Ordinary Thais continue ceaselessly to stage protests in June 2000
outside Government House calling for the withdrawal of Thailand's commitment
from loan contracts offered by Asian Development Bank.
by Piyaporn Hawiset
16 June 2000
The World Bank (WB) presents itself with the slogan: "Our dream is a world free of poverty". The Asian Development bank (ADB) declares: "Reduction of poverty is no longer one of ADB's five objectives; it is ADB's overarching goal". Michel Camdessus has declared that the IMF is the "best friend of the poor" and that "poverty reduction is at the heart of our programmes". Even the World Trade Organisation (WTO) has occasionally mumbled that its chief reason for being is overcoming poverty. These major international organisations are deep in a crisis of credibility. The old development model they lived by is under attack because it is increasingly obvious that the business of development assistance has been a hypocritical business masquerading as altruism.
The 1990s saw a series of crises which tested their organisational ability and, even more, their thinking. The transition of Eastern Europe from socialism to a market economy turned into a social and economic disaster. The market liberalisation of the Asian economies led to a world-shaking crisis. These organisations no longer want to be seen as standard-bearers for some model of "development".
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As a result, the business of poverty reduction is becoming a very overcrowded zone. And it has become more of a business than truly a goal because somehow those who claim to be bringing about poverty reduction seem to be no closer to working themselves out of a job than ever before. Enter "poverty" on the WB's website, and it spews out 300 recent documents before asking you please to be a bit more specific. The WB will not give less developed countries loans now until they write out a "poverty-reduction strategy", for which the bank offers a template, rather like a model answer to an exam question. The ADB has its own fat "Poverty Reduction Strategy" document. The IMF hosted a "Social Forum" in 1999 and continues cranking out position papers with the word "poverty" in the title. |
Poverty reduction has become one of the newer buzz-words in the business of international development aid, and the IMF and ADB decided to hoist the poverty flag up their own flagpoles only in 1999, in a reaction to the Asian crisis. But the WB had been there for a decade, devoting its annual World Development Report to the poverty theme in 1990. Much of the international thinking on poverty has been done in the WB. So how are these bodies going to fight/overcome/eliminate poverty?
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At the end of the day actually very little. I know because I have many friends who worked for the ADB on their projects. There is much talk with fancy words but little substance. And they quit when they saw there was little heart-felt intent to work themselves out of being a necessary organisation. Continents of trees have been massacred to print everything the WB has had to say on poverty in the previous decade. But really the bank has three ideas. First, the best cure for poverty supposedly is growth. This is, of course, the old trickle-down theory. This idea justifies the WB and ADB's emphasis on loans for economic infrastructure--roads, dams, ports, power plants. This is true even now in 2000 despite the technical assistances that seeks to find out what the little people and farmers needs are. This is because for these organisations to be allowed to work in the countries they seek to give loans they have to be diplomatically circumspect. The talk of grass-roots involvment and stakeholders is only to appease NGOs and other concerned parties which at the top are considered radically spoilsports. To sell loans they have to make sure that the right people benefit from the projects because, after all, the ADB's and World Bank's business is being banks and making a profit for the donor countries. These investments that are financed by the likes of the ADB and the World Bank initially benefit big companies, big investors. But some of the benefits nevertheless do spread. Asia's fast-growing economies proved the point. Numbers below the poverty line fell. The ADB loyally restates the case: "Growth can reduce poverty by generating employment and income." |
The WB's second anti-poverty idea is social capital. In WB-speak, the fashionable but elusive term has come to mean two things, first how well a society looks after its members through institutions such as family, community and voluntary associations, second how well individuals are equipped to participate in the economy through their "capital" of education and skills.
The WB's third anti-poverty idea is "social safety nets" or "social protection". The WB insists a liberalised, growing economy and strong social institutions will lift most people out of poverty. But there are many who get bypassed by the market and excluded from society--either permanently, or temporarily in situations like a financial crisis. Some way has to be found to identify these people and give them some minimal assistance.
Of course there is a lot more than these three things in the fat policy documents. Indeed, the WB has upended its whole policy presentation so that its usual set of issues--macroeconomic stability, structural reform--now arrives as appendices to poverty planning. But take out the motherhood and the boilerplate, and we are left with these three.
Nobody can question the priority given to poverty. That is, why it is such a good flag to run up over your institution. So why is all this enthusiasm for poverty policies so worrying?
First, because even if it is not it somehow only looks like a cloak for all the old ways of doing things. Peep under the covers of these development strategies and you find growth policies, infrastructure investments, market liberalisation, structural reform--all the bits and pieces of the development model which these institutions no longer want to talk about because they appear to have become politically incorrect.
Second, because the prime role given to growth in overcoming poverty is based on shaky methods of accounting, particularly in countries where lack of transparency and corruption are rife. Every peasant lifted out of a village and stuck in a factory makes the national GDP grow. But partly this is because the GDP does a good job of counting the output of the factory (all of which is sold) owned by the economic and political elite, but not such a good job of counting the output of the village (much of which is locally consumed and never comes near being a statistic).
Third, the WB's expectation that growth always reduces poverty is based on the old economics. Wealth used to trickle down because labour markets tightened. But almost all economists the world (unless they work for the economic and political elites) have recognized growth is becoming ever more capital-intensive. Fewer and fewer people are directly involved. Consider India, for instance. Its software industry is one of the great success stories of the new economy. But the few hundred thousand involved are a speck in the billion-plus population.
Fourth, the WB strategy on human-resource development does not make sense. On the one hand the WB expects governments to tax less and do less. On the other, it shouts at the same governments to invest more money and expertise in developing education and training. Furthermore, it demands that loans be used to pay for these programs, but the loans plus interest have to be paid back with the taxpayers' money because the economic and political elites are notorious for not keeping their part of the repayment bargain. In Thailand, this irony is specially acute. The financial crisis heightened the social commitment to reform and expand education, but left the debt-strapped government with no funds to spend on it and an increased debt that has to be repaid by the taxpayer..
Finally, social safety nets are an illusion. Identifying the hopelessly poor and delivering them minimal support sounds cheap and easy. In reality it is not, particularly in the corrupt countries where such finances are often diverted and the rural people rarely see this assistance. It requires information, expertise and political will. Weak states cannot do it. That has been a big learning experience from the East European debacle and the Asian crisis.
The international organisations have adopted poverty as their millennium crusade. But is this really something new? Is it really going to work for the poor? Or is it just a cloak to help these organisations weather a crisis of credibility? Are we looking at ideas on poverty? Or a poverty of ideas?
