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 Press release - Efforts To Improve Human Welfare Stall On The Threshold Of The New Millennium (WB)

 Press release date: 25.04.1999

PRESS RELEASE

News Release No. 99/2152/S

Contacts: Phillip Hay (202) 473-1796
Phay@worldbank.org
Mapi Buitano (202) 473 8417
Mbuitano@worldbank.org
TV/Radio Cynthia Case McMahon (202) 473-2243
Ccase@worldbank.org

EFFORTS TO IMPROVE HUMAN WELFARE STALL ON THE THRESHOLD OF THE NEW MILLENNIUM

World Bank report offers new figures on poverty rates, life expectancy, and Internet access

WASHINGTON, April 26, 1999 - After a generation of declining poverty, longer lives, and better health for millions of the worlds poorest people, efforts to improve key areas of human development are in danger of stalling on the threshold of the new Millennium. Faltering growth in Asia and Latin America, uncertain prospects for the transition economies in the former Soviet Union, and the continuing spread of HIV/AIDS in Africa, will make it increasingly difficult for the international community to achieve a series of key development goals for the early 21st century, according to a new report released today by the World Bank.

According to World Development Indicators 1999? an annual World Bank compilation of significant development facts, figures, and analysis? developing countries, excluding the former Soviet Union, grew at a rate of 5.3 percent from 1991-97, encouraging expectations that living standards would continue to rise in most regions of the world. However, the financial crisis, which began in Asia in 1997, has now tempered those expectations and could reverse the gains of many people who had previously migrated from poverty to the ranks of the middle class in the worst-affected crisis countries.

In Eastern Europe and the countries of the former Soviet Union (FSU), millions of people have seen their living standards deteriorate sharply during their difficult move towards establishing modern market economies. In 1989, about 14 million people in the transition economies of the FSU were living under a poverty line of four dollars a day. By the mid-1990s, that number was about 147 million, or about one-person-in- three.

In parts of Sub-Saharan Africa, hard-won increases in life expectancy have been wiped out by HIV/AIDS, and from 1980-1996, growth in the school-age population has consistently outpaced the numbers of primary school enrollments. Furthermore, foreign aid levels are at their lowest levels in almost 50 years.

A year ago we confidently predicted that the international development goals of halving poverty, cutting infant and child mortality by two-thirds, and enrolling all children in primary education could be met, says James D. Wolfensohn, President of the World Bank Group. Now those goals are at risk, and we must draw on the lessons of recent experience to help us reshape our strategies for the future.

The international crisis that began with over-extended private banks in East Asia, and which has since roiled much of the developing world, is more than just a financial crisis, Wolfensohn writes in a foreward to the report . This has been a crisis of institutions not robust enough to sustain the forces of an increasingly global economy. This has also been a crisis of governancefor which the cure must be found in a strong legal system, a fair justice system, and transparent public institutions that work together with the private sector and civil society to produce equitable and sustainable growth.

Now in its third year, the World Development Indicators, which is compiled in close partnership with national statistical offices and international agencies such as the United Nations and the OECD, offers one of the worlds most detailed portraits of people, their economies, and their environment, and the health of states and markets.

The broad scope of the data underpins World Bank President James Wolfensohns campaign for a Comprehensive Development Framework? a more holistic approach to development that balances the social, economic, institutional, and environmental needs of market economies in a new effort to reduce poverty, and to improve peoples lives.

Some encouraging news

The report also offers some encouraging observations about the state of the world. For example:

  • India and China, which together account for 38 percent of the worlds population, have largely avoided the financial crisis that has shaken their Asian neighbors
  • Botswana had the worlds fastest growing economy in the period, 1965-97, with 11.4 percent average annual growth, followed by Oman, 9.7 percent, China, 8.5 percent, Singapore, 8.3 percent, and South Korea with 8.2 percent annual growth respectively
  • Girls enrollments have caught up with boys in most high-income, Latin American, Caribbean, and Eastern European countries
  • World free trade continues to grow despite protectionist pressures in some countries, and the continuing impact of the financial crisis in emerging markets
  • Latin America, Central Asia, the Middle East and North Africa have the best access to personal computers in the developing world, while Europe and Central Asia lead the way with Internet access

Despite the problems of the past 18 months, there is still some good news to report. Over the last 25 years we can see how living standards have risen dramatically, says Joseph E. Stiglitz, World Bank Chief Economist and Senior Vice President. Since 1970, food production has outpaced the population growth of nearly 2 billion; and 70 percent of adults in the developing world can read today.. By bringing together indicators that cover the full range of development issues, World Development Indicators provides a yardstick for measuring the results of our efforts in all regions and challenging us to make good on our goals for the benefit of all people.

People and their world? what the numbers tell us

Poverty

All developing regions have lost momentum in achieving their poverty reduction goals. During the period 1990-97, East and South Asia were the only regions growing fast enough to reduce poverty by half by 2015. Current forecasts for 1998-2001 suggest that only South Asia and China will grow sufficiently quickly to achieve this goal (page 9).

The most dramatic loss has been for East Asian countries. Comparing their latest growth forecasts with those from just 12 months ago, the average number of years it will take to reduce poverty by 50 percent, as required by the international development goals agreed several years ago, has risen by roughly two years for Indonesia. In the Philippines, where income growth has historically been low, its slowdown in growth will increase the time it takes to meet its poverty target by as much as 10 years.

According to World Development Indicators 1999, these forecasts assume that inequality remains stationary. But crises usually produce rising inequality, unless governments adopt social safety nets and other measures to protect the poor from the worst effects of economic shock.

Growing inequality

Inequality has increased most rapidly in Eastern Europe and the countries of the former Soviet Union since the collapse of Communism. In Russia, the number of people living in poverty (less then $4 per day) soared from about 2 million in 1987 to 66 millionfour out of ten Russiansby 1995. (p.7)

During the past decade, inequality has also increased in countries as diverse as Brazil, Bangladesh, China, Malaysia and Thailand. In 34 developing countriesincluding Jordan, Malaysia, Russia, Peru, South Africa, Ukraine, Venezuela, and Zambia,the richest 20 percent of the population receives more than half the countrys income, while the poorest 20 percent gets less than 5 percent.

Education

Many developing countries continue to make strides towards ensuring universal primary education and equal access to secondary education for girls as well as boys. However, some regions and countries are better than others. In Morocco, Pakistan and India, for example, the difference in years of schooling completed by children from the poorest and richest families varied from eight to ten years. But in Kenya, Ghana, the Philippines and Egypt the gap was only two to three years.

Enrollments by female students are catching up with those of boys in some regions but continue to lag in others. Intensive promotion of education over the past decade has significantly increased primary school enrollments. In East Asia, Latin America, and Eastern Europe, girls are now as likely as boys to attend primary school, and to go onto secondary school. But in the Middle East and North Africa, in South Asia, and in Sub-Saharan Africa girls enrollments continue to lag behind boys (Table2.12).

Environment

Global per capita water supplies are declining and are now 30 percent lower than they were 25 years ago. Further increases in population and economic activity are expected to boost demand for water, exposing many countries to chronic and widespread water shortages. By 2050, as much as 42% of the worlds population will live in countries with insufficient fresh water stocks to meet the combined needs of agriculture, industry and domestic use (p. 118).

Four countriesthe U.S., China, Russia and Japanaccounted for more than 40% of commercial energy use (basically, all energy use except for home use of firewood and other biomass). Commercial energy use has been growing rapidly in low- and middle-income countries, but high-income countries still use almost seven times as much on a per capita basis (Table 3.7).

Health

Adult mortality rates have increased in many countries in Sub-Saharan Africa, due to HIV/AIDS. Furthermore, HIV infection rates in the region are among the worlds highest. For example, 29 percent of Zimbabwes population aged 15-49 is infected with the virus, followed by Botswana, 25 percent, and Zambia, 19 percent. Eight other African countries have infection rates of more than 10 percent of their adult populations (Table 2.17).

Adult mortality has also increased in Eastern Europe and the countries of the former Soviet Union, due to factors such as smoking, high-fat diet, excessive alcohol use, and the stressful psychological conditions of economic transition (Table 2.18).

Technology? the digital age expands its reach

According to World Development Indicators 1999, the communications and computer revolutions are greatly expanding the reach of global knowledge. Indeed, they can allow developing countries to leapfrog old technologies that still hold sway in industrial countries. For example, the ratio of cellular to total mainframe telephone use is much higher in the Philippines and Sri Lanka than in Belgium or France (see tables 5.10 and 5.11).

Worldwide, Finland has the greatest number of cellular phones per 1,000 people with 417; followed by Norway with 381; Sweden with 358; Japan with 303; and Israel with 283.

The report also shows that Sub-Saharan Africa countries such as Botswana, Djibouti, and Ghana have 100 percent digital telephone networks, compared with the OECD average of less than 70 percent.

Although the Internet continues to reach millions of new subscribers each year in both developed and developing countries, the report shows that industrial countries, and particularly those in Scandinavia, continue to have the greatest access to cyberspace. Once again, as with cellular technology, Finland also has the worlds largest number of Internet hosts per 10,000 people with 996; followed by the United States with 976; Norway with 705; New Zealand with 468; and Sweden with 430.

Looking ahead

World Development Indicators shows that international development efforts over the last 25 years have clearly achieved tremendous gains, but that the financial crisis that has gripped developing countries and those in transition, has slowed efforts to maintain and improve living standards for the worlds poorest people. As Shaida Badiee, Director of the World Banks Data Group which produces the report, puts it, having authoritative and up-to-date development information available is crucial to safeguarding the human gains of previous years, finding the means to weather the current crisis, and charting a new, more hopeful future in the post-crisis era.

This year we report on the prospects for developing countries in the aftermath of the financial crisis that swept much of the world. It is too soon to draw conclusions? indeed, we are only beginning to measure the effects. What is clear is that the world cannot afford another lost decade like the one Latin America endured after the debt crisis of the 1980s. Such a setback would put all our goals out of reach and leave millions in still greater distress.



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