Financial crisis hampers effort to cut world poverty

Diane Coyle in Washington reports on plans to ease hardship and handle future crises

THE LONG MARCH towards the reduction of poverty has been stalled by the financial crisis of the past two years, according to a new report from the World Bank yesterday.

The report concludes there are some encouraging trends, but warns that new inequalities between rich and poor countries are emerging in cyberspace, with little Internet access in the developing world.

"This has been more than a financial crisis. This has been a crisis of institutions not robust enough to sustain the force of an increasingly global economy," said James Wolfensohn, the World Bank president.

The Bank warns that it will become increasingly difficult for the international community to achieve goals such as reducing poverty and infant mortality and universal primary education.

Its new "World Development Indicators", an annual compendium of statistics, highlights a wide range of inequalities between rich and poor states.

For example, GDP per head has grown faster in the rich countries, reaching 2.3 per cent growth between 1965 and 1997, compared with 1.4 per cent for low income countries. In the poorest countries, such as Niger, Uganda and Guinea Bissau, more than half the population lives on less than one dollar a day.

Income inequality also remains extreme in many developing and emerging countries. In Brazil, for example, the top 10 per cent of earners enjoy nearly half of the total income, compared with about one-quarter for the top tenth of the UK income distribution and just one-fifth in the most equal nations such as Austria and Norway.

But the report highlights some additional inequalities stemming from access to new technologies. Computer and telecommunications technologies can in principle allow poor countries to leapfrog the old technologies that are still widespread in the industrial countries.

For instance, in the Philippines and Sri Lanka there is a much higher ratio of mobile telephones to land lines than there is in European states such as Belgium and France. Some sub-Saharan countries, including Botswana, Djibouti and Ghana, already have fully digital telephone networks.

Even so, the poorer nations lag far behind in the number of mobile phones in use, with just 1 per 1,000 of the population compared with 189 in the richest countries, and 16 fixed telephone lines per thousand compared with 506.

There are similar disparities in computer and Internet access. Two in every thousand people in poor countries have access to a personal computer, while more than one in four do so in the rich countries. There is less than one Internet host for every 10,000 people in the low income countries, and 375 per 10,000 in the high income ones.

There are exceptions, of course. Cuba has as many Internet hosts per capita as France, while South Africa and Venezuela rival Portugal. Among the emerging regions, Latin America boasts by far the greatest computer access. But the region ranks second to central and eastern Europe in Internet access. South Asia lags far behind in both cases, despite India's reputation for strength in the software industry.

There is much else to be gloomy about as the century draws to an end. Increases in life expectancy in sub-Saharan Africa in recent decades have in many countries been wiped out by the spread of HIV and Aids.

The growth of the school-age population in countries of the developing world has outpaced primary school enrollments. Living standards in Russia and Eastern Europe have dived since 1989. What's more, levels of foreign aid have fallen to their lowest in almost 50 years.

In an effort to find some rays of hope, the report makes some encouraging observations. India and China have largely escaped the recent crisis, it notes.

Some poor countries, such as Botswana and China, have sustained rapid growth in GDP and incomes. In general, living standards around the world have risen dramatically over the past quarter of a century.

But Mr Wolfensohn ends his introduction by striking a more sombre note. "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. Now those goals are at risk."