Contacts:
In Manila: Leonora Aquino-Gonzales (632) 917-3003
E-mail: lgonzales@worldbank.org
Anissa Tria (632) 917-3013
E-mail: atria2@worldbank.org
In Washington: Mohamad Al-Arief (202) 458-5964
E-mail: malarief@worldbank.org MANILA, January 22, 2007 — "Developing countries will be better able to achieve higher growth and faster reduction of poverty if equity and fairness become central elements of a development strategy," said the World Bank's Senior Vice-President for Development Economics and Chief Economist, François Bourguignon at a lecture-forum on the role of equity in development. The lecture-forum is a partnership between the Philippine Economic Society (PES) and the World Bank (WB), in coordination with the Knowledge for Development Centers of the University of Southeastern Philippines in Davao City and Silliman University in Dumaguete City. "When a large share of the population is excluded from the main opportunities in development–they don't have good education; they don't have the same investment opportunities; their property rights aren’t respected; they don't have the same political influence and the ability to influence their governments–then these people innovate and invest less. Moreover, excessive inequity and weak institutions may be the motive of crime, violence, political instability and conflicts, which are all deterrents of economic growth," Mr. Bourguignon said. Thus, the country loses out if social inclusion or equity is not taken into consideration.
As an example, Mr. Bourguignon said, "Poor but enterprising people are unable to establish and expand profitable investments or businesses due to lack of capital and insurance. Farmers, for instance, under-invest in high-return but high-risk crops because they cannot not afford to buy insurance. On the other hand, average or mediocre projects get implemented simply because they are undertaken by the well-off who have better access to credit and can afford to take risks. This has huge implications on the overall economic growth." Likewise, he added, "the country loses out when poor but bright students drop out from school and thus cannot get better paying jobs; when only a few wealthy people wield power over policies and public resources; when social inclusion becomes the motive of crime, violence and armed conflicts." Joachim von Amsberg, World Bank Country Director for the Philippines, said that the issue of inequality and its implications to growth and poverty reduction is very much relevant to the Philippines. "With high levels of inequality of income, assets and opportunities, many Filipinos are effectively excluded from social and economic development and cannot contribute to the development of their country," he said. He added that this is why recent World Bank assistance to the Philippines has been aimed at improving service delivery particularly in health and education, widening access to infrastructure, as well as improving governance and curbing corruption. Such policies are expected to lead to more and better opportunities for the poor. Mr. Bourguignon said that in order to achieve higher growth rates, greater attention must be given to leveling the economic and political playing fields. "Good policies for growth and poverty reduction generally involve redistribution–of influence, government expenditures and current income–away from dominant groups," he said. He also said that the so-called "elite capture"–or rent seeking by the elites that exercise political and economic power–must be addressed. He added that this can be done through dissemination of information on distributional effects government policies and reforms, promoting transparency at all levels. Earlier in the day, Mr. Bourguignon met with Finance Secretary Margarito Teves and expressed the full support of the World Bank for the economic management of the Philippine government. "The success of fiscal reform, coupled with the positive international environment, creates a window of opportunity for the Philippines to raise investments, and thus, employment and income, through policies for a better investment climate." |
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