to clarify, it wasn't 80 percent; we are projecting 45 percent of the world's poorest, dollar-a-day poorest, living in Sub-Saharan Africa by 2015; 45 percent is the number, not 80 percent.
MR. BOURGUIGNON: Do you want to--
MR. RAVALLION: No.
MR. BOURGUIGNON: I can only repeat what I said during my initial presentation: the problem with--I mean, we need those countries to grow. Now, the problem is that there is no universal recipe for growth. If there was a recipe, I would hope that we would already have found it, and all the countries in the world would be growing very quickly.
Now, what we know? We know that there are some conditions which are probably necessary for growth to take place, and we want to make sure that those conditions are in place. And those conditions, what are they? They are political and macroeconomic stability for some time--not for, I mean, it is not because there has been stability for a few years that immediately, the investment climate is getting much better and that domestic firms, domestic entrepreneurs and foreign firms are immediately getting in and starting to invest dynamically.
So these are certainly conditions which must be satisfied. There are many countries in Sub-Saharan Africa which are far from that. And there is an historical dimension that we must wait some time, and we must make sure that during that time, no shocks, no accidents take place.
Now, during that time, we also need to build human capital. We must invest in the education, the health of the people to make sure that the whole population is able to participate to the process of modernizing, of dynamizing the economy. We must make sure that some infrastructure is being built which will indeed make the investment climate attractive to domestic and foreign entrepreneurs.
All of these things may take place in the coming years. That this will immediately trigger growth, we cannot say. But that this will trigger growth at some stage, I think we have many reasons to believe it.
MR. NEAL: Thank you very much.
[Whereupon, at 11:03 a.m., the press conference was concluded.]