Premium Essay

What the World Bank Means by Poverty Reduction

In: Business and Management

Submitted By kibunja
Words 11424
Pages 46
What the World Bank Means by Poverty Reduction

Paul Cammack

ABSTRACT

Critics of the World Bank have variously attributed its proclaimed commitment to poverty reduction to empty rhetoric, hypocrisy, incompetence, confusion, or overload in the absence of a coherent agenda. This article argues that the commitment is genuine, but that it is not a first order goal: poverty reduction is an intended consequence of its principal objective, the transformation of social and governmental relations and institutions in the developing world in order to generalize and facilitate capitalist accumulation on a global scale, and build capitalist hegemony through the promotion of tightly controlled forms of 'participation' and 'ownership'. This objective has been pursued consistently since the mid -1990s, with Wolfensohn as Director and Stiglitz while Chief Economist playing leading roles. It has been reflected in particular in the HIPC (Heavily Indebted Poor Countries) Initiative, the Comprehensive Development Framework, and PRSPs (Poverty Reduction Strategy Papers) as means of governing low-income countries. Once the character of the project is understood, its limitations and contradictions become apparent, but at the same time many of the criticisms advanced are seen to underestimate its logic and coherence, and proposals for reform arising from them are shown to be naïve.

INTRODUCTION

In 1996 the IMF and the World Bank introduced the HIPC (Heavily Indebted Poor Countries)
Debt Initiative, a programme aimed to provide debt relief against country commitments to reduce poverty and pursue economic reform. Since then poverty reduction has taken centre stage at the World Bank in particular. The central role accorded to it was institutionalized with the announcement of the Comprehensive Development Framework in January 1999, and the parallel...

Similar Documents

Premium Essay

Inernaional Development

...POVERTY REDUCTION STRATEGY PAPER ANALYSIS INTRODUCTION Poverty Reduction Strategy Papers (PRSPs) were introduced in 1999 by the World Bank and the IMF as a new framework to enhance domestic accountability for poverty reduction reform efforts (Web.worldbank.org). The initial Structural Adjustment Programme failed, as pointed out by Rapley, 2007, almost every country that has implemented structural adjustment programme has seen its own share of strikes and riots in response to deteriorating living standards and rising unemployment. Donors acknowledged that, lack of government commitment or “ownership” was a main factor for the failure of structural adjustment policies (Driscoll et al, 2004). As a result, the IMF and World Bank restructured their terms of engagement. They promoted PRSPs as being “country owned”, participatory and as taking a universal approach to poverty (Bradshaw and Linneker, 2003). However, whether these arguments reflect the reality is open for debate. Through in-depth analysis of various PRSPs articles and civil society reports, the report will analyse the concept of PRSPs for the purpose of enlightening a British based development Non- Governmental Organisation. AIMS AND OBJECTIVES • Analyse the significant change in policy and discuss what PRSPs actually entails. • Provide a clear and balanced analysis to the British based development NGO before they promote the participation of national civil actors in the PRSP design process. Finally, the......

Words: 2025 - Pages: 9

Premium Essay

The Relationship Between Globalisation, Inequality and Poverty.

...relationship between globalisation, inequality and poverty. The term globalisation refers to the process by which the world has become more connected through advancements in technology, transport and communications and resultantly become integrated in many areas of life. For the purposes of this essay, one will be discussing the relationship between primarily economic globalisation, poverty and inequality in what many have referred to as the ‘third wave’ of globalisation, which has been prominent since the 1980s. Advocates of economic globalisation, understood as “the widening, deepening, and speeding up of worldwide interconnectedness” (McGrew in Ravenhill, 2005: 275) suggest that economic advancement through globalisation is a by-product of well-functioning markets; that countries should specialise in line with their comparative advantage; and that countries should practice free trade as a guiding principle. (Wade, 2004a: 184) Still today there exists huge economic inequality both within and between countries, and mass poverty is an issue which is still high on the agenda of world leaders across the globe. Yet data from the World Bank has shown that the number of people living in extreme poverty, of which it classifies as those living on less than $1 per day in Purchasing Power Parity (PPP) has fallen in the last two decades for the first time in 120 years. (Wade, 2004a: 163) The relationship between globalisation, inequality and poverty thus seems to be one which is......

Words: 3011 - Pages: 13

Premium Essay

World Bank and Developing Countries

...World Bank: Roles and Responsibilities in Developing Countries Mathew Vettukallel Liberty University Business 606-B01 LUO Professor Dr. Joan Koonce October 11, 2013 Abstract This research paper will focus on how the World Bank has helped many third world counties to transition into developing nations. The mission of the World Bank is total elimination of poverty from the face of the earth by the year 2030 (www.worldbank.org). The World Bank has been helping many developing countries to fight against diseases such as AIDS, Tuberculosis, and Malaria in many parts of the world (Clark, 2011). The World Bank is offering financial help for several programs to help with agriculture, transportation, infrastructure, and irrigation in many South Asian countries to reduce poverty. There has been so much controversy about the activities of the World Bank. Even though the main mission of the World Bank is to alleviate poverty from the face of the earth, there has been severe criticism that the World Bank is changing its focus to financial policy reforms and structural adjustments. The World Bank as an international financial institution has done so much to help numerous developing countries when they are in financial crisis or needed help to undertake a major development project. Regardless of the criticism and corruption accusations, this author believes that the World Bank is in the right direction by providing basic reforms and structural adjustments in order to alleviate...

Words: 7437 - Pages: 30

Premium Essay

World Bank

...Purpose[edit] The World Bank and IMF require countries to produce a Poverty Reduction Strategy Paper as a condition for debt relief through the HIPC initiative and other monetary aid, as do several bilateral donors.[2] PRSPs are intended to help aid recipient countries meet the Millennium Development Goals (MDGs).[1] They detail a country's plan to promote growth and reduce poverty through implementation of specific economic, social and structural policies over a period of three years or longer.[7][1] PRSPs provide lending organizations, like the World Bank and the IMF, assurance that aid receiving countries will utilize aid to pursue development outcomes that have been elaborated in the PRSPs and approved by lenders. Goals[edit] The IMF has outlined five core principles for the process through which PRSPs are elaborated.[1] First, it should be country-driven, meaning that country ownership of the strategy should be culminated through broad-based participation of civil society.[1] It should also be result-oriented by focusing on outcomes that will benefit the poor, comprehensive in exploring and understanding the multidimensional nature of poverty, partnership-oriented by involving development partners such as the government, domestic stakeholders, and external donors.[1] Lastly, the development of the PRSP should be based on a long-term perspective geared towards reducing poverty.[1] These core principles are central to the goals of the PRS process. Poverty-focused......

Words: 1263 - Pages: 6

Premium Essay

Microfinance as a Tool for Poverty Reduction in the Kwahu South District of Ghana

...their own bank accounts nor are they able to take out loans, transfer money or insure their families against risks such as illness, accident or death. In most cases, access to these financial services that are so central to sustainable development are either denied or made very difficult. Consequently, people frequently have no choice but to resort to local moneylenders who charge usurious rates of interest or use informal and, therefore, insecure ways of performing transactions such as payments and money transfer. The above is reflected in the quotation by the past Secretary-General of the United Nations: ‘‘The stark reality is that most people in the world still lack access to sustainable financial services, whether it is savings, credit or insurance. The great challenge before us is to address the constraints that exclude people from full participation in the financial sector. Together, we can and must build inclusive financial sectors that help people improve their lives (United Nations, 1997).’’ With almost thirty per cent of the country's population living in poverty, the Government of Ghana clearly faces an enormous challenge to reduce poverty especially in the three northern savannah regions where there is the greatest concentration of poor people. To achieve rapid and sustainable reduction in poverty, it is necessary to have an integrated policy with the various elements of the strategy reinforcing each other. The World Development Report for 1990 (World Bank,......

Words: 20209 - Pages: 81

Premium Essay

Poverty in Phillipine

...2007-1 Why Does Poverty Persist in the Philippines? Facts, Fancies, and Policies Arsenio M. Balisacan SOUTHEAST ASIAN REGIONAL CENTER FOR GRADUATE STUDY AND RESEARCH IN AGRICULTURE Science and education for agriculture and development Arsenio M. Balisacan SEARCA College, Los Baños, Laguna Tel/Fax: (63) 495362290 E-mail: post@agri.searca.org The SEARCA Agriculture and Development Discussion Paper Series aims to disseminate information on current trends or researches to inspire discussion between the author and other stakeholders in the same field of interest. SEARCA encourages readers to directly contact the author through the address provided or join the discussion board for this paper at http://bit.ly/searca-dps-2007-1. DISCLAIMER The point of view taken in this paper is entirely that of the author and does not reflect in any way, SEARCA’s position. INTRODUCTION A ddresing the widespread poverty problem is the single most important policy challenge facing the Philippines. Not only is poverty high compared with other countries in East Asia, but also its reduction is so slow that the country has become the basket case in the region. Proposals peddled to address the poverty problem are plenty—and keep growing. At one end of the spectrum are proposals contending that the root of the problem is simply the lack of a respectable economic growth. Putting the economy on a high-growth path is prescribed as all that is needed to lick the poverty problem. At......

Words: 7211 - Pages: 29

Free Essay

Labour Standards

...ouLabour standards and poverty reduction Labour standards and poverty reduction May 2004 FOREWORD BY THE SECRETARY OF STATE FOR INTERNATIONAL DEVELOPMENT One of the greatest moral and political challenges of our time is the ending of mass poverty. To ensure action on a global scale, and to assess progress, the international community has set itself ambitious targets for the reduction of poverty, embodied in the Millennium Development Goals and affirmed by governments worldwide at the UN Millennium Assembly in 2000. These have been adopted by major development agencies, and are supported by NGOs. They express the conviction that it is possible to improve substantially the living conditions and opportunities of the world’s poor over the coming decade. The MDGs can be achieved only if poor people themselves are involved in the decisions which affect their lives. They should therefore have the freedom to organise themselves in associations which promote their interests in the societies in which they live. They should not be subject to forced labour, or suffer from discrimination in the labour market. They should be able to maintain their livelihoods without having to make their children work rather than go to school. An essential part of poverty elimination is those human rights known as core labour standards: freedom of association and the right to free collective bargaining; elimination of all forms of forced or compulsory labour; effective abolition of child......

Words: 16550 - Pages: 67

Free Essay

Social Safety Nets in Bangladesh

...Net Plans in Bangladesh and their poverty impact at a macroeconomic level. The main objective of the study is to look into the overall impact of the existing safety net programs on poverty reduction in Bangladesh. The paper also looks into the impact of the existing safety net programs on reducing inequality. | Social Safety Nets In Bangladesh This report looks at the overall structure of Social Security Net Plans in Bangladesh and their poverty impact at a macroeconomic level. The main objective of the study is to look into the overall impact of the existing safety net programs on poverty reduction in Bangladesh. The paper also looks into the impact of the existing safety net programs on reducing inequality. Institute of Business Administration, University of Dhaka Table of Contents 1. Executive Summary i 2. Introduction 1 2.1. The Poverty Situation of Bangladesh 1 2.2. Social Safety Nets 1 3. Social Safety Nets of Bangladesh 2 3.1. Structure of Social Safety Nets 4 3.2. Trends in Social Safety Nets 7 4. Social Safety Nets and Poverty 9 4.1. Impact Assessment of Social Safety Nets on the Poverty of Bangladesh 9 4.2. Inequality Effect of Social Safety Nets 9 5. Conclusion 10 6. Recommendations 10 7. Bibliography 12 1. Executive Summary Social safety net is a measure taken by the government in order to prevent the vulnerable section of its population to fall beyond a certain level of poverty. Social safety net programs......

Words: 5360 - Pages: 22

Premium Essay

Human Development

...what’s different in poverty reduction?” would have brought a set of answers different from those that one would give today. Despite the Asian financial and economic crisis, positive new developments within the last two years suggest promising possibilities for poverty reduction and poverty elimination. Poverty Reduction before the Asian Financial and Economic Crisis Three new elements stand out in the approach to poverty reduction in the 1990s. First, there was a new optimism in the mid-1990s over the prospects for rapid reduction of poverty in developing countries. The Human Development Report (HDR) for 1997, which focused on poverty, amply demonstrates this. It showed that the incidence of poverty had fallen more in the last 50 years than in the previous 500 years. Indicators of human development highlighted significant advances in most countries of the world, including countries that had experienced long periods of economic difficulty. The People’s Republic of China (PRC) and some 14 other countries, with a population totaling 1.5 billion people, had shown astonishing drops in poverty in less than 20 years. Ten more countries with almost another billion people reduced the proportion of their populations below the poverty line by a quarter or more. All this set the stage for optimism regarding prospects in the rest of the world, with many Asian countries leading the way. Second, there was a new commitment to reducing and eventually eliminating poverty. At the World Summit......

Words: 1641 - Pages: 7

Premium Essay

Assessing the Effectiveness of Microfinance Loans from Nbc in Reduction of Poverty in Kinondoni District

...Assessing the Effectiveness of Microfinance Loans from NBC in Reduction of Poverty in Kinondoni District – Dar es Salaam. LIST OF ABBREVIATIONS. ACB - Akiba Commercial Bank CGAP - Consultative Group to Assist the poor CRDB - Cooperative and Development Bank FFI - Formal Financial Institution FINCA - Foundation for International Community Assiatance GDP - Gross Domestic Product NBC - National Bank of Commerce NGO - Non Governmental Organisation NMB - National Microfinance Bank NMFP - National Microfinance policy PFSs - Private Financial Sectors PRIDE - Promotion of Rural Initiatives and Development Enterprise SACCOS - Saving and Credit Cooperative Society SPSS - Statistical Package for Social Science URT - United Republic of Tanzania ABSTRACT The Ojective of the research was to assess the eeffectiveness/contribution of PFSs in reduction of poverty in Kinondoni District Dar es Salaam Tanzania. The research was conducted at NBC branches. The Branches to which the Reseacrh was conducted were Kinondoni Branch, Ubungo Branch, Mlimani City Branch, UDSM Branch and Tegeta Branche. Data were collected through interview and research questionnaires and were analyzed by using quantitative approach. The research study revealed that......

Words: 15107 - Pages: 61

Premium Essay

Agriculture

...Agriculture, growth and poverty reduction This paper was produced by the Agriculture and Natural Resources Team of the UK Department for International Development (DFID) in collaboration with Anne Thomson of Oxford Policy Management, Oxford. The authors are grateful to the UK Food Group for their additional contributions and comments. The paper reflects work in progress towards the development of new thinking on agricultural policy in DFID. It does not necessarily reflect the views and policy of DFID. This (working/supporting) paper is intended to stimulate public discussion. It is not necessarily DFID or UK Government policy. October 2004 Contents Executive Summary...................................................................................................... 3 1. What is the issue? .................................................................................................... 4 2. Agriculture, growth and poverty – what we know of the relationship ............................ 5 2.1 The context – the state of world poverty............................................................... 5 2.2 Agriculture’s recent performance – a picture of mixed progress............................... 7 2.3 Agricultural growth and poverty reduction – the evidence....................................... 9 2.4 Understanding how increased agricultural productivity reduces poverty ................. 10 3. Emerging issues and questions................................................

Words: 10970 - Pages: 44

Premium Essay

Economy

...consequently general economic activity will follow suit, so it is held. We suggest that unemployment is not the key issue for economic growth. What matters for individuals is not whether they are employed as such but the purchasing power of their earnings. The key for this is the infrastructure individuals utilize in the production of goods and services. What permits an increase of the production of goods and services and hence raises people’s living standards is an expansion and enhancement of infrastructure. What in turn permits this is an expanding pool of real savings. Contrary to popular thinking, the Fed’s and the government policies that are aiming at lowering unemployment don’t improve people’s living standards, but on the contrary they undermine the process of real wealth generation and thus set in motion an economic impoverishment. In fact the latest government data indicates that many more Americans have fallen below the poverty line in 2009 despite all the massive stimulus packages. For the time being, the latest US economic data remains subdued. Also in China a visible fall in the growth momentum of money supply M1 raises the likelihood of a visible fall ahead in economic activity indicators. Is a reduction in unemployment the key to US economic recovery? Most experts are almost unanimous that the key to economic recovery is a reduction in the unemployment rate, which stood at 9.6% in August. The number of unemployed stood in August at almost 15 million. Also......

Words: 2786 - Pages: 12

Premium Essay

Social Network

...BENTLEY COLLEGE Bentley Model United Nations Program 16th Annual BMUN High School Conference 28-31 May 2004 La Cava Campus Center BACKGROUND PAPER AND TOPIC SUMMARY Third World Debt Executive Summary: The debt problems of developing countries that began in the 1980s still remain a huge burden in the new millennium. Although there have been several initiatives like the Baker Plan, the Brady Plan, and the HIPC Initiative to ease the burdens of those countries, many still experience unsustainable debt. The debt burdens of developing and middle-income countries increased from $500 billion in 1980 to $1 trillion by 1985. By 2000, their debt was about $2 trillion. The debts of HIPC countries increased from $60 billion in 1980 to $190 billion by 1990. Even with relief programs like the HIPC Initiative, 8 countries under the Initiative experienced worsening debt indicators even after reaching their completion points. The consequences of developing countries’ inability to exit from debt payments go beyond the financial level. In addition to economies being hurt, the peoples of developing countries will also feel the affects. The United Nations established the Millennium Development Goals in 2000 that pledged to halve income poverty between 1990 and 2015, but countries like those in Sub-Saharan Africa will most likely not meet this goal. The problems delaying debt relief result from numerous actors. Creditors need to provide additional......

Words: 6791 - Pages: 28

Premium Essay

Why Do Poverty Reduction Programmes Tend Not to Work Out as Intended?

...Why do Poverty Reduction Programmes tend not to work out as intended? Discuss in relation to either i) states or ii) civil society organisations (NGOs or social movements or both). Introduction Mass poverty is the single most important economic and social issue on our planet today (Downer, 1997). ‘Poverty’ is a multidimensional concept involving the inability of people to meet their economic, social and other standards of well-being (OECD, 2001). Over the years a number of institutional approaches have been used to ensure the eradication of poverty from the society (Sarker and Rahman, 2006). One of these efforts is through a poverty reduction strategy. According to Barder (2009) ‘Poverty reduction’ is often described as the promotion of economic growth that will permanently lift as many people as possible over the poverty line. This line is defined as ‘the income levels below which people are defined as poor’ (World Banks, 2004). However, making poverty reduction strategies work has proven a much bigger challenge regardless of the fact that many efforts have been made towards alleviating it. Downer (1997) argues that the provision of opportunity for people to meet their basic needs has become the greatest challenge to most countries. Why then do poverty reduction programmes tend not to work out as intended? Pellissery (2005) points out that in developing economies, public authorities who are responsible for designing and implementing anti-poverty interventions are not......

Words: 3393 - Pages: 14

Free Essay

Busn-115

... List five ways to improve communication in an international business relationship 7. Identify five forms of international business activity 8. Discuss terrorism’s impact on globalization Answers to End-of-Chapter Questions Test Your Knowledge Questions for Review 1. How can a company use licensing agreements to enter world markets? By licensing, a company can negotiate an agreement that entitles it to produce or market another company’s product in return for a royalty or fee. The company that obtains the license is responsible for the product quality, promotion, and distribution, and it must pay the other company a percentage of its sales. On the other hand, the company that grants the license avoids shipping costs, trade barriers, and other problems associated with international trade, while still receiving a portion of the revenue from overseas sales. 2. What two fundamental product strategies do companies choose between when selling their products in a global marketplace? Should products be standardized, selling the same brand everywhere in the world, or customized to accommodate local target markets? 3. What is the balance of trade, and how is it related to the balance of payments? The balance of trade is determined by the relationship between the value of a country’s imports and the value of its exports....

Words: 1767 - Pages: 8