Press Releases

    21 October 2005

    Lives of Many Poor People Worldwide Determined by Circumstances beyond Their Control, World Back Official Tells Second-Third Committee Panel Discussion

    In Joint Event to Consider Findings of Report on Equity, Development, He Cites Race, Gender, Social Group, Family Background

    NEW YORK, 21 October (UN Headquarters) -- Fair societies, in which many people had a chance to become productive at investing and innovating, did better than those that restricted opportunities, Francisco Ferreira, senior World Bank economist and co-lead author of World Development Report 2006: Equity and Development, said this afternoon during a joint panel discussion of the Second and Third Committees (Economic and Financial; Social Humanitarian and Cultural respectively) to discuss that report's findings.

    He said that the lives of many of the world's poor were predetermined by circumstances beyond their control -- such as race, gender, social group and family background -- and that the term "equity" was used to convey the notion that people should instead determine the outcomes of their lives through effort, preferences and talents.  The report's use of the term referred not to income equality but to equality of opportunity, he added.

    Inequity hindered economic growth because it prevented human and financial capital from being allocated efficiently, he continued.  For example, poor entrepreneurs with good business ideas could not easily borrow money from a bank or issue stocks, a fact that signalled inefficiencies in the allocation of financial capital.  Unfortunately, the interactions between economic, political and socio-cultural inequalities in many poor countries were mutually reinforcing and often perpetuated through their institutions, forming an "inequality trap".

    To climb out of such traps, Governments should begin viewing the poor as an underutilized resource rather than a burden, he said.  Efforts should be made to invest in capacity-building for the poor -- through nutritional programmes for poor children so as to improve mental development, for example.  Governments should also allocate more investment in infrastructure directed towards the poor, who, for example, often "paid" more for water because they obtained it by more costly methods, such as fountains and vendors.  Better infrastructure could alleviate that problem.

    Finally, he said Governments should provide everyone with better access to markets of all kinds, including financial, labour and product markets, and ensure equal treatment for all players in those markets.  That was relevant not just within countries but also between countries.  The international community should strive towards levelling the international playing field, for instance, by increasing the mobility of labour for the poorest countries so that they could reap a high return from their abundance of unskilled labour.

    Another speaker was Duncan Campbell, Director of the International Policy Group in the Policy Integration Department of the International Labour Organization (ILO).  Noting that economic development and rights went hand in hand, he said people around the world wanted the opportunity for decent work, but they were hampered by unequal opportunities that were handed down from generation to generation.  To help break that cycle, the ILO had intervened by promoting education, for instance, thus substituting schooling for child labour and breaking what would have been a self-perpetuating cycle of poverty.

    He pointed out, however, that efforts to promote equity in labour markets might not necessarily address the root causes of inequity overall.  A country that had excellent laws on anti-discrimination in the labour market -- and could enforce them -- would receive the economic payoff of more productive job matches, but if girls had been deprived of the schooling that boys received, it would be too late to address the problem fully by the time they joined the labour market.

    A third speaker was Jomo Kwame Sundaram, Assistant-Secretary-General for Economic Development in the United Nations Department of Economic and Social Affairs, who said that the issue of equity was particularly important at present, given the decline of the government role in distribution.  Tax structures had become less progressive and more regressive, benefiting the rich more than the poor.  Also, public spending had declined as a proportion of gross national product, with the proportion devoted to social expenditure having decreased in developing countries.  Furthermore, the drop in primary-commodity prices relative to those of manufactured goods, the decline in tropical agricultural commodities in relation to temperate agricultural commodities, and the strict enforcement of intellectual property rights all underscored, more than ever, the need to act.

    But agricultural trade liberalization was not a sure solution, he cautioned, explaining that the main beneficiaries of such liberalization would be existing agricultural exporters rather than new exporters from Africa or elsewhere as many would hope.  Similarly, financial liberalization had not resulted in the flow of capital from rich to poor, but the reverse.  Because the scope and jurisdiction of the World Trade Organization (WTO) had widened to include such matters, delegates should examine how the WTO governance could be reformed to ensure a democratic, equitable and developmental outcome to trade negotiations.  It would also be important to preserve a country's policy space, so as to ensure national ownership of development strategies and equitable development outcomes.

    During the ensuing discussion, speakers questioned how the ill-advised policies that developing countries had been urged to adopt during the 1980s -- such as charging for health and education services, promoting privatization, and reducing resource flows to the social sector -- could now be smoothly overturned.

    Mr. Ferreira responded by pointing out the danger of lumping all policies together, and noting that some instances of privatization had been more successful than others in increasing access to basic services.  As for education, fees for tertiary studies could be appropriate, but were probably short-sighted for primary education or health care.

    Responding to queries about the Doha Round of trade negotiations and agricultural subsidies, he said the World Bank was not necessarily confident that the outcome would benefit developing countries.  Developed nations, where policies benefiting farmers at home were considered justified, must revise their attitudes. 

    Such political decisions were complex, and one could not say with any certainty which direction they would take.

    In response to comments about the apparent conflict between the long-term process of improving governance and quick fixes to inequity so as to boost development, he stressed the interdependence of governance and equity.  Reducing inequity was actually a slow process, and would only occur through good governance and a more equal access to power.

    Second Committee Chairman Aminu Wali Bashir (Nigeria), who co-chaired the event with Third Committee Chairman Francis Butagira (Uganda), said in his opening remarks that inequities in access to health care, education, jobs, food and shelter had led to a pool of unskilled and weak adults and children, who were at risk of being mired in poverty.  Attention should be given to promoting the inclusion of poor countries in international decision-making while making them accountable for carrying out reforms in their own countries.

    The Second Committee will meet again at 3 p.m. on Monday, 24 October, to hear a presentation by the World Economic Forum on "The role of public-private partnerships, risk mitigation and capacity building in mobilizing resources for development".

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