21/04/2011 Poverty - Ravi Kanbur's Response to th…

Home • Site Map • Index • FA Qs • Contact Us

Ravi Kanbur's Response to the Final Summary

Prepared by Ravi Kanbur, May 24, 2000 Contents

Let me first of all thank the Bretton Woods Project and the New Policy Institute for • Introduction
organizing and managing this E-conference. I know such undertakings are not easy, • A Fra m e work
and the level of commitment and effort that is required to pull them through is
• Em powe rm ent
enormous. The WDR team is also grateful to you and your colleagues for the
summary (longer than we had originally envisaged!), which pulls together very well • Security
the wide range of comments received. • O pportunity

In what follows, I will gratefully accept the praise and the points of agreement and • Internationa l
Dim ensions
concentrate on where there are major points of potential disagreement. I will also not
comment on "there should be more on X or Y" • Overview

if I agree with it--we will have to look at this in light of what material is available and
See also...
the space and time constraints we face.
• Consulta tion Dra ft
Introduction • P ublic Ele ctronic
Discussion (Feb 21-
3. Let me start with a response to the process question raised in para 3. As you Ma rch 31, 2000)
know, Mr. Wolfensohn wrote to you some time ago, in response to your letter to him • Final Sum m ary of the
posing the same question. I believe the Bretton Woods Project circulated this letter P ublic Ele ctronic
widely. As Mr. Wolfensohn noted in his letter to you, the WDR is an important vehicle Discussion
for the Bank's dialogue with the international development community at large. He said he would like WDR's to
increasingly move away from pat answers to posing questions and issues which do not necessarily have easy
answers. He also said that he would like the process of preparing WDRs to become more consultative, and we
have tried to put that into practice this year. However, while the WDR is not a document of the Executive Board of
the Bank and is thus not an official policy document, it is a document prepared by Bank staff and therefore
represents the views of staff and management (obviously synthesized in some fashion, since there is by no
means uniformity in these views!). In his letter Mr. Wolfensohn noted that the WDR is not a vehicle for
assessment of the specifics of Bank activities--this is done by the independent Operations Evaluation
Department.

4. I take the point on translation, and we did provide translations of the summary. However, it would have
been extremely difficult in the time frame to have had all 400 pages translated and checked, not to mention
the financial costs. We should think jointly about how to address this issue in the future.

Let me first of all take up the specifics Chapter by Chapter and then return to the Overview.

A Framework

13. This para raises an important issue of presentation and substance. On the former, our presentational
device of listing as bullet points (in 1.1 and in S6) the many different views we have heard expressed in our
consultations, clearly failed miserably. Despite our saying that these are the range of views we have
encountered, different people have read different bullets as representing the team's views--each reader
picking their favorite bugbear. These bullets will have to go in the next version--they have caused just too
much confusion! We will have to show the range of views in some other way.

On substance, let me take up what the summary calls "the report's strong emphasis on the relationship
between economic growth and poverty reduction." Here, we may indeed be in an area of some
disagreement. While, as you note, we are very concerned with patterns of growth, and with the
disaggregated outcomes of growth, the fact remains that almost any indicator of poverty at the national
level is negatively associated with national per capita income. We are not aware of any case where
negative growth in a country has been associated with poverty reduction at the national level. The issue for
us is not "growth or not", but how to get growth which is equitable and sustainable. We believe that
inequality in different dimensions and institutional arrangements play as key a role in this as markets do,
and this links to our empowerment discussion.

15. We thought we did give emphasis to land ownership, and at various points in the report we discuss and
are supportive of land reform proposals (the issue is relevant only in some parts of the world).

…worldbank.org/…/0,,print:Y~isCURL:Y… 1/4
21/04/2011 Poverty - Ravi Kanbur's Response to th…
We will look again at the international corporations issue, especially in the context of the responsibilities of
different actors in poverty reduction strategies. We have not come across any empirical cross country
studies on this topic.

16. These are good points. At a general level the issues raised here are incorporated into our discussion of
social institutions and social capital. More specifically, however, we have struggled to find any empirical
estimates of the phenomena mentioned.

19. It is indeed debatable whether the strategies in the War on Poverty worked or not--what might poverty
have been without them? However, we feel that the approaches we are recommending go beyond simple
transfers and protection, to include support for institution building and building up assets and access to
markets for the poor.

Empowerment

21. We will think again about giving an actual definition of empowerment, but are concerned that this will
set off a round of semantic back and forth as different people give their own preferred definitions. Rather,
we prefer to think of Empowerment as being a broad heading under which to consider a number of state
and non-state institutional factors which lie behind poverty and poverty reduction. In fact, we are
considering renaming this part of the report "Institutions and Empowerment" to convey this sense, and
also to account for the fact that we discuss institutions such as the legal system which can have effects
on the economy as a whole. A propos of the point raised in para 18, trade unions would also fit into this as
economy wide institutions with impacts on empowering the poor.

22. Differentials between Indian states are, we feel, emphasized in the report (eg discussion in
decentralization and many other places).

24. We will look again at how we present our argument here, since one line of argument we thought we
took (for example in the discussion on democracy etc) was indeed that what explained different outcomes
(eg in India) at the local level was organization of the poor. We will try to strengthen this discussion.

27. Yes, the China example is good one, where there has been tremendous progress in poverty reduction
without formal democracy--and the counter is of course India where poverty festers despite a lively formal
democracy. On the other hand, as Amartya Sen notes, China had a devastating famine while India has not
had one since independence.

30. We noted with interest the divergent views on the utility of the social capital construct. We feel that on
balance it serves to advance the discussion, although we take the point that it should not obscure
economic opportunity issues. Also, we do indeed talk about negative effects of some forms of social
capital but will go back to see how this can be strengthened.

31. The two views mentioned are indeed the two ends of the spectrum we have been trying to bridge. There
is no easy answer but in the revision we will try to emphasize both strategies--mobilization of the poor and
also relying on elite motivation (self interested or otherwise).

Security

34. Yes, we will have to work to link this part of the report better to empowerment and highlight community
level approaches. However, we were concerned to correct an imbalance we feel has entered some of the
discussion where the role of the state has been minimized. We will think again about "Protecting the Poor"
as a title and try to come up with one which has a more pro-active feel to it.

35. This para raises an important issue for us of the sequence in which we have put Opportunity and
Security. Issues such as capital flows or various policy reform issues are dealt with in detail in Chapter 8,
but some of the security consequences are now to be found in the earlier Chapters 5 and 6. We are
considering making the sequence Empowerment, Opportunity and Security to improve the flow. The same
applies to some of the points raised in para 36.

38. Please compare this para to para 34, a comparison which shows the tension between market, state
and community approaches to insurance. As argued above, we were concerned to give state based
approaches a good hearing, but in the context of exploring partnerships based on relative strengths of
different actors in different settings. We will look again at whether we have got the balance right. This point
is also relevant to para 39.

…worldbank.org/…/0,,print:Y~isCURL:Y… 2/4
21/04/2011 Poverty - Ravi Kanbur's Response to th…
40. See above point on sequencing. Chapter 8 does indeed deal with some of these issues.

42. We will try to provide this perspective in the revision.

43. We thought we did talk about some of these things, but will look again.

Opportunity

45, 50, 52, 53, 54, 55, 56. These paras between them raise some important generic questions and some
potential areas for disagreement, so let me take them together.

Different portions of the paras reveal tensions among the comments. For example, para 5 talks
disapprovingly of market-based approaches, while para 50 emphasizes the role of small businesses--which
presumably function on the profit motive. Para 56 reports on the tension between those concerned with
public sector inefficiencies versus those concerned with the potentially negative consequences of
privatization. For us the "markets or not" debate, at least in its sharp form, is not a very useful one. The
real issues are to do with how specific arrangements work in specific circumstances. It is this
differentiation that we were trying to get across.

Let me take as an example the issue of trade liberalization. We were trying to get beyond the
"liberalization is good"--"no it isn't"--"yes it is" type debate and to show the highly differentiated nature of
the outcomes which follow on from trade liberalization. This may indeed give the impression that we have
no "bottom line", but at this stage we thought it worth recognizing the complex patters that one sees in
reality. To the extent that a bottom line is being asked of us, and it is, we would respond on trade
liberalization as follows. From the medium term point of view, we cannot see how a country can attain
sustained poverty reduction behind protectionist walls for ever. In this sense we support trade liberalization
over the medium term. But the pace and sequencing of opening up needs to be looked at carefully, and
complementary policies need to be put in place. The claim that trade liberalization does not have some
costs for some of the poor is as invalid as the claim that all protection benefits all poor everywhere. The
strategy of groups like SEWA, for example, is to support those liberalizations which help their members,
and to argue for supporting policies and institutions which complement income earning opportunities for
the poor produced by certain liberalizations. Of course, they oppose those liberalizations which hurt their
members. The role of "automatic safety nets" is also important here since the negative consequences of
any policy, however small, cannot be predicted with accuracy--this was our original rationale for treating
Security before Opportunity, but see other arguments above for reversing the sequence. Further on this, we
agree that Northern country protectionism should be taken more to task in the report, and we will do so in
the revision.

46. In our analysis, we basically support free provision of certain types of health and education--the
analysis of cost recovery, especially in health, has shown up the problems for the poor. Our analysis of
water is more nuanced, because of the overwhelming evidence that free municipal water usually ends up in
the swimming pools of the urban rich, while the poor pay over the odds for marketed water. A better
strategy would be to the charge the urban rich and use the savings to increase connections to the poorer
localities.

48. The para itself reveals the difficulty of prioritizing--it mentions most of the categories of assets we
consider. The point is that these priorities will vary depending upon specific circumstances. The key is to
have mechanism which elicit these priorities and then deliver on them. This is what we were trying to
emphasize in some of our "guiding principles".

49. Curriculum content of education would take us into a level of detail which we may not be able to
sustain in the context of this report. We were surprised that we were seen as underplaying poverty of
those in work, since in many developing countries "formal unemployment" is quite low and most of the
poor work in one form or another--our focus is on how to increase their remuneration through asset build up
and increasing demand for labor. Core labor standards are touched upon in Chapter 9.

International Dimensions

58. We accept that in this draft the threads of the argument are not pulled together well enough at the end
to come up with a strategy for poverty reduction. We are considering a final concluding chapter which will
do this, highlighting the role of different actors ni the international and national arena.

59. We are considering a reshaping of Chapter 9 to bring in some other issues such as capital flows and

…worldbank.org/…/0,,print:Y~isCURL:Y… 3/4
21/04/2011 Poverty - Ravi Kanbur's Response to th…
global surveillance etc--to make it into a more general Chapter on the global setting for poverty reduction,
with International Public goods being one part of this picture.

60. Clearly, developing the new technologies and delivering them are both needed. In this chapter we were
focusing on the former, and highlighting the deficiencies in the current system.

61. We will look at the first part of this, in light of the reshaping of the chapter mentioned above.

62. Freedom of association is discussed in Chapter 3--we need to strengthen that. On Child Labor, the
statement is true. The issue is how to relieve that tension which households face. Legislation will if
anything increase that tension, and will probably be ineffective. Increasing incentives to send children to
school is what is needed, and we discuss these in various settings in the report (Chapter 6 and 7). But
we'll look at this again.

67. As I note above, the WDR is not the vehicle for discussion of specific Bank activities, including its
dealings with other agencies.

68. See above. We are thinking of a final concluding chapter which pulls the threads together.

Overview

7. This touches on my response to Para 13. The team does not see any evidence that national poverty
indicators have been reduced when poor countries have had zero or negative growth. We did not see any
such countries identified in the discussion. Economic growth is not sufficient by any means. The pattern of
growth determines the nature and extent of poverty reduction. And it is important to investigate which
policy interventions lead to pro-poor patterns of growth. But on growth itself, we cannot see how a zero
growth recommendation makes sense for poor countries.

8. I have discussed some of these in the detailed responses, but we will need to look at space and time
constraints, and whether it makes sense to take up issues perfunctorily in this report. An example is the
environment. The Bank has done entire reports on this topic. We touch on environmental issues as
illustrations of our themes at various points, but a detailed investigation would be beyond our scope.

9. I thought we did give emphasis--perhaps not sufficient--at least to some structural forces such as
assets, land inequality, gender inequality, etc.

WDRs are directed to an analysis of developing countries and transition economies, so we cannot really
do justice to the vast literature on poverty in rich countries in the space and time available. We will discuss
rich countries' responsibilities to the poor countries more in the proposed final chapter.

10. We will look again at better use of the material from the Voices of the Poor and the World Faiths
Development Dialogue.

Back to the WDR 2000/2001 homepage

© 2011 The W orld Bank Group, All R ights R ese rved. Le ga l.

…worldbank.org/…/0,,print:Y~isCURL:Y… 4/4