IFI governance


WDR on equity: Practice what you preach

21 November 2005

Civil society organisations welcomed many of the findings of the latest instalment of the World Bank’s World Development Report (WDR) on equity and development. However question marks remain over its historical amnesia and the likelihood that the Bank will practice what it preaches in this instance.

The Bank’s flagship annual report which was published in September, is divided into three sections: part 1 considers the evidence on inequality of opportunity within and across countries; part 2 asks why equity matters; and part 3 asks how public action can level the playing field. Parts 1 and 2 of the report find that global inequalities continue to rise (if China and India are excluded), and that this is a bad thing for both the intrinsic unjustness it represents and because of the instrumental relationship between equity and development. David Woodward of the New Economics Foundation describes these findings as a “straight-faced recycling of arguments NGOs and others have been making to the Bank for decades”.

While the report recognises the role of historical injustices such as slavery and colonialism in exacerbating inequality, professor Sanjay Reddy of Columbia University is staggered by the authors’ failure “to recognise that the policies recommended by the Bretton Woods Institutions may have been among the major reasons for the increases in relative inequality observed in countries in recent years.”

straight-faced recycling of arguments NGOs and others have been making to the Bank for decades

Part 3 addresses the more interesting question of the implications of the findings in parts 1 and 2 for World Bank policy. The report’s discussion of domestic policy actions to address inequity is divided into three broad areas: human capacities; justice, land and infrastructure; and markets and the macro-economy:

  • The report includes detailed and even-handed discussions for improving early childhood development programmes, universal access to basic education and health coverage, and social protection.
  • Authors come out against user fees in education and health, although there is a very cautious discussion of school vouchers.
  • There is a call for the recognition of customary land rights and a concession that land sales are “generally not an avenue to expand access to the poor and may actually reduce it”.
  • The report says that the results of the push for private provision of infrastructure in the 90s are a “mixed bag”, and stresses the importance of regulation for achieving equitable service provision.
  • An innovative proposal is put forward for the creation of a “generic drug region” in which “inventors in developed countries make legally binding commitments not to enforce patent rights”.
  • While the report says that the effect of employment protection legislation is “ambiguous,” countries should not reduce such legislation without improving social protection and job creation schemes. In this respect, the WDR findings sharply contradict the conclusions of the Doing Business in 2006 report, which ranks countries according to their friendliness to business, based on criteria that penalise countries for enforcing any sort of labour regulation. ICFTU general secretary Guy Ryder says that “the fact that the report recognises the positive social and economic role of trade unions, and advocates defending workers’ rights, is an improvement.”

In a meeting with UK NGOs, UK executive director to the World Bank Tom Scholar expressed his belief that the WDR would be a very useful entry point for discussion of the issue of human rights, normally a no-go area for the Bank.

Finally, the report deals with the issue of equity in the global arena. Without a hint of irony, authors state that “more effective representation of poor countries in global institutions would help improve processes and may lead to more equitable rules.”

In his analysis of the WDR, Reddy concludes by returning to a long-standing critique of the WDR exercise: “the substantial resources expended each year in the production of the WDR could perhaps better be used by supporting independent competitive research institutes.”