Combating poverty requires a broad, comprehensive approach spanning economic, social and structural elements, says Mats Karlsson, vice-president for external and United Nations affairs at the World Bank. "Economic growth isn't everything. Over the past 10 years, growth has been increasing, but the impact on poverty has been less," he said. "While work has been done, there still has not been a sufficient impact in fighting poverty."Three concepts are at the heart of the World Bank's development strategies: empowerment, security and opportunity.
Countries had to take a more active role in "caring for the needs of the poor", Mr Karlsson said, implement protection mechanisms and offer creative opportunities for people. Earlier this week, the World Bank announced a $200-million initiative to help develop Internet-related businesses in developing markets. Japanese Internet firm Softbank will hold a 75% in the new Softbank Emerging Markets, with the World Bank's International Finance Corporation holding the rest. The initiative will provide funds, technology, legal and management assistance to new firms in developing countries.
Mr Karlsson said the project was aimed at "bridging the digital divide" by supporting entrepreneurs and infrastructure development. "For instance, in Ethiopia, one entrepreneur sells goats through a web site. The market? Cab drivers in New York City," he said. "He monitors his orders through the Internet. Things like this could never have happened before."Mr Karlsson said the Information Age was helping press the World Bank and other institutions to take a more open, inclusive approach toward its development strategies.
"In the past, for structural adjustment policies, the World Bank, the International Monetary Fund, we might exchange letters with a country's finance ministry, saying that's the programme. Now just do it," he said. "They agree to it, but not quite agree to it. Now, in a modern world, you have to communicate, align strengths of organisations, of civil society, governments and the private sector."Mr Karlsson said the World Bank shared frustration felt by many that low-income countries were not getting free access to exports.
But trade was only one element of a bigger picture involving also investment and governance in the fight for improving quality of life. "My hope is that we can look back a decade from now and see that poverty figures have gone down, that people are freer," Mr Karlsson said. "That's what development is about."
Domestic consumption is not strong enough to sustain Thailand's economic recovery without banking reform progressing further, the World Bank's vice-president, Jean-Michel Severino, has warned. Although the bankruptcy law had been effective since the middle of last year, the number of court petitions and case approvals remained low, he said at a meeting of the Foreign Correspondents' Club on Monday.
Quicker progress would help restore investors' confidence in the credit system, Mr Severino said. "A large number of corporations will end up bankrupt at the end of the day. But banking system reform is as equally important in strengthening the economy to support recovery," he said. The rapid recovery of the economy last year was driven mainly by exports. Domestic consumption had yet to improve significantly enough to sustain the recovery, Mr Severino said. The economic crisis resulted from structural problems.
Another area of banking system reform is developing the bond markets. The private sector's excessive reliance on bank loans contributed to the crisis, he said. The International Monetary Fund's economic programme was not the only formula for success. Malaysia survived the crisis with capital controls, while South Korea's government tackled the chaebol, the country's dominant businesses.
Thailand's ability to adopt new technology to improve its competitiveness would be an important challenge. High wages and the appreciation of the baht showed that the country could not pin its hopes on labour-intensive products and low prices, he said.
Bangkok Post, February 16, 2000