Shanta's blog

Ever wonder how a World Bank  flagship report gets written?  A team of experts drafts an outline and shares it with stakeholders for their comments, suggestions and inputs.  Based on this feedback, the team drafts the report and shares the draft for further comment, before publishing the final draft.

UPDATE (May 15th, 2012) Caroline Freund, World Bank Chief Economist for the Middle East and North Africa has joined the debate. See her remarks.

The Chief Economists of all the regions where the World Bank implements programs got together recently to exchange thoughts about the current state of development economics.

You can read a summary of our views related to Africa, South Asia, and Europe and Central Asia here. 

And we hope you can participate in this debate by sharing your own views via the comments section below.  

Several people, from The Economist to this blog, have been highlighting Africa's accelerated GDP growth of about 5 percent a year for the decade before the 2008-9 global economic crisis, and the two years since the crisis. But has this growth served to reduce poverty?

The latest globally consistent estimate of poverty rates has an answer: Yes. 

Using the measure of people living on $1.25 a day or less, the World Bank's poverty measurement team, led by my colleague Martin Ravallion, estimates that the percentage of poor Africans fell from 58 percent in 1999 to 47.5 percent in 2008.  This rate of decline of about one percentage point a year is a welcome change from the previous decade when growth was much slower and the poverty rate increased. 

While banks, homeowners and a few governments in the US and Europe are "de-leveraging," the buzzword in the aid business is "leveraging"--using scarce aid resources to crowd-in other resources, such as tax revenues and private capital flows.  The reason is simple:   aid resources are limited (partly due to the economic slowdown in donor countries from their de-leveraging) but development needs are great, so using aid money to stimulate tax revenues or guarantee private investors' risk could square the circle.

But we don’t just want to increase the amount of resources available:  we want to make sure those resources are spent on activities that reduce poverty.  This suggests a different way of thinking of leveraging. 

Lors d’une mission au Mali, j’ai présenté les constats du dernier « Pouls Africain » à un séminaire avec une centaine de participants, y inclus le ministre des finances du pays.   J’ai soulevé quatre points:

• Malgré le ralentissement de la croissance économique dans les pays développés, l’Afrique sub-saharienne a connu une continuation de la relance économique suite à la crise de 2008-9.  Le taux de croissance moyen du PIB pour l’année dernière était de 4.9 pourcent.

 Note: This is a French translation of a blog post that originally appeared in The Guardian's Poverty Matters blog.

Les progrès économiques enregistrés cette année par l’Afrique sub-saharienne sont à risque, mais une forte demande de bonne gouvernance par les citoyens en vue de résoudre les problèmes du continent présage d’un avenir meilleur.

Au cours de l’année 2011, une série de chocs externes et internes a menacé les gains économiques acquis au cours de la dernière décennie par l’Afrique sub-saharienne, sans compter la menace posée à son redressement au lendemain de la crise économique mondiale de 2008-09.

Over the last decade, there has been increasing enthusiasm for empowering poor people by giving them information.  For instance, sharing information about absentee teachers and doctors, the availability of drugs in clinics, and the effectiveness of development projects will enable poor people (the intended beneficiaries of these programs) to demand better services—and get them. 

I share this enthusiasm and may even have contributed in a small way to it.  But at a recent aid data conference, I thought I’d consider the criticisms that such efforts have received, and some responses.

1.  They already know.  Poor people don’t need to be told that the teacher is absent from the public primary school.  Their children have been telling them this for years. 

Fifteen years ago, Easterly and Levine published “Africa’s Growth Tragedy”, highlighting the disappointing performance of Africa’s growth, and the toll it has taken on the poor. Since then, growth has picked up, averaging 5-6 percent a year, and poverty is declining at about one percentage point a year. The “statistical tragedy” is that we cannot be sure this is true.

Take economic growth, which is measured in terms of growth in GDP.  GDP in turn is measured by national accounts.  While there has been some progress, today, only 35 percent of Africa’s population lives in countries that use the 1993 UN System of National Accounts; the others use earlier systems, some dating back to the 1960s. 

To show that this is not an arcane point, consider the case of Ghana, which decided to update its GDP last year to the 1993 system.  When they did so, they found that their GDP was 62 percent higher than previously thought.  Ghana’s per capita GDP is now over $1,000, making it a middle-income country. 

I felt privileged to speak to the freshman class of Princeton University, my alma mater, at the annual “Reflections on Service”  event organized by the Pace Center.  In my speech, I drew on my work on the 2004 World Development Report, Making Service Work for Poor People and since then in South Asia and Africa, as well as my village immersion experience living and working with a woman in Gujarat, India who earns $1.25 a day. 

Both sets of experiences taught me how government programs—in health, education, water, sanitation, agriculture, infrastructure—that are intended to benefit the poor often fail to do so because they are captured by the non-poor who are politically more powerful.  I suggested to the students that, in addition to getting a good education and undertaking volunteer activities, they consider using their education to inform poor people, so that they can bring pressure to bear on politicians for pro-poor reforms.  The two examples I used to illustrate—citizen report cards in Bangalore and public expenditure tracking surveys in Uganda—were from the 1990s; with the penetration of cell phones in Africa and South Asia, getting knowledge to poor people in 2011 should be easier.