WORLD BANK/Commentary: Rich vs. Poor: Our Unstable World: Wolfensohn

Commentary: Rich vs. Poor: Our Unstable World: Wolfensohn 
 
5 March, 2004

I'm speaking to a group of San Jose high school students today about the role 
that youth can play in international development. My comments come at a time 
when events of recent years have shown how small our world is, and how 
interdependent we've become, writes World Bank President James Wolfensohn in 
an op-ed in the San Jose Mercury News (03/04).

California is a state that understands the forces of globalization more than 
most. People here recognize that California depends for much of its economic 
health on the fortunes and developments in many other parts of the world. 
Last year, the state's exports to the rest of the world totaled about $94 
billion. The state's economic vitality is one of the major reasons behind the 
influx of people from Latin America and Asia to the extent that now one-third 
of California's 33.8 million people are Hispanic, and one-tenth are from 
Asia. This gives us a picture of a region closely entwined with the rest of 
the world.

And yet, here, as in many other parts of the United States, there is an 
urgent need for even greater understanding of the linkage between the 
developed and the developing nations. This is especially true when the war 
against terror risks overshadowing the war on poverty, and when protectionist 
tendencies risk derailing the free trade principles on which much of our 
prosperity depends. The fault-line imbalance of our time is the great divide 
between rich and poor. In our world of 6 billion people, one billion own 80 
percent of global wealth, while another billion struggle to survive on a 
dollar a day. Two billion people have no access to clean water; 150 million 
children never get the chance to go to school; more than 40 million people in 
the developing countries are HIV positive -- with little hope of receiving 
treatment, Wolfensohn writes.

Demography is another source of major imbalance. Over the next 25 years, 
about 2 billion more people will be added to the planet's population—but only 
50 million of them will be in the richer countries. The vast majority will be 
in the poorer nations, born with the prospect of growing up into poverty and 
unemployment—and disillusioned with a world that they will view as 
inequitable and unjust. Terrorism is often bred in places where a burgeoning 
youth population sees hope as more of a taunt than a promise. For these young 
people, the choice is stark: dignity or desperation. In making the choice, an 
ever-increasing number will leave their home countries to find work. 
Migration will become an even more critical issue for us all.

There is further imbalance between what the industrialized countries spend on 
development assistance. Subsidies and tariff protection for farmers in the 
developed countries total more than $300 billion. Military spending by all 
countries was $800 billion in 1999—and it is probably closer to $1 trillion 
today, given the conflicts in Iraq and Afghanistan. By comparison, aid 
spending represents 0.22 percent of global income, its lowest level in 40 
years.

Time is against us if we are to address these inequities, but what needs to 
be done? Developing countries have to tackle corruption and spend more on the 
poor. The wealthier nations need to support them by providing more aid, by 
dismantling trade barriers and by relieving the debt burdens of countries 
that are delivering on reform. We are linked now in so many ways: by 
economics and trade, migration, environment, disease, drugs, conflict 
and—yes—terrorism. Elections are won and lost on local issues; that is true 
for every country. But it is global issues, and especially poverty, that will 
shape the world our children live in, he writes.

Meanwhile, The Stanford Daily writes that Wolfensohn recently met with 
students at Stanford University Graduate School of Business and explained 
that to achieve the World Bank's goals in each country, many things need to 
be considered together, such as institutional structure, capacity in 
government, a legal system to protect rights and a transparent financial 
system. "Above all, we need a system [that is] not corrupt," Wolfensohn said. 
To deal with that, he emphasized the importance of creating an institutional 
framework that would not tolerate corruption in any countries. But "the key 
to all," as Wolfensohn put it, was "growth – private sector growth" that can 
generate jobs.

 
SOURCE: World Bank