World Bank President James Wolfensohn gave a speech at the annual meeting of the World Bank and the International Monetary Fund in September that highlighted the problem with the developed world’s continued hypocrisy when it comes to free trade.

Wolfensohn rightly chastised the developed world for spending just $56 billion in foreign aid while devoting $300 billion to farm subsidies. Wolfensohn said,

There is further imbalance between what rich countries spend on development assistance– $56 billion a year– compared with the $300 billion they spend on agricultural subsidies and $600 billion for defense. The poor countries themselves spend $200 billion on defense-more than what they spend on education. Another major imbalance.

. . .

Action on trade is equally important. It is inconsistent to preach the benefits of free trade and then maintain the highest subsidies and barriers for precisely those goods in which poor countries have a comparative advantage. Developing countries also need to help themselves on this point, since they pay substantial tariffs in South-South trade.

Certainly good to hear as far as it goes, but at least one attendee — Demba Moussa Dembele of Senegal — told the BBC that Wolfensohn and the World Bank were also engaged in their own form of hypocrisy,

It was the World Bank which insisted our countries open up to trade and investment from the North and told us to trust in global markets.

Didn’t the Bank know about the market distortions created by subsidies and trade restrictions? It should not just urger the North to change its policies, but take responsibility for misleading us down the path of rigged prices and poverty.

In fact, it is interesting that while Wolfensohn devoted plenty of time to criticizing the developing and developed countries, he couldn’t afford even a single sentence for a little introspection about the World Bank’s failures.

Being from the World Bank apparently means never having to say you’re sorry.

Sources:

A New Global Balance: The Challenge of Leadership. James Wolfensohn, September 23, 2003.

Growing gulf between rich and poor. Rick Rowden, The BBC, September 24, 2003.

The World Bank’s World Development Report 2004 concludes that many developing countries fail to provide even the most basic of services to their citizens and the developing world is likely to miss the targets of the Millennium Development Goal. The Millennium Development Goal called for halving poverty and improving meeting basic needs of people in developing countries by 2015.

The problems with services range from lack of improved sanitation to few educational opportunities. For example, 2.5 billion people still lack access to improved sanitation around the world.

The report finds that — surprise — simply throwing money at these problems rarely arrives at solutions. The Middle East, for example, spends more per capita on education than any other developing region, but still has some of the highest illiteracy rates in the world due to unequal access for women and girls.

According to a press release announcing the report,

The productivity of public spending varies enormously across countries. Ethiopia and Malawi spend roughly the same amount per person on primary education – with very different outcomes. Peru and Thailand spend vastly different amounts – with similar outcomes.

The Report concludes that no one size fits all. The type of service delivery mechanism needs to be tailored to characteristics of the service and circumstances of the country. For instance, if the service is easy to monitor, such as immunization, and it is in a country where the politics are pro-poor, such as Norway, then it can be delivered by the central government directly, or contracted out. But if the politics of the country are such that these resources are likely to be diverted to the well-off by way of patronage, and the service is difficult to monitor, such as student learning, then arrangements that strengthen the clientÂ’s power as much as possible are necessary. Means-tested voucher schemes, as in Colombia or Bangladesh, community-managed schools as in El Salvador, or transparent, rule-based programs, such as MexicoÂ’s ‘Progresa”, are more likely to work for poor people.

The report recommends three basic ways to improve basic services to the poor,

1. By increasing poor clientsÂ’ choice and participation in service delivery, so they can monitor and discipline providers. School voucher schemes – such as a program for poor families in Colombia, or a girlsÂ’ scholarship program in Bangladesh (that paid schools based on the number of girls they enrolled) – increase clientsÂ’ power over providers, and substantially increased enrollment rates. Community-managed schools in El Salvador, where parents visited schools regularly, lowered teacher absenteeism and raised student test scores.

2. By raising poor citizensÂ’ voice, through the ballot box and making information widely available. Service delivery surveys in Bangalore, India, that showed poor people the quality of the water, health, education and transport services they were receiving compared to neighboring districts, increased demand for better public services, and forced politicians to act.

3. By rewarding the effective and penalizing the ineffective delivery of services to poor people. In the aftermath of a civil war, Cambodia paid primary health providers in two districts based on the health of the households (as measured by independent surveys) in their district. Health indicators, as well as use by the poor, in those districts improved relative to other districts.

Sources:

Basic services ‘fail world’s poor’. The BBC, September 21, 2003.

World Development Report 2004: Making Services Work For Poor People. World Bank, September 2003.