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World: Bank Report Sees China, Russia As Examples Of Growth

The World Bank is joining the United Nations in the effort to cut in half the number of people living in abject poverty. The bank has issued a new report outlining how this can be done, and what economists have learned about the causes of poverty. RFE/RL senior correspondent Andrew F. Tully reports that the bank cites Russia and China as examples of how poverty can be reduced -- and how it can be made worse.

Washington, 13 September 2000 (RFE/RL) -- The World Bank's latest report on poverty reduction shares a major goal with the United Nations: By 2015, both want to reduce by half the number of people -- now estimated at 1.2 billion -- living on less than a dollar a day.

Last week, the leaders of more than 150 nations signed the UN's Millennium Declaration, which included that promise. On Tuesday (Sept. 12), the World Bank issued a report -- more than 330 pages -- on its plans to accomplish the same goal.

Nora Lustig, who directed the report, said at a news conference at the bank's Washington headquarters that the three "pillars" of poverty reduction are opportunity, empowerment, and security.

She said the bank intends to further help governments give the poor more opportunities for jobs, land and education. It will seek to empower the poor by giving them more political and economic control over their lives. And it hopes to make them more secure by protecting them from natural, man-made and economic disasters, or giving them the tools to cope with such disasters.

At the news conference, Lustig and Nicholas Stern, the World Bank's chief economist, devoted most of their time to the issue of poverty in Asia and Latin America. But Lustig used China and Russia as examples of how a country's economic growth can dramatically reduce poverty -- and how economic decline can increase it.

"In China, for example, in the 1990s, [economic] growth resulted in a reduction by about one-third of the number of people living on less than a dollar a day. In contrast, in Russia, during the economic crisis of 1998, poverty -- the incidence of poverty, the proportion of people living in poverty -- increased by 50 percent."

Stern was asked why Russia and China had such different experiences, despite broad World Bank involvement in both countries. Stern replied that the two countries were in dramatically different positions at the start of the 1990s.

Stern said China's regions began to trade among themselves. He said Russia's managed economy -- which he called "artificial" -- simply collapsed, bringing down regional economies.

"China had a strong administrative structure and a regional structure which was much less interdependent [than Russia's], so that what happened in China when you started to liberalize [the communist economy] is that you got a lot of the gains from trade, of regions opening up and trading with each other. Whereas in Russia, you got a collapse of an economic system which was artificial and overly bound together."

Stern also said there were mistakes by hastily privatizing some Russian industries during the first half of the 1990s. But he stressed that these mistakes are understandable because of the fear that a communist government might return to power and reverse these reforms.

"It's very easy to ignore the political circumstances at the time and point fingers. That we can do with hindsight. That's not my concern. But it is my concern -- and the concern of all of us who study the process of reform -- to understand what it was that went wrong, to learn the lessons."

Stern said the economies of the former Soviet satellites in Eastern Europe are doing better than Russia. He singled out Poland and Hungary as developing solid economies. But he emphasized that none of the former communist countries of Europe and Central Asia has escaped trouble altogether.

"It's been tough for everybody, but there are some success stories. And if you look at the ideas that are there in the WDR [World Development Report], I think [they will] help cast some light on why some things work and why some things don't."

A World Bank spokesman (Phillip Hay) says the bank and the International Monetary Fund will be working closely with the UN to achieve the goal of reducing abject poverty by half in 15 years. But the question remains whether so extravagant a goal can be met.