33061 7re7 4' *- r - V F 5, vi - 2 *2 . I*.A '' X'' t; . '''.'"'.'.'.'i': *0 . _ _ PC' 4dT'.,¼ LsD ; ~~r- t9*5 u* r 1980 7I ~ ~ ~ ~ ~ __ jS# I EH CONTENTS Introduction 3 Robert S. McNamara From growth to basic needs 5 Paul Streeten The evolution of the recent emphasis on basic human needs as a target of economic development strategies. Country experience in providing for basic needs 9 Frances Stewart Studies of country policies geared toward meeting the basic needs of the poorest provide a basis for identifying key macroeconomic elements of such policies. Sectoral priorities for meeting basic needs 13 Shahid Javed Burki Approaches to meeting the basic needs of the poor drawn from Bank studies of various sectors. A strategy to reduce malnutrition 18 Alan Berg There is a need for the development of nutrition-oriented food policies to meet one of the developing world's most basic needs. Is there a tradeoff between growth and basic needs? 23 Norman L. Hicks Evidence from 83 developing countries indicates that policies to meet basic needs can aid growth. Poverty and progress-choices for the developing world 26 Hollis B. Chenery Conclusions from recent Bank research, and a pragmatic approach to poverty alleviation. An international perspective on basic needs 31 Mahbub ul Haq Providing for basic needs can help alleviate poverty and develop human resources; national strategies may vary. 1 INTRODUCTION Despite the impressive level of economic growth the developing world has achieved over the past quarter century, some 800 million individuals there remain caught up in absolute poverty: a condition of life so limited by malnutrition, disease, illiteracy, low life expectancy, and high infant mortality as to be beneath any rational definition of human decency. The self-perpetuating plight of the absolute poor has tended to cut them off from the economic progress that has taken place elsewhere in their own societies. They have remained largely outside the entire develop- ment effort, able neither to contribute much to it, nor to benefit fairly from it. Unless specific efforts are made to bring them into the development process, no feasible degree of traditional welfare, or simple redistribution of already inadequate national income, can fundamentally alter the circum- stances that irnpoverish them The only practical hope, then, of reducing absolute poverty is to assist the poor to become more productive. The World Bank has put a major emphasis on that strategy in its lending operations over the last several years projects specifically designed to enhance the earning power of the poor A critical uornponent of that approach is for governments of develop- ing countries to provide better access for the absolute poor in their socie- ties to essential public services, particularly basic education, primary health care. and clean water These fundamental services--combined with the better shelter and nutrition that improved incomes can afford-are the key to the poor's being able to rneet their own basic needs Norne of this can be achieved, of course, except in a climate of eco- normFc growth But growth alone-essential as it is-cannot assist the poor unless t reaches the poor And it does not reach the poor well enough today In much of the developing world. It all too often passes them by. In this situation the right kind of public services are those which not only reach the poor, but help them alter their personal circumstances so that their own inherent potential can be more fully realized What the Bank's experience clearly demonstrates is that investment in the absolute poor's human development is not merely more equitable social policy but very sound econornics as well. In June 1980, we published a booklet of articles on The World Bank and the World's Poorest. This present series on Poverty and Basic Needs continues that discussion and examines the task of redesigning and ex- panding those essential puclic services that can help transform the depriva- tions of poverty into the enhancement of human achievement. Robert S McNamara 3 -9 0 ~~Over the past 25 years, the emphasis of development strategies \ ~~~~~. ~~has been adapted to changing experiences. From an initial concentration on growth, we moved to stressing the creation of employment, and then the redistribution of benefits to the poor. -lm Although the purpose of development was sometimes lost in the - technical complexity of the means, it was then, as it is now, to ureduce mass deprivation-to give everyone the opportunity to live a full life. This article describes how the latest approach with its emphasis on basic human needs evolved, and why it is more finely PI ~~~tuned to its objective than previous approaches. By^is~ ~ ~ ~ ~~~Pu Streete = ~~~~How is it that, in spite of growing hostility called for changes in the approaches U* ~~~and midsconceptions, the concept of "basic adopted by development policymakers. sS, ~ ~ ~ ~ ~ ~ ~ ~~Pu Ste : th doae o ae:p ro iet ie,nwfd n human needs" has been so widely ac- Otherwise we might be tempted to say that cepted as the principal objective of devel- the international development comnmunity a basic needs approach to development are fashions, or that we are acting out a corn- not only bilateral and multilateral donor edy of errors. Basic needs is not just an- agencies, but also thinkers from the Third other fad. (Nor, of course, is it the revela- World whose views are expressed in doc- tion of ultimate truth.) It is no more, but uments such as The Declaration of Cocoyoc also no less, than a stage in the thinking (1974), What Now-Another Development and responses to the challenges presented (1975), prepared by the Dag Hammarskj6ld by development over the last 20 to 25 years. Foundation, Catastrophe or Newv Society? If, in the following pages, the deficien- (1976), prepared by the Bariloche Founda- cies of the prebasic needs approaches are tion in Argentina, and Reshaping the Inter- stressed and the virtues of the basic needs national Order (1976). approach overstressed, this is done in or- In order to understand the wide appeal der to bring out sharply its distinctive fea- of this approach, it is helpful to reflect on tures. It is not intended to imply either that how the concept has evolved and on the the previous approaches have not taught -. .. way in which accumulating experience has us much that is still valuable, or that the 5 basic needs approach is rtot subject to many process of belt tightening, while the bene- not only academic thought but also politi- of the objections raised to earlier ap- fits from development would go mainly to cal action in the early days of development, proaches, and some additional ones. the rich. But if the rewards of the rich are did not turn out to be true for three rea- Basic needs is concemed with removing used to provide incentives to innovate, to sons. (1) The differences between rural and mass deprivation. The approach can be de- adapt, to save, and to invest, the accumu- urban incomes were much greater than fined briefly as one which is designed to lated wealth will eventually benefit the Lewis had assumed, owing partly to trade improve, first, the income earning oppor- poor. union action on wages, partly to minimum tunities for the poor; second, the public This view was supported by analysis wage legislation, and partly to income dif- services that reach the poor; third, the flow based on the U-shaped so-called Kuznets ferentials inherited from colonial days. (2) of goods and services to meet the needs of curve, which has strongly influenced The rates of growth of the population and all members of the household; and fourth, thinking about development. According to of the labor force were much larger than participation of the poor in the ways in this model, the early stages of growth are expected. (3) The technology transferred which their needs are met. All four pillars accompanied by growing inequality. Only from the rich countries to the urban indus- must be built on a sustainable basis. In ad- at an income of about $600 per capita (in trial sector was labor saving and did better dition, basic needs must be met in a shorter 1973 dollars) is further growth associated at raising labor productivity than at creat- period and at lower levels of eamed in- with reduced inequality (measured by the ing jobs. come per capita than has generally been share of the lowest 20 per cent of the pop- The reaction to the growing dualism that true in the past, or than would have been ulation). had resulted from modern, industrial achieved via the income expansion associ- growth was to tum to the need to create ated with growth alone. Dualism and unemployment employment. Since 1969, work by the In- The early discussions of development in Each of these three assumptions turned temational Labor Organization's missions the 1950s had the same concern with dep- out to be wrong, or at least not to be uni- to seven countries has shown that "em- rivation. But, strongly influenced by Sir versally confirmed, as we gathered more ployment" and "unemployment," as Arthur Lewis and others, these discussions experience. Income did not automatically these are defined in the industrial world, concentrated on economic growth as the trickle down to the poor, except possibly in are not illuminating concepts for a strategy most effective way of eradicating poverty. a few countries, with special initial condi- to reach the poor in the developing world. It was on the growth of incomes, especially tions and policies; nor did governments Experience in many countries showed that in modern, organized, large-scale indus- (not surprisingly) always take corrective "unemployment" can coexist with con- trial activity, that the hope for improve- action to reduce poverty; and it certainly siderable labor shortages and capital un- ment in basic welfare was built. At this was not true that a period of increasing derutilization. (Gunnar Myrdal had criti- early stage, it was quite clear (in spite of poverty or inequality was needed in order cized the employment approach in Asian what is now often said in a caricature of to accumulate capital and stimulate entre- Drama earlier.) past thinking) that growth was not an end preneurship. It was found that small farm- "Employment" and "unemployment" in itself but merely a performance test or ers saved at least as high a proportion of only make sense in an industrialized soci- an indicator of development. their income as big landlords, and were ac- ety where there are employment ex- There were three types of justification tually more productive in terms of yield changes, organized and informed labor for the emphasis on a country's economic per acre, and that entrepreneurial talent markets, and social security benefits for the growth as the principal performance test. was widespread and not confined to large unemployed who are trained workers, One was the belief that the gains from eco- or foreign firms. willing and able to work, but temporarily nomic growth would automatically "trickle Judging by economic growth, the devel- without a job. down" to the poor and their benefits opment process of the last 25 years was a There are none of these institutions in would spread through market forces, rais- spectacular, unprecedented, and unex- many developing countries. The root prob- ing demand for labor, raising its productiv- pected success. But judged by poverty re- lem of poverty in the developing countries ity, and raising wages, or lowering prices. duction, it was much less successful. is not unemployment. It is very hard work There were, of course, even in the early Growth was often accompanied by in- and long hours of work at unremunerative, days, some skeptics who said that the pro- creasing dualism-the expansion of the unproductive forms of activity. This dis- cess of growth tends to give to those who modern, urban, large-scale manufacturing covery has drawn attention to the informal already have, not to spread its fruits widely. sector alongside slow growth or stagnation sector in the towns: the blacksmiths, the Altematively, the assumption was made in the rest of the economy. Despite high carpenters, the sandal makers, the build- that governments are democratic, or at any rates of growth of industrial production ers, and the lamp makers-all those who rate concemed with the fate of the poor, and continued general economic growth, often work extremely hard, are self- and will extend the benefits of growth by not much employment was created. Nor employed, or are employed by their fam- policies such as progressive taxation or so- were the benefits spreading to the poor. In ily, and are very poor. And it has drawn cial services. If, in fact, market forces did 1954, Sir Arthur Lewis had predicted that attention to the women who, in some cul- concentrate benefits, governments would subsistence farmers and landless laborers tures, perform hard tasks and work long correct them. would move from the countryside to the hours without even being counted as The third justification was the more higher-income, urban, modem industries. members of the labor force. The problem hardheaded belief that in the early stages This would increase inequality in the early then was redefined as that of the "working of development the fate of the poor must stages of growth (as long as rural inequali- poor." Not only labor but also capital are not be a major concern. The best way to ties were not substantially greater than ur- grossly underutilized in many developing help them, it was argued, was first to build ban inequalities), but when all the rural countries, which suggests that causes other up the capital, infrastructure, and produc- poor were absorbed in modern industry, than surplus labor in relation to scarce cap- tive capacity of an economy. For a period the golden age would be ushered in, when ital are at work. There are three types of of time-and it can be quite a long period- growth would be married to equality. causes of low labor utilization in develop- the poor might even have to go through a The Lewis predictions, which dominated ing countries, none of which is captured by 6 September 1979 the conventional employment concept, but 1974 by the World Bank and the Sussex In- we also asked ourselves the question: all of which are important if development stitute of Development Studies, entitled Which objective is more important-to re- is to mobilize fully the abundant factor- Redistribution with Growth, was concerned duce inequality through redistribution or labor. These can be classified under (1) with redistribution. This concern arose from to meet basic needs? consumption and levels of living; (2) atti- two sets of questions. (1) How can we In societies in which many people's lev- tudes; and (3) institutions. make the small-scale, labor-intensive, in- els of living are low the goal of meeting Nutrition, health, and education-as- formal sector more productive? How can basic needs may have a higher priority pects of the level of living-are important we remove discrimination against this sec- than reducing inequality-for two main for fuller labor utilization. But they have tor and improve its access to credit, infor- reasons. First, most people would, rightly, been neglected because in rich societies mation, and markets? How does redistri- regard meeting basic needs as more impor- they count as consumption, which (except bution affect efficiency and growth? Does tant than equality. Equality per se is of no for some forms of education) has no effect helping the "working poor" mean sacri- great concern to people, other than to util- on human productivity (or possibly a neg- ficing productivity, or is helping the small itarian philosophers and ideologues. Sec- ative one, like four-martini lunches). In firm and the small farm an efficient way of ond, implementing basic needs is a more poor countries, better nutrition, health, and promoting growth? (2) How does eco- operational goal than equality. Equality is education can increase production. They nomic growth affect income distribution? a highly complex, abstract objective, open constitute forms of investment in human In Bangladesh, India, Indonesia, Pakistan, to many different interpretations, and it is, resources. (This is one thread that goes the Sahel of Africa, and Sri Lanka growth therefore, difficult to know what are the into the fabric of the basic needs ap- (of a certain type) is necessary to eradicate criteria for achieving it, quite apart from proach.) poverty. But economic growth in some the difficulties of implementation. On the Attitudes also make a difference to what countries-for example, Brazil and Mex- other hand, meeting the basic needs of de- jobs people will accept. In Sri Lanka, for ico-reinforced and entrenched existing prived groups, like removing malnutrition example, a large part of unemployment is inequalities in incomes, assets, and power. in children, preventing disease, or educat- the result of the aspirations of the edu- Therefore, not surprisingly, a certain type ing girls, are concrete, specific achieve- cated, who, as a result of their education, of growth, beginning with an unequal land ments judged by clear criteria. If we judge are not prepared to accept manual, "dirty" and power distribution, made it more dif- policies by the evident reduction of suffer- jobs. ficult either to redistribute income or to ing, the criterion of basic needs scores The third dimension is the absence or eradicate poverty. higher than that of reduced inequality. weakness of such institutions as labor ex- It is an empirical question to ask how Basic human needs changes, credit institutions, and an appro- economic growth affects inequality and priate system of land ownership or favor- poverty, and how both in turn affect eco- The current emphasis on "basic human able tenancy laws. As a result, labor is nomic growth. The answers to these ques- needs" is a logical step along the path of underutilized. tions will vary from country to country and development thinking. The evolution from For reasons such as these, an approach will depend in large measure upon the ini- a concern with growth, employment, and to poverty which runs in terms of unem- tial distribution of assets, the policies pur- redistribution to basic needs shows that ployment and underemployment, in which sued by the government, available tech- our concepts have become less abstract and levels of living, attitudes, and institutions nologies, foreign trade opportunities, and more disaggregated, concrete, and spe- are assumed to be adapted to full labor uti- the rate of population growth. It is another cific. lization (as they are in industrial coun- empirical question to ask how policies The basic needs approach is concerned tries), or automatically adaptable (as they aimed at reducing inequality and meeting with particular goods and services directed are in Marxist theory, though not in Marx- basic needs affect individual freedom. But at particular, identified human beings. An- ist practice), has turned out to be largely a other advantage of the basic needs ap- dead end. proach is that it is a more positive concept Moreover, and this brings us closer to Paul Streeten than the double negatives of eliminating or basic needs, perhaps 80 per cent of the LL reducing unemployment, alleviating pov- population of developing countries are erty, or reducing inequality. The basic members of households, so that one might, , needs approach spells out in considerable by raising the income of the head of the , detail human needs in terms of health, household, presume to benefit them. (Some a U.K. citizen, joined the food, education, water, shelter, transport, qualifications are discussed below.) But Biank staff in 1976 as simple household goods, as well as non- there are perhaps 20 per cent outside these Special Adziser to the material needs like participation, cultural households. These are not the unem- Policy Planning and identity, and a sense of purpose in life and ployed but the unemployables: the old, the I Program Reviewz work, which interact with the material infirm, the crippled, and orphaned chil- ' Department. He u'as needs. dren. If we wish to meet basic needs, we Warden of Qlueent Elizabeth House, Director of the Moreover, basic needs have a broad ap- ought to be concerned also with those for Inistitute o fCommonalth Stdies, ad a Fello zt f peal, politically and intellectually. Because Balliol Ci. N. Oxford (U.K.). Mr. Streeten w,as pelpoicayanitletul.Bcus whom productive and remunerative work Pro fessor of Economics at the University of Sussex, a of the political appeal, they are capable of is not an option and who do not benefit Felloz' of the Inistitlute of Development Studies, and mobilizing resources, which vaguer objec- from being members of a family. Depuoty Director-General of Economic Planning at tives, like raising growth rates or contrib- Inequality the Ministry of Overseas Development (U.K.). He uting 0.7 per cent of GNP or redistributing Inequaliy zaas a member of the Board of the Commonwealth for greater equality, lack. Intellectually, they With the concern for the "working Development Corporation and of the Royal provide a key to the solution of a number poor," the attention then switched from Commission on Environmental Pollution, and has of apparently separate, but on inspection dualism and employment to income distri- published widely on devzelopment, related, problems. Urbanization, the pro- bution and equality. The book published in tection of the environment, equality, inter- 7 national and intra-Third World trade, ap- mum private income is, however, often required resources by reducing fertility propriate technology, the role of the trans- necessary for gaining access to free goods rates. When infant morality is reduced and national enterprise, the relation between and services: first, to cover the costs of for- more children survive, when women are rural development and industrialization, gone income of children sent to school better educated, and when the community rural-urban migration, domination, and who would otherwise have worked on the takes care of the old and disabled, the need dependence all appear in a new light and farm, for example and second, to cover and the desire for large families is reduced. are seen to be related, once meeting the out-of-pocket expenses, such as transport, Resources can then be devoted to improv- basic needs of men and women becomes clothes, or books.) ing the quality of life of smaller families. the center of our concern. Other limitations of the income ap- The available resources are increased be- Income approach and basic needs proach are that it ignores those who are in- cause a sustained basic needs approach capable of earning an income the unem- makes for a healthier, more vigorous, bet- Does, then, the basic needs approach ployables-and that it ignores nonmaterial ter skilled, better educated, better moti- represent an improvement on the earlier needs. Participation in the design and im- vated labor force, both now and later when approaches, which advocated raising the plementation of projects affecting the poor, the present generation of children enter productivity, incomes, and purchasing a sense of purpose in life and work, and a the labor force, because it mobilizes previ- power of the poor? There are several rea- sense of national and cultural identity built ously underutilized labor (and local mate- sons for thinking that it does. An improve- on indigenous values are essential. rials) and because it makes use of capital- ment in only the productivity of, say, poor The role of nonmaterial basic needs, both saving techniques. Costa Rica, South Ko- farmers may not raise their earnings. It as ends in their own right and as means to rea, Singapore, Taiwan, and Yugoslavia il- may be reflected only in lower food prices meeting material needs that reduce costs lustrate this. and benefit urban food consumers. But and improve impact, is a crucial aspect of Basic needs is therefore thrice blessed. It even when higher productivity is fully reg- the basic needs approach. Nonmaterial is an end in itself, not in need of any fur- istered in higher earnings, the income ap- needs interact in a complex and underex- ther justification. But it is also a form of hu- proach has serious limitations. Personal in- plored way with material needs, but are man resource mobilization, it harnesses the come which is earned by an employed quite distinct in that they normally do not factor in abundant supply in the poor worker or self-employed farmer or artisan require the allocation of scarce resources countries, and, by reducing population is sometimes an inefficient way of meeting and, therefore, cannot readily be dis- growth, it economizes in the use of re- basic needs and may even reduce the pensed by the state. But any proper defi- sources and improves the quality of labor. amount spent on necessities. The expend- nition of basic needs must encompass a If this effective and concerted attack on iture pattern of subsistence farmers who whole range of needs that cannot be met hunger, malnutrition, ignorance, and ill switch from growing their own food to simply by supplying goods to the needy. health also mobilizes more international cash crops, or are employed in dairy farm- The essence of the case for the basic resources, by making meeting basic needs ing, often changes from coarser, more nu- needs approach is that it enables us to a first charge on our aid budgets, it would tritious, to finer, less nutritious, cereals or achieve a widely agreed-upon, high-prior- testify to the fact that we have begun to ac- from food to nonfood items. Nutritional ity objective in a shorter period, and with knowledge our membership of the human and health standards fall, even though in- fewer resources, than if we took the round- family. come has risen. about route of only raising employment Similarly, when women go out to work and incomes, and waiting for basic needs and cease to breast-feed their children, in- to be satisfied. This is clearly illustrated by comes rise but health standards fall. We the experience of Sri Lanka and the state of have to see how we can achieve appropri- Kerala in India, where, at extremely low Related reading ate medical, biological, and physiological income levels, life expectancy, literacy, and standards of nutrition because the meth- infant mortality have reached levels com- HolLs thenery et .7i, ResOntutdU'n ivrty ods by which higher incomes are gener- parable to those in the most advanced Preost/ (London, Oxtord University ated may interfere with the availability of countries. The basic needs approach Simon Kumnets, Economic Growth and nutritious food. There is also the neglected achieves this objective by economizing on Income Inequality." Amirican Ecomn'iL question of the intrahousehold distribution the resources required and by increasing Rne'ie (MNaxch 195li. of goods and services. In our surveys we the available resources. W. ArthuLr Le%vis, 'Economic Development often assume that if the head of the house- The required resources are reduced be- %vilh Unlimnited Supplies ot Labour.' hold receives adequate income the other cause the basic needs approach econo- Alanchester School (May 195-4L. members of the family are also looked after. mizes on resources devoted to nonbasic , The Thecvy of Economic G roawth iLon But the male head of the household often needs. For example, it replaces expensive, don. Allen & Lnwin, 1955) benefits at the expense of the women and urban, curative health services, by low-cost, Gunnar Nlvrdal, Asian Dramza An lnq/uirv children. In these cases simply increasing replicative, preventive, rural health ser- iwnti the Cimerti of Nuhons (Ne1 v York, incomes does not help the deprived "target vices. It also economizes by using linkages H W Singer. "Po'erty. Income D,stnbu- groups." between sector programs, such as improv- tion and Levels of ULving Thirty Years ot Another critiism of the income ap- ing nutrition, and thereby reducing health Changing Thought on Development proach is that, while it may provide ade- expenditure, improving health (by elimi- Problems." in Essays in H1onoiur of quate personal income to buy needed goods nating parasitic diseases, for example) and V K R. V. Rat (forthcorrung). and services in the market, some basic thus reducing both health and nutritional Paul Streeten, "Self-Reliant lndustnaliza- needs cannot be met at all or cannot be met expenditures. In Sri Lanka, for example, ton.' in The Political Ecourznom of Deve- efficiently by private purchases. Such needs the right kind of education has made pos- opfrnent and Underrdevlopnent. edited by as health, education, safe water, and sew- sible economies in the provision of safe Charles K. tVilber (Nee Yorl, Random erage can only, or more efficiently, be pro- water, because the people know when to vided for through public efforts. (A mini- boil unsafe water. Finally, it economizes on 8 Country experience in providing for basic needs The performance of developing countries in meeting the "basic tries to form a picture of how countries are needs" of their people varies greatly. This article provides a brief meeting basic needs. analysis of the results of World Bank studies on the determinants of such performance and discusses their implications for framing an Varying performances approach to provide for these needs at a national level. The performance of developing coun- tries in meeting the basic needs of their Frances Stewart populations varies enormously. Figures for life expectancy at birth and rates of literacy The ultimate goal of economic develop- needs of their populations, the World Bank provide rough measures of achievement. ment is the improvement of the conditions recently conducted in-depth analyses of For example, among countries with popu- of life in developing countries. In the years the performance of seven countries in the lations of over half a million people, life ex- after World War II, when many countries area of basic needs-Brazil, Egypt, The pectancy at birth in 1977 was estimated to acquired independence, economic devel- Gambia, Indonesia, Mali, Somalia, and Sri be less than 45 years in 12 countries-Af- opment became a major objective, and the Lanka. This analysis from the country ghanistan, Angola, Bhutan, Chad, Ethio- main aim of development policy was then studies can be set alongside more general pia, Guinea, the Lao People's Democratic to raise the growth of gross national prod- information from other developing coun- Republic, Mali, Mauritania, Niger, Sene- uct (GNP). But it has become apparent that ~~ ... economic growth alone is, in many cases, O4 a not sufficient to improve substantially the conditions of life of the poor. The real in- comes of the poorest 40 per cent of many -,. . populations have remained abysmally low; r3 while the values of social indicators-such e as life expectancy at birth, morbidity, and literacy-lag well behind those of the pop- ~s.~~ ulation of developed countries. The basic- needs approach to development is a re- sponse to these shortcomings of policies concentrated on economic growth: it fo- ' cuses directly on improving the conditions ? 2 /, of life of poor people in particular on their w i - 1 need for essential goods and services. It is not possible to reach complete agreement on exactly what the basic needs - ; of poor people are. The composition of the country varies, of course. Moreover, some people would include nonmaterial needs such as employment, participation in the , means of production, and political rights. But some needs are common to the poor in I most countries-these include food and nutrition, health services, education, water, sanitation, and shelter. These are basic hu- f man needs in large part because they con- , tribute to two fundamental aspects of hu- a man life health and education. In this I article, improvements in health and edu- E -AN, cation are taken as the primary objectives _ of a basic needs approach. In order to provide a basis for identifying [K the key macroeconomic elements for policy-makers attempting to meet the basic - . 1. . gal, and Somalia. It was 70 years or over in years in 1960, in 14 life expectancy was be predicted by per capita income alone. 10 countries-Argentina, Costa Rica, Cuba, over 70 in 1977. By contrast, in no country The relationship between changes in in- Hong Kong, Jamaica, Panama, Singapore, where life expectancy was less than 60 in come per capita and changes in perfor- the Republic of China, Trinidad and To- 1960 was it over 70 in 1977. There was quite mance on life expectancy and basic needs bago, and Uruguay. Similar variation oc- a substantial variation in the rate of im- is much weaker-the change in per capita curs in rates of literacy: in 12 countries less provement among countries between 1960 income providing virtually no explanation than 20 per cent of the adults were literate and 1977, but the strong correlation be- of the change in life expectancy between in 1975, while 16 countries had adult liter- tween present and past performance over 1960 and 1970. (In fact, it was precisely the acy rates of over 80 per cent. The quality the 17-year period indicates not only the failure of growth of GNP to eliminate pov- and extent of basic goods and services pro- importance of history but also the limits to erty which led to the new emphasis on vided in the less developed countries also major progress in the medium term. basic needs.) One reason why a country's perfor- mance in meeting basic needs is not fully explained by per capita incomes is that the Provision for basic needs in developing countries distribution of income among the popula- tion varies between countries and changes Education Health services Water Nutrition over time. One would expect the income of 1976 1976 1975 1974 the poorest 40 percent of the population, rather than average per capita income, to Enrollment in Population per: Population be critical in determining basic needs per- primary education with access Average As per cent (As per cent to safe water per day of require- formance. While data are inadequate for a of age group) Doctor Nurse (In per cent) (In calories) ments' full testing of the significance of income Male Female distribution, it is clear that those countries Average of lowest in which life expectancy is much higher five countries 24 9 56,710 36,764 7 1,773 76 than their per capita incomes might indi- Average of cate also tend to have more egalitarian in- highest five come distribution. And countries that do countries' 135 127 846 432 89 3,137 125 worse than might be predicted tend to have Source: World Bank, World Development Indicators, 1979. marked inequality in income distribution. Requirements are defined by the UN Food and Agriculture Organization. Thus, two groups of countries-the social- 'Among all less developed countries, excluding Greece, Israel, Portugal, and Spain. ist countries, which have fairly equal in- come distribution, such as the People's Republic of China, Cuba, and North Ko- varies widely. For example, in the 5 best- The second major explanation of the rea, and the rather egalitarian market- served countries, there is one nurse for varying performance of countries is the oriented and mixed economies, such as Ja- every 432 people; in the 5 worst-served level of per capita income. Since this level maica, the Republic of Korea, Sri Lanka, countries, each nurse serves over 36,000 determines the availability of resources, it and the Republic of China, all provide bet- people (see table). helps determine national expenditures on ter for basic needs than predicted. The However, between 1960 and 1977, all de- goods and services that affect life expec- countries with relatively unequal income veloping countries improved their provi- tancy and literacy. For a group of 86 devel- distribution, on the other hand, such as the sion of basic goods and services, although oping countries in 1975, 52 per cent of the oil producing countries, do not perform as the improvement was by no means uni- variance in life expectancy is related to dif- well as might be predicted on the basis of form over all the countries. On average, ferences in income per capita. per capita income. But some countries with life expectancy in low-income developing However, a large number of countries do very inequitable distribution of income ap- countries had risen from 40 years in 1960 to much better (or much worse) than would pear to be average performers in meeting 50 by 1977; in middle-income developing basic needs. countries it increased from 53 years on av- erage in 1960 to 60 in 1977; in the indus- Paradigms of success trialized countries it went from 69 years to Frances Stewart The evidence from the Bank's studies, 74; and in the centrally planned economies . together with more general evidence from it rose from 58 years to 66. Similar im- other developing countries, enables us to provements occurred in literacy rates; for -, classify countries according to their suc- example, among low-income countries the cess, and tentatively suggests certain par- adult literacy rate rose from 29 per cent in adigms of performance. Life expectancy is 1960 to 36 per cent in 1977, while middle- ____ - a citizen of the Utted I the single most significant indicator of per- income countries moved from 51 per cent W A Kingdom, wrote this article formance on basic needs. Comparing 1960 to 69 per cent in 1977. ~ ~~ ~-~- to/tile workin\' asa in 1960 to are of m significance in consuultant 1t tile Policy achievements in life expectancy with what Two factors are of major significance ins Planniing and Progratn might have been predicted on the basis of explaining these large variations. One is Review Department of the a country's level of income per capita pro- countries' past performance in the provi- World Bank. She is a Fellow of Som,er2ille College, vides a way of classifying countries' per- sion of basic needs goods and services: Oxford University (U.K.) and ti Scnior Researcht formance. countries that did relatively well in 1960 Officer at the Institute of Commonwealth Studies In The countries whose achievements on also did relatively well in 1977, and con- Orford (U.K.). Slte hias writtett widely otn questiotis life expectancy have been significantly versely. Thus, of the 16 developing coun- of techtnology, eotploymnent. and developiment, above their expected level form a rather tries where life expectancy was over 60 mixed bag. They include Burma, the Peo- 10 December 1979 ple's Republic of China, Costa Rica, Cuba, The "mixed" economy with welfare in- nutrition, poor health and hygiene prac- Hong Kong, Jamaica, North Korea, the Re- tervention: Sri Lanka's programs provide tices, low standards of sanitation, and un- public of Korea, Panama, Paraguay, Sri a prime example. With income per capita clean water. Similarly, the provision of Lanka, the Republic of China, Thailand, at less than $200 a year, life expectancy in clean water and sanitation services has lit- and Uruguay. Sri Lanka is 69 years and 75 percent of the tle effect on health because of deficiencies In general, we may tentatively distin- population is literate. The high level of in other services-particularly poor educa- guish three types of economies which turn achievement in Sri Lanka was the result of tion that may prevent users from making out to be notably successful. effective government intervention-on proper use of the services. Yet simultane- The rapidly growing, market-oriented supply, through universal health and ed- ous progress on all fronts is prevented by economies: Successful examples include ucation programs, and on incomes, through the lack of all the necessary resources- the Republic of Korea and the Republic of food subsidies-which reinforced a fairly such as finance, administration, and skills. China. They both combined relatively equal egalitarian income distribution. The net effects of major deficiencies in all land and income distribution with rapid The food ration accounted for about 20 the basic needs sectors in these countries economic growth; the economic growth has per cent of the caloric intake of families are very high levels of infant and child been generally labor-intensive and em- with a household income below 400 rupees mortality-as many as 50 per cent of the ployment-generating with considerable a month; in 1973 the subsidies amounted children die before they are five in some emphasis on human capital. For these to about 14 percent of the income of fami- areas. Most governments in such areas are countries, the prime impetus for success in lies at that income level. The effect of the now committed to a basic needs approach meeting basic needs has been rising in- subsidies on health and nutrition was no- and recognize the deficiencies of past pro- comes among all sections of the commu- ticeable in 1974, when a cutback in the ra- grams. Yet new programs are rendered nity. These higher incomes have permitted tion was associated with a marked increase rather ineffective by administrative defi- increased expenditure by poor families for in the death rate. Until recently, the pro- ciencies and by political pressures, at both basic needs. The public sector has played grams were universal, not aimed at partic- national and local levels, which tend to de- a supportive role in providing near- ularly needy groups. The distribution of prive the underprivileged of access to basic universal primary education and health income apparently became more equitable services and produce urban and class bias services, although public consumption as between 1953 and 1973, with the income in the distribution of services. The very low a proportion of national income has been share of the bottom 20 per cent rising from level of aggregate resources also severely below average. These economies show that 5.2 per cent to 7.2 per cent. The distribu- limits the magnitude of any set of pro- a market-oriented strategy may succeed in tion of taxes, government services, and grams to meet basic needs. meeting basic needs, given fairly equal ini- subsidies was egalitarian, reducing overall Rapid growth without substantial pov- tial distribution of incomes and land, and inequality by one fifth according to one erty reduction: These are the economies rapid economic growth which is not ac- measure (that is, the Gini coefficient). where the "trickle down" of the benefits companied by a serious increase in in- None of these three "successful" para- of growth has failed most notably; eco- equality in income distribution. digms is easy to duplicate as a general nomic growth is combined with worsening The centrally planned economies: The model; each arises from special historical income distribution. Not only do the in- People's Republic of China and Cuba are and political circumstances. Nonetheless, comes of the poor fail to keep up with the examples of socialist countries which have their stories suggest some of the essential average; in some cases they actually fall in been relatively successfuly in providing for elements of success: the fact that quite a real terms, mainly because the growth pro- basic needs. Their achievements are based large number of countries have been fairly cess is rather capital intensive and favors on a combination of equitable income dis- successful (10 countries with life expectan- the modern manufacturing sector at the tribution and planning, with priority given cies of over 70) shows that improved per- expense of the rest of the economy. In to social investment. We know too little at formance is feasible in varying circumstan- many cases, the level of public services is this stage about the People's Republic of ces and country situations. low and the distribution of public services China to say much in detail about its ex- is rather inegalitarian, favoring the urban perience. Less successful cases areas and the middle classes. Aspects of The Cuban achievements-average life In contrast to the paradigms of success, the performance of some of the larger expectancy of 72 years and almost univer- the analysis also shows patterns of devel- countries in East Asia and Latin America sal literacy-reflect the high priority placed opment that are associated with poor or illustrate this pattern. on education, health, and nutrition by the moderate achievement in providing for Moderate growth, moderate poverty im- socialist government. Cuba has spent about basic needs. Such pattems are evident in pact: This is a fairly typical development twice as much of its national income on three categories of developing countries. pattern. Here growth has been fairly capi- health and education as other developing Very poor economies: A number of small tal intensive; as a result, additional in- countries with a similar income level. A African countries are examples of this pat- comes have tended to accrue to those in system of subsidies and rationing has tern. They lack almost all the elements the modern sector rather than to the rural guaranteed a minimum balanced supply of needed to meet basic needs effectively. areas and the urban poor. In many of these food, clothing, and shelter to all the peo- They have low incomes (around $100 a countries up to a third of the population ple, while expenditure on nonbasic private head) and low productivity; infrastructure fall below an absolute poverty line, with consumption has been curtailed. While and administration facilities are deficient; poverty and malnutrition concentrated in precise figures are not available, it is be- and there is very low expenditure on the the rural areas. Although public expendi- lieved that substantial asset redistribution main basic needs sectors. The sectors are ture on basic services has tended to be combined with full employment has closely linked, which means that advance quite high, performance in the field of ed- brought about an egalitarian distribution of on any single sector is likely to be ineffec- ucation sometimes has been poor. The tax income. However, the high priority given tive if pursued alone. Curative health ser- system has done almost nothing to offset to social investment may have been partly vices, for example, tend to be rendered al- maldistribution; the fairly high public ex- at the expense of productive investment. most totally ineffective by low levels of penditure benefits the middle classes dis- 11 proportionately, and thus fails to contrib- ductivity of the labor force, it might be ex- were evident in these countries and in ute effectively to providing for the basic pected, in the medium to long term, to in- Egypt. The failure to generate sufficient in- needs of the poor. crease the overall rate of growth. A higher comes among the poor was evident among In contrast to the very poor countries, a rate of growth, in turn, may be expected to all the weak performers, particularly in noticeable feature of the last two categories improve performance on basic needs Brazil and Indonesia. is that a much improved performance could through its effects on per capita income. The "success" stories, on the other be achieved by redistribution of resources But much depends on the essential char- hand, showed all three aspects of the to those who are without access to them. acteristics of the growth process. framework as effectively developed and For the most part, these countries have a coordinated; but the leading factor contrib- sufficient margin of resources, at present Macroeconomic framework uting to the success differed between devoted to luxury or semiluxury consump- The country studies and paradigms pro- countries. In the Republic of Korea and the tion in both private and public sectors, to vide insights into the macroeconomic re- Republic of China, the critical factor was a make this feasible without a substantial re- quirements for different types of countries rapid and widely distributed growth in in- duction in investment. But one could ex- to implement a successful program to meet comes; in Cuba, it was planned produc- pect very severe political obstacles to such basic needs. There is a need for a macro- tion; and in Sri Lanka, it was the combined redistribution. There would be strong re- economic framework to provide coherent effect of appropriate and efficient organi- sistance to cutting down on private con- and comprehensive guidelines for plan- zation-the households were notably good sumption to build up public services. ning and for policy intervention in three at health/hygiene, and the public sector Moreover, the distribution of public ser- areas of the economy: production, organi- structure was successful in health and ed- vices is quite strongly inegalitarian, so a zation, and income. Developments in all ucation-and in maintaining adequate real buildup of the public sector might not have three areas affect basic needs. (1) The pro- incomes for most of the population. any major impact on basic needs among duction approach shows how the alloca- A major finding of the review of country the poor. Political constraints arising from tion of productive resources in the econ- experience is the very great variety of ex- entrenched vested interests provide the omy (for example, between the basic needs perience that is consistent with successful major obstacle to substantial improve- sectors, nonbasic needs consumption, and performance in meeting the basic needs of ments in providing for basic needs. investment) has certain effects on basic the population. Political and economic sys- The analysis of country performance needs. (2) These productive activities are tems among successful countries vary suggests that there are two major determi- carried out in different forms of organiza- widely. The macroeconomic framework nants of achievements in meeting basic tions-the market sector, the public sector, provides a coherent way of classifying needs: first, the pattern of growth and the and the household sector. The household, country performance and analyzing differ- consequent distribution of incomes. An particularly, plays a critical role both in ences, although further development of egalitarian, labor-intensive pattern of producing basic needs "goods" (food, such an approach and detailed application growth provides the poor with the pur- health, and so on) and in using these goods. to particular countries are required. A ma- chasing power to ensure adequate nutri- This use of basic needs goods by house- jor lacuna in our knowledge concerns as- tion and other essentials. The second de- holds largely determines their effective- pects of political economy. We know that terminant is the nature of government ness in improving conditions of life. The political factors are critical. But we are ig- interventions in relation to basic needs- public sector is also of particular impor- norant about the conditions that lead to an both in terms of the level of services and tance in basic needs sectors, since it nor- effective and determined basic needs ap- subsidies provided and their distribution. mally provides most health and education proach to development. The paradigms While in theory government interventions services and also intervenes actively in provided by the country studies used in can offset initial inequalities caused by the other sectors. The areas of production and this analysis could serve as a guide in that process of development, political limits on organization deal with the supply of basic direction. intervention are normally such that in fact needs goods. (3) Planning for basic needs the most essential element for successfully must also include an analysis of the way meeting basic needs is to increase the in- incomes are generated and distributed comes of the poor. throughout society, since the level of in- In general, there seems to be no system- come determines families' purchasing atic relationship between a country's eco- power and, therefore, their demand for Related reading nomic growth and its performance in basic goods and services. meeting basic needs in the medium term. The three approaches must be consist- J. Fei, G. Ranis, and F. Stewart, "Basic Some countries, such as the Republic of ent; in any particular country, successful Needs: A Framework for Analysis," Korea and the Republic of China, have had planning for basic needs requires guide- World Bank, April 1979. rapid growth and improved performance lines and action in each of them, while de- Growth and Basic Needs-A One World while others, like Cuba and Sri Lanka, ficiencies in any one of the approaches may Problem, Geneva, 1976. have done well on providing for basic needs detract from the effectiveness of the overall N. Hicks, "A Note on the Linkages Be- but are below average on growth rates. strategy. Applying the three approaches to tween Basic Needs and Growth," World Among the best performers in the area of country performance described in this ar- Development (forthcoming issue). basic needs, some have had above-average ticle, it is seen that organizational deficien- , "Sector Priorities in Meeting Basic investment ratios for middle-income coun- cies were particularlv notable in some Needs: Some Statistical Evidence," tries (the Republic of Korea, Paraguay, the countries. Poor household practices with World Bank, April 1979. Philippines, and the Republic of China) respect to health and hvgiene were a major G. Sheehan and M. Hopkins, "Meeting Philippiners majorad blow-aerag ra- lctr in he prsistnce f un ccep lbl Basic Needs: An Examination of the while others have had below-average ra- factor in the persistence of unacceptable World Situation in 1970," International tios (Colombia, Cuba, Jamaica, Paraguay, living conditions in the three African coun- Labour Review, September-October, 1978. and Sri Lanka). Because improving perfor- tries and in Indonesia; deficiencies in the mance on basic needs increases the pro- provision of services by the public sector I 12 Sectoral priorities for meeting basic needs Although many developing countries have made some headway in from 142 million in 1960 to 315 million in meeting the basic needs of their populations, the situation- 1975; and there has been some expansion particularly of the poor-remains disquieting. The author outlines in the supply of water and sewerage serv- the results of World Bank studies on the priorities for action in ices and in the amount of housing available various sectors, such as education, health, nutrition, water supply, to the poor. These improvements have had sanitation, and shelter. He discusses the changes in national policy an impact. They have contributed to a 15 that are needed and the constraints on these changes that confront apter cireth incrdeavselopin avrcaoguentife expfectany7 policymakers in the developing world. years in 1960 to 54 years in 1977. In spite of these improvements, living Shahid Javed Burki The "basic needs approach" to develop- conditions in the developing world remain ment reflects the necessity to ensure the disquieting, as illustrated by a number of access of the poor to a bundle of essential indices (see the table). For instance, there goods and services. While some of the still remains a large gap in life expectancy components of this bundle may vary from at birth between the developed and devel- country to country, there is a common core oping countries: the average is 74 years in that includes education, basic health, nu- the developed, and only 54 years in the trition, water and sanitation, and shelter. less developed, areas. The infant mortality Developing countries have made some rate in these countries is estimated at 100 progress in meeting these needs over the per thousand of all live births, compared last two decades. There has been, on av- with 25 in the industrial nations. The fig- erage, a slight improvement in the availa- ures for female life expectancy at birth show bility of food per capita; the total number a significantly wider gap between the two ,,-* -. ^ £s , -'of children enrolled in schools increased groups of countries than those for males. 13 There are about 850 million people in de- The priority for the majority of develop- poor children of preschool age and would veloping nations who have little or no ac- ing countries is to expand basic education also help to reduce the burden of child care cess to school. Of these illiterates, 250 mil- opportunities for the poor. This can be on women. lion are children and 400 million are adult achieved in part by providing additional While such policies would require sub- women. Only one fifth of the developing services for the poorest segments of soci- stantial resources to implement, the effects countries' population has access to ade- ety-in particular by expanding opportun- on the educational budget could include a quate water supply-as a result, it is esti- ities for primary school age children and reduction of total costs. The efficiency of mated that the women spend one tenth of for poorly educated or uneducated adults, most school systems can be improved in their time in collecting water for consump- especially women. The education of women several ways: by reducing wastage (brought tion within households. Nearly two fifths is important not only to enable them to de- about by students repeating or dropping of the population in these countries re- velop their own potential but also- out of classes, or by classes that are too mains without adequate shelter. Telling as these indices are, they should not be interpreted to mean that interna- Basic needs indicators tional action programs are needed in all these areas. While a global approach may Life expectancy at birth Adult literacy rates aperattractive, in that it offers a well- (in years) (in per cent) appear atrcv,i hti fesawl- country groups' 1960 1970 1977 1960 1970 1975 defined set of targets for planning pur- poses, such an effort may make very little Low income (up to $300 per sense in operational terms. Plans to pro- capita) 42 47 50 28 35 39 vide people with basic needs have to be Middle income (over $300 per evolved individually for each country. capita) 53 57 60 56 65 71 As a result, the real burden of decision- All developing 47 51 54 39 46 51 making falls on the countries themselves. Industrialized 69 72 74 98 99 99 The main purpose of the World Bank's re- Source World Bank, World Development Report, 1979. cently concluded work program on how to 1 Classification in the 1979 World Development Report of per capita income groups, according to GNP per capita in cently concluded work program on how to i977. The developing countries exclude those with population below one million as well as the capital surplus oil exporters. meet peoples' basic needs was to assist in- terested countries in planning to provide for the unmet basic needs of their citizens. because their function in most societies is big); by instituting programs to make full The program included a number of con- to bring up children-to improve their at- use of existing capacity-that is, by using ceptual, sector, and country case studies. titudes toward education in general, and schools or teachers for double shifts or This article summarizes some of the main their children's education in particular. summer sessions; and, where teachers are conclusions of the work on education, The relevance and efficiency of the edu- in short supply, by using substitute teach- health, nutrition, water supply, sanitation, cation process can readily be improved in ers (such as students, workers, or retired and shelter. most developing countries at all educa- persons). There are a number of different ways to tional levels. At the secondary and higher Health; Wat* Shelt restructure activities in the relevant sectors levels, the most immediate need is to make H w of a national economy in an effort to satisfy education more relevant to the world of The health of the great majority of the the unmet needs of large segments of the work. For primary and adult education, people in developing countries has re- population. Whether these steps should greater emphasis also needs to be placed mained relatively poor despite high levels actually be taken depends on the prevail- on ensuring that students obtain the skills of expenditure in this sector. This is not ing political, social, and economic circum- that are relevant to local social and physical due to a lack of technical solutions to the stances in each case, some of which are conditions. For most developing countries, problems of health care in developing discussed later. these changes imply major revisions in the countries, but to the way in which re- Interventions in education content and style of teaching, with accom- sources are spent on health services. In ad- panying changes in teacher training pro- dition, many health problems are also af- In education, efforts need to be concen- grams. They also require substantial fected by a wide range of causes not directly trated in three areas: (1) expanding basic changes in the ways in which education related to health, such as poor nutrition or education opportunities, especially for and work places are integrated. sanitation. Curative health care has been women; (2) improving the quality of edu- In some countries, special attention may emphasized at the expense of preventive, cation and making it more relevant to local need to be given to community preschool and urban health care at the expense of ru- needs; and (3) improving the out-of-school programs. Such programs would help to ral. Many millions of poor people in rural environment of the poor. reduce the differences between rich and areas have no access to health care facili- 14 March 1980 f4 7;,N,4 X ' /t - / /< > -41i - >/ / ,0 of supplying piped water to houses, stand- 7.-f i _,_ pipes could be installed in the urban areas, and standpipes or improved village wells 4 X ,< >> - >,,~ ^ / . ;and springs in the rural areas. There is a F , . / . >= /0 very wide variety of technologies available -f.1 Z / A Y , / q 9 9-/t, - for sanitation and water disposal, ranging / =,9 ,- / - - -from a conventional flush system to a sim- ple vault or borehole, all of which are sat- - t ' * iKa- >_ * t} E = _the problem of urban shelter is more acute. -_@ R m1_ , - . ./ ff. Y t,,,,a p The number of very poor households in J i,C\+ 9 . f j:ffi - F _ffi;, gD the urban areas is expected to double be- .1r,- w j / f .- tween 1980 and 2000. Basic shelter for all but the poorest 20 per cent can be provided mainly through private schemes. Govern- t9-r>~ t5 ,/.'o -, -z - ment support is required primarily to facil- 1;-<*->< Z z j J ] y w itate the transfer of land and to provide - t< _ 1i. // tE x>vt.;t>such services as water and sanitation. ,.' obj B /iz 4-_* t= / 1 tf _ duc4d by the adtharfor the Worfd Bank 1-, ' '7~~~~~~~~~~~~~~~~~~~ --i,- nutrition is central to survival and is a crit- mistic (and perhaps least likely) set of as- ond, by adjusting consumer prices in ways ical factor in an individual's growth and sumptions-high income growth and stable to assure that the poor have access to what capacity to function in society. Even in food prices-the projections of the magni- they need. normal, nonfamine conditions, inadequate tude of malnutrition in the five countries Every government now influences, in a food consumption significantly affects the studied show a sharp reduction by 1995 in variety of ways, the quantities and kinds of death rate. If adults fail to meet their food both the proportion of the population that foods being produced, traded, and con- requirements, they lose weight. This can is undernourished and in the magnitude of sumed. Yet the nutritional effects of agri- lead to diminished ability to cope with in- its deprivation. But even then, the absolute cultural and food policies generally are in- fection and other environmental stresses, number of the undernourished remains adequately planned or anticipated. Few to work, to enjoy the normal satisfactions over 150 million in these five countries. countries have systematically collected-or of life, and to raise and educate healthy With high income growth and, as is more used in their planning-data on the nutri- children. Maternal malnutrition during likely, slightly increased food prices, the tional consequences of changes in incomes pregnancy results in low birth weight of number of malnourished would fall by only and in food prices. Fortunately, several infants (the most important cause of infant about 1 per cent per annum from current countries (for instance, Brazil, India, Indo- mortality), and malnutrition during lacta- levels. And with more pessimistic (and, nesia, and the Philippines) have begun tion affects directly and indirectly the in- unfortunately, not implausible) assump- disaggregating food consumption data by fant's health, as well as the mother's. tions, the number of malnourished would income group. These data, along with re- Undernourished children are less active increase significantly. Projections based on cent analyses and project experience, sug- than they should be. When a child's intake the actual recent experience of these coun- gest several key considerations for the de- of food falls below 70 per cent of standard tries show that only Pakistan could expect sign of food policies aimed at improving allowances, growth slows; if low levels of to have calorie adequacy within the next 30 nutrition. feeding persist, adult stature is reduced. years. First, families with very low incomes Whether small size per se is disadvanta- One key conclusion of this analysis is spend most of their incomes on food, but geous is arguable. However, severe mal- that increases in income and in food pro- still often do not consume enough for nu- nutrition associated with decreased growth duction are likely to fall far short of what is tritional adequacy. In many countries, more also results in decreased brain size and cell required to meet basic needs in nutrition. than 40 per cent of the population have numbers and altered brain chemistry. Even A specific strategy to improve nutrition is calorie-deficient diets, and upward of 15 when malnutrition is not severe, decreased thus required to complement what a policy per cent have gross deficiencies. Second, growth is associated with low scores on focused only on growth would be too slow the foods they buy differ markedly from tests of cognitive and sensory ability. Small to accomplish. those bought by the rest of the population. stature caused by early malnutrition has Polic considerations In Indonesia, for instance, the lowest three been directly related to poorer productiv- Y income deciles obtain about 40 per cent of ity. Recent studies of work performance of Emphasis here is on the relatively ne- their calories from cassava and corn; by sugarcane cutters concluded that taller glected, deliberate use of public policy to contrast, the upper three deciles obtain workers were more productive at all ages influence the character of production, pro- about 14 per cent of their calories from than shorter workers. Work output in in- cessing, and distribution of food within a these foods. Third, and contrary to com- dustry has also been linked to body size. country to increase the amount consumed mon assumptions, poor people tend to have Improved nutrition, and the survival and by the poor. This can occur in two ways. an adequate balance between protein and well-being it implies, is a sufficient justifi- First, by changing the strategy of agricul- calories in their diets, even when an im- cation for a country to invest in better nu- tural production to put more emphasis on portant share of their calories comes from trition for its population. In addition, re- the nutritional needs of the poor; and sec- low-protein starchy staples. Regrettably, ducing or preventing malnutrition and its they are not always so rational when it deleterious effect on work capacity and comes to the distribution of food to the cognitive ability adds to human capital , Alan Berg very young of their families. and potentially increases output. Programs 'I , Fourth, while many of the malnourished that improve the nutritional status of the ; are small farmers and their families, the poor also help to achieve other social goals, majority are landless or near-landless ag- including the distribution of income, and, ricultural laborers, those in other low-paid through their impact on nutrition-related a U.S. eitizen, joined tlue rural nonfarm or urban jobs, or the unem- mortality, help reduce desired family size. Bank staff in 1972 and is ployed. They thus benefit only indirectly - nozo Scnior Niitrition from programs designed to boost the pro- Strategy needed Strategy needed ~>o. u Ado ser. Behfre Joining the duction of small farmers. Fifth, within any The common official response to the - Bank, Ie was a Senlior country, the extent of deficiencies tends to problem of food and nutrition has been to - Fellow at The r, vary substantially between regions and be- grow more food. More recent analysis, tak- Institution, Visiting Professor of Nuitritioni at the tween rural and urban areas. The varia- ing account of low demand or purchasing Massachludsetts Institute of Technology (M. . T.), anid tions that occur partly reflect differences in power among the poor and malnourished, Ifokdia Hfis pul9iation include The Nutrition incomes and tastes. They also reflect dif- has also emphasized the need to increase Factor: Its Role in National Development ferences in prices resulting from differ- their incomes. The relative importance of (BrookinIs, 1973), Nutrition, National ences in transport, production and storage food production and income, and the effect Development, and Planning (M.I.T. Press, 1973, costs, marketing margins, and government that improvement in either would have on as senior editor), and was responsible for the pricing policies. Often nutritional ade- the level of nutrition in a country, have niutritionl section in The World Food and quacy of diets also varies a great deal by been projected by Bank staff from data Nutrition Study (National Acadeniy of Scienices, season and by year. Seasonal deficiencies available on Bangladesh, Brazil, India, Mo- 1977). tend to be severe in countries with only rocco, and Pakistan. With the most opti- one major harvest, where price rises gen- Marcli 1980 19 erally coincide with seasonally low earn- crease incomes of the poor, are the key ele- confirmed statistically. It was seen most ings for agricultural laborers. Recent stud- ments in meeting nutritional needs in the dramatically in 1974, when ration supplies ies confirm that the highest incidence of longer run. In the intervening (and often were sharply reduced and food prices on malnutrition often occurs at this time. lengthy) period, measures are required to the open market sharply increased because Introducing a concern with nutrition into reduce the prices the malnourished pay for the cost of imported food grains more than food policy calls for a broad review. of ag- their food. This generally involves the often doubled. In that year the death rate in- ricultural production strategies. Most im- contentious issue of food ration and sub- creased significantly. The literacy rate had portant is the need for more emphasis on sidy programs-or food demand pro- not changed, nor had the proximity to the production of those low-cost foods grams. Such programs raise budgetary, health services or the quality of the water consumed primarily by the poor. In Col- balance of payments, and agricultural pric- supply. There was no plausible reason for ombia, a 10 per cent increase in the supply ing problems. Rationing programs are also the increased deaths other than the short- of beef could add three times as many cal- difficult to administer, and they may build age of food. Programs to provide the poor- ories to the daily diets of the already ade- up political constituencies that make them est with subsidized food grains in Kerala quately nourished group as to the diets of difficult to cut back. It is not surprising that (India) and Pakistan also appear to have the calorie-deficient group. In contrast, the many development analysts have believed had a positive impact on nutritional status. In most developing and developed countries, food is, politically, a special 'Nutrition-oriented food production programs, commodity. There is ample evidence that in conjunction with steps to increase incomes redistributing incomes is politically diffi- cult. However, many countries that are of the poor, are the key elements In meeting unwilling to transfer income to the poor nutritional needs in the longer run. " are willing to transfer large sums to subsi- dize staple foods. benefits of a 10 per cent increase in the pro- that ration and subsidy programs are much Target food programs duction of cassava would be received en- more a part of the development problem Food subsidies can be expensive, how- tirely by the calorie-deficient group. Em- than a part of the solution. These programs ever. For example, in 1975 their share of phasis on foods favored by the poor should are, however, one of the few ways to meet total budgetary expenditure was 21 per extend to every aspect of agricultural strat- the basic nutritional needs of very large cent in Egypt, 19 per cent in Korea, 12 per egy, including research, extension ser- groups of people. Experience in several cent in Morocco, and 16 per cent in Sri vices, supply of inputs, credit facilities, countries shows that such programs can Lanka. To keep costs down, subsidies must and marketing. effectively reach the poor and substantially be specifically aimed-or "targeted"-at Effective programs aimed at improving reduce severe malnutrition and malnutri- the nutritionally needy. Otherwise, the the production of small farms will gener- tion-related deaths. programs are likely to run short of funds ally improve the diets of small-farm house- The nutritionally most successful (and fi- and supplies just when they are needed holds, whether or not the programs di- nancially one of the most costly) food de- most, as Sri Lanka's program did in 1974. rectly increase the production of the food mand program has been carried out in Sri Had the subsidies been directed more at crops they consume. However, changes in Lanka. A 1970 survey shows that the rice the poor, as they are now, the increase in agricultural cropping patterns or policies ration program (which then provided rice mortality could have been substantially re- can sometimes have unexpected deleteri- to nearly the whole population) provided duced. ous effects on nutrition. When a farm shifts about 20 per cent of total caloric intake and Target groups of malnourished can be production from subsistence to cash crops, had a value equivalent to 14 per cent of in- identified in a number of wavs-by in- total income may increase but heads of come for the lowest income group. Only 5 come, by region, by season, by age, and by households may not provide to their fami- per cent of the (adult-equivalent) popula- the staples in their diet. Income is probably lies as much food as betore, since it must tion consumed less than 1,900 calories per the best means of indicating where nutri- now be bought at retail prices. This partic- day. In 1975, life expectancy was 66 years, tional problems on a large scale are con- ularly affects young children and women, higher than in richer countries such as Bra- centrated. However, imposing a means test who generally come at the end of the fam- zil, Korea, or Malaysia, and the highest in to define the target group is difficult, both ily food line. Intensive nutrition education relation to income level of all countries for politically and administratively. Another or plans to continue some subsistence pro- which data are available. It was 39 per cent way is by geographic area-a part of Col- duction may be needed to avoid the dan- higher than would have been predicted for ombia's nutrition program, for instance, gers inherent in such shifts. Similarly, when Sri Lanka's income level; infant mortality provides foods to specific age groups living agricultural prices are increased as an in- was 67 per cent lower. in specified needy geographical regions, centive to increase production, wages for How far is nutrition responsible for Sri regardless of income level. A promising unskilled laborers, which are often at bare Lanka's long life expectancy and low in- but generally unexplored means of target- subsistence levels, are generally slow to fant mortality? Sri Lanka also has a tradi- ing is by season. Countries with subsidy rise in step, and the transitional effect on tion of assisting the poor in meeting other programs during the months when food nutrition may be severe. It can be alle- basic needs-its literacy rate is 78 per cent, prices normally are highest will cover the viated through wage policies, short-term health services are good, and the water periods of severest nutritional vulnerability subsidies, or other food demand pro- supply is better than that of most other and of highest demand for expenditures of grams. poor countries. Clearly such achievements human energy. in meeting basic needs complement one Most target programs require rationing Food demand programs another. But the direct relation between to avoid large-scale misuse. But when poor Nutrition-oriented food production pro- food supply, nutritional adequacy, and the households constitute the target group, the grams, in conjunction with steps to in- low death rate in Sri Lanka has also been need for rationing, with all the administra- 20 tive work it entails, can be reduced, or transfer to the poor, it cannot be assumed are dependent on food production, as even sometimes eliminated, by a careful that the funds not spent on food are farmers or farm laborers, for increases in choice of the commodities to be subsi- wasted. People poor enough to have seri- their incomes. dized. The best foods to subsidize are those ous nutritional problems in their families New attention is needed on developing with a low cost per calorie or gram of pro- tend to spend more than half of their in- nutrition-oriented agricultural production tein and with a positive income elasticity comes on food, and most of the rest is policies and programs. And to ensure that for the poor and a low or negative income spent for other basic needs like shelter and food reaches those in need, increased em- elasticity for others. Coarse grains like sor- clothing. phasis is required on food demand pro- ghum and millet, processed cassava flour, Target programs involving ration shops grams, including the strong possibility in and certain food legumes favored by the or food stamps raise formidable institu- some cases of food subsidies aimed at spe- poor (for example, macassar beans in Bra- tional problems. There is bound to be a cific target groups. Such programs should zil, lentils in central India, black gram in good deal of bureaucratic inefficiency, and not be dismissed a priori because of past south India) meet these criteria. They are the power of rationing officials to grant or fiscal and other problems associated with generally consumed in lower quantities by withhold ration cards is an invitation to untargeted programs. (Nor should they be middle-income and upper-income people, widespread corruption. But if administra- seen as a panacea for solving nutrition so that a subsidy primarily would benefit tive costs do not wipe out food savings and problems; initial emphasis should be on the poor. Such subsidies have rarely been if they appear to be proportionately lower experimentation and careful monitoring.) tried. Most subsidies of staples have, in than those of other nutrition or poverty- These newer areas of policy emphasis fact, been for high-status grains like wheat oriented efforts, such a program will be complement more commonly used, but and rice (which have been widely available better than one that is not targeted at all. limited, ways of reducing the malnutri- tion-nutrition education, the fortification of staples with micronutrients, institu- malnutrition is not ust a poverty problem . . tional feeding programs, and the use of countries committed to eliminating most overt health services to support nutrition pro- malnutrition appear capableofdoingso. ,,zgrams. Different countries will have differ- malnutrl'tl'on appear capable of doling so. ent program priorities, depending on the distribution of malnutrition between rural and urban areas, the extent to which the in concessional foreign food aid programs) The potential disincentive to domestic rural malnourished are small farm families, with the aim of reaching the urban lower- agricultural production that ration and the particular nutritional problems and their middle and middle classes. subsidy programs pose is also a wide- causes, the likely cost-effectiveness of fea- The malnourished can also be reached spread concern. Steps governments take to sible interventions, institutional and fund- by subsidizing inferior qualities of a given reduce the balance of payments and fiscal ing capacity, and political constraints. staple. For example, a subsidy on low- costs of the programs can lead to a net re- Children under three with problems of quality rice (short-grain, with a high per- duction in the prices farmers receive for low birth weights (largely addressed centage of broken grains) will have more their products and, hence, to a reduction through the mother) and those in the first effect on the diets of the poor than a sub- in their output. The need to provide incen- year of life deserve priority attention, be- sidy on higher quality rice. So-called com- tives for domestic agricultural production cause of the effect of early malnutrition on posite flours (such as a mixture of cassava is increasingly accepted in developing subsequent life. But nutrition needs also with wheat and soy flours) could have nu- countries, although the incentives are fre- exist among older children, the aged, and tritional benefits as well. Subsidizing a quently inadequate and remain a serious working adults, who are able to produce particular commodity-for instance, pro- problem. Food demand programs should more income and food for their families if cessed weaning foods or special fortified be designed to take adequate account of they are better nourished. Even if planners foods for pregnant women-can tend to disincentive risks. were concerned only about reaching chil- limit beneficiaries of the subsidy to vulner- pr,i.sdren, it often would be more cost-effective able groups. riorities to reach them through programs affecting Problems Several high-priority areas for country malnourished households as a whole; in nutrition strategies emerge from this anal- many countries, a large percentage of mal- Even food demand programs aimed at ysis. Accelerated growth in the incomes of nourished children at vulnerable ages can- specific target groups will have substantial the poor and, with very few exceptions, in not be reached effectively in any other way. leakages to people outside the groups and food production continue to play funda- The whole problem of the malnourished through substitution when intended ben- mental roles in efforts to meet nutritional can be viewed as part of a complex tangle eficiaries reduce their food expenditures or needs. While growth in income and in food of poverty; clearly, the fundamental causes sell subsidized food. Such substitution may production is not a sufficient condition for of poverty loom large in any analysis of the cause the program to become, at least meeting basic needs in nutrition, it is a problem. But malnutrition is not just a partly, a disguised income transfer. There necessary condition. Without this growth, poverty problem. While virtually all people is little empirical information on the exent the poor will afford less food and govern- suffering from calorie deficiencies are poor, to which this happens. Only one study has ment revenues will not increase enough to not all poor people suffer from calorie or rigorously compared the effect of a ration finance nutrition and other programs. other nutritional deficiencies. Some coun- program on caloric intake with what would Similarly, there must be rapid increases in tries with high per capita incomes have have occurred with an equivalent income food supply to meet increases in popula- considerable malnutrition, and certain low- transfer; it found the nutritional impact of tion and in per capita incomes. Otherwise, income countries have little. In short, the ration program in Kerala to be substan- the relative price of food will go up, at least countries committed to eliminating most tially greater. But even if a program turns partly offsetting any increases in incomes overt malnutrition appear capable of doing out to be primarily a disguised income of the poor. In addition, many of the poor so. 21 Is there a tradeoff bet1veen growth and basic needs? It is often argued that policies aimed at providing the poor and neglected with basic goods and services imply a sacrifice of productive investments and economic growth. The author reviews theoretical and empirical arguments on the issue and uses evidence from 83 developing countries to indicate that providing for basic needs can improve growth performance. Norman L. Hicks While the developing countries have had ten's article, "From growth to basic phasized in theory: that is, the allocations substantial increases in output during the needs," in the September 1979 issue of Fi- of national resources between savings and past 25 years, it has been widely recog- nance & Development). consumptionorbetweensocialservicesand nized that this growth has often failed to The critical question for the individual other "productive" sectors. The true im- reduce the level of poverty in their coun- country is: will the provision of basic goods pact of an investment program oriented to- tries. Various alternatives have been pro- and services slow down a country's growth ward basic needs thus becomes very diffi- posed to redress this problem-including rate? In other words, is there a tradeoff be- cult to evaluate. strategies aimed at increasing employ- tween growth and basic needs? From a The debate ment, at developing rural areas, at redistri- theoretical standpoint there may be no buting the benefits of growth in favor of necessary reason for such a tradeoff; but Proponents of a basic needs approach low income groups, and at meeting the the evidence is not conclusive. Countries argue that the direct provision of essential basic needs of the poor. An approach that which have emphasized basic needs, such goods and services is a more efficient and concentrates on meeting basic needs em- as Burma, Cuba, Sri Lanka, and Tanzania, more rapid way of eliminating poverty than phasizes improvements in health, nutri- may be seen to have done so at the cost of an approach based on hopes that the ben- tion, and basic education-especially lower growth rates of output. On the other efits of increased national growth will through improved and redirected public hand, one can point to countries such as eventually reach the poor. While support- services, such as rural water supplies, san- Taiwan, Korea, and Singapore, which have ing efforts to raise productivity and in- itation facilities, and primary schools. It both grown relatively rapidly and made come, they emphasize that these alone may has been argued that the direct provision commendable progress in providing social be neither sufficient nor efficient. Their of such goods and services affects poverty services, reducing poverty, and improving case rests on their experience that: more immediately than those approaches the distribution of income. The issue is * the poor tend not to spend incremental that rely on raising the incomes and the complicated by the many factors which af- income wisely or efficiently, since they may productivity of the poor (see Paul Stree- fect growth other than the elements em- not be good managers or are not suffi- 'A ~ ~ - -~~~~~~~~~~~~~~~~~~o r , I *@S~~~~~~~~~~~~~~~~~~~~ -_ rig% %5&954L.Jr. 7r-9vrr,~' ciently knowledgeable about health and gross national product (GNP)) is broken tion. This can be done by estimating the nutrition; down into components relating to the lifetime earnings of people with various * there is serious maldistribution of in- growth of factor inputs (land, labor, and levels of education, compared to the pri- comes within households which cannot be capital) and an unexplained "residual" vate and social costs of education, which overcome by raising family incomes but which captures productivity changes of an include earnings forgone while at school. which can be corrected by the direct pro- unidentified origin. While the earliest ef- In general, these kinds of studies have vision of goods and services to the ne- forts in growth accounting can be traced found high rates of return from investment glected members; back to George Stigler (1947), the definitive in education particularly from primary ed- * some basic needs-such as water sup- work remains that of Edward Denison ucation in developing countries. A survey plies and sanitation-can only be met effi- (1967, 1974, 1979). of 17 developing countries by Psacharo- ciently through public services; and Denison's latest estimates show that less poulos (1973) found an average return of * it is difficult to formulate policies or in- than 60 per cent of the growth in GNP in 25 per cent for primary education. These vestment strategies to increase the produc- the United States can be attributed to the returns range, however, from a low of 6.6 tivity of all of the poor in a uniform way. increase in traditional factor inputs-labor per cent (Singapore, 1966) to a high of 82 The argument against directly providing and capital primarily-while the remainder per cent (Venezuela, 1957). for basic needs is based on two main con- is the result of economies of scale, im- There are considerable conceptual diffi- tentions. First, transfers of essential goods provements in resource allocation, and a culties in measuring such rates of return on and services result in increasing the con- large residual attributed to human capital, investments in human capital. The returns sumption level of the poor at the cost of which is labeled "advances in knowledge." may be overstated because they capture eventually reducing the net level of invest- Education is considered by Denison to be the "screening" effect of higher educa- ment and saving in the economy and a factor input which alone accounts for 14 tion, which means that more highly edu- therefore the welfare of everybody. Sec- per cent of the growth of GNP between cated people receive better paying jobs re- ond, the poor would be better provided for 1929 and 1976. If education is combined gardless of any true differentials in in the long run through the higher incomes with the residual advances in knowledge, productivity. The high unemployment rate realized by greater overall investment un- then the contribution of human capital to often found among highly educated people der a more conventional, growth-oriented growth would be about 38 per cent. At- in some developing countries suggests that development strategy. Meeting basic needs tempts to apply the same technique to de- investments in education may not always is seen as a strategy providing for a tem- veloping countries (Krueger, 1968) tend to raise productivity, particularly in those porary consumption transfer to the poor, show similar results. countries already possessing a large supply and not as a transfer of capital resources There is some question, however, of educated persons. Several studies have that would result in a permanent improve- whether the residual can be attributed to questioned the utility of education invest- ment in their condition. improvements in the stock of human capi- ments in development. For instance, Cor- The concept that basic needs can be bet- tal. It could represent errors in the calcula- rea (1970) found in a study of a group of ter met in the long run through increased tions of other variables, the omission of Latin American countries that while health output appears faulty for two important other important factors, or simply a faulty and nutrition were very important factors reasons. First, the basic needs of the poor assumption about the nature of the under- in GNP, improvements in education ap- can be met in ways that have little or no lying production function. While growth peared to have no impact at all. Nadiri direct effect on national levels of invest- accounting attributes an important role to (1972) concluded from a survey of the pub- ment and growth-by reducing the con- human capital in explaining growth, it does lished literature that education was not sumption expenditures on nonessentials of not necessarily provye that human capital is very useful in explaining differences in the poor and the rich or by redirecting the important. Thus it is not a completely reli- growth rates between developing coun- expenditures of the public sector from able way to measure the contribution of tries, although it did seem to explain vari- nonbasic to basic needs activities. Second, human capital to the growth process. ations in productivity within countries over it seems quite likely that expenditures on An alternative way of assessing the im- time. Thus, the evidence on the role of hu- basic needs improve the productivity of pact of improvements in human capital is man capital, particularly education, in af- human resources, and can therefore be to measure the rate of return from educa- fecting the growth of output in developing considered a form of long-term investment countries is not definitive or measurable. in human capital. The question then be- Furthermore, the concept of human capital comes one of identifying the degree to improvements covers areas (higher educa- which expenditures on basic needs actually _ Norman L. Hicks tion is an example), which are not consid- result in permanent improvements in hu- ered to be as relevant to a basic needs ap- man capital, and whether economic re- - proach, and vice versa. turns to this form of human investment are Another way of measuring the impor- higher than those from other kinds of in- tance of human capital is to look at the sta- vestments available to developing coun- a from the United States, tistical correlations between the provision tries. & joined the staff of the of basic needs and the growth rates in a Conflicting evidence World Bank in 1970 and is large number of countries. The problem presently Senior Economist with simple correlations is that they cannot There is a considerable body of literature C *'z in the Policy Planning and identify the links between basic needs that which attempts to identify the economic ^"W ';t /2 Program Review have been met and growth. Better provi- returns from improvements in human cap- Department. Mr. Hicks received his Ph.D. in sion of basic goods and services is just as ital. In developed countries, considerable economics from the University of Maryland in 1968, likely to be a result of higher incomes, as attention has been given to the concept of and worked for the U.S. Agency for International its cause. At the same time, growth in in- "growth accounting." In this approach, Development in Ghana before joining the Bank. come is clearly going to be affected by fac- the growth of total output (measured by tors other than those related to the provi- June 1980 23 sion of basic needs. Thus, one has to isolate the meeting of basic needs from other fac- Table 1 tors which can be considered important Economic growth, lIfe expectancy, and literacy for selected countries determinants of growth, in order to avoid Deviation from giving too much weight to the basic needs Growth expected levels Deviabon from rate Life expectancy of Ife Adult literacy expected levels variables 1960-77' 1960 expectancy' 1960 of literacy, 1960' Measurement problems Country (In per cent) (In years) (In per cent) We have no easy measure, however, of Singapore 7.7 64.0 3.1 - - progress in meeting basic needs. A variety Korea 7.6 54.0 11.1 71.0 43.6 of social indicators can be used, but using Taiwan 6.5 64.0 15.5 54.0 14.2 Hong Kong 6.3 65.0 6.5 70.0 6.4 them often presents conceptual problems. Greece 6.1 68.0 5.7 81.0 7.5 Some indicators reflect results, while oth- Portugal 5.7 62.0 4.7 62.0 1.7 ers-such as population per doctor and Spain 5.3 68.0 1.8 87.0 1.2 school enrollments-measure inputs. Some Yugoslavia 5.2 62.0 4.7 77.0 16.7 indicators measure the average level of so- Brazil 4.9 57.0 3.0 61.0 8.6 cial progress for the whole society, while Israel 4.6 69.0 2.0 - - others are based on a "have, have-not" Thailand 4.5 51.0 9.5 68.0 43.5 principle. Thus, the percentage of house- Tunisia 4.3 48.0 -0.5 16.0 -23.8 holds with access to clean water can accu- Average top 12 countries 5.7 61.0 5.6 64.7 12.0 rately capture the numbers without such Avnrae-64I service. By contrast, an average of the cal- countries4 2.4 48.0 -.0 37.6 -.0 ories consumed per capita as per cent of requirements is quite misleading, since it Source: World Bank, World Development Indicators, 1979. combines the overconsumption of the rich1 Growth rate of real per capita GNP. combines the overconsumption of the rich I Deviations from estimated values derived from an equahon where life expectancy in 1960 (LE) is related to per capita and the underconsumption of the poor. income in 1960 (Y) in the followeng way: LE - 34.29 eq .07679 Y - .000043 Y' (' = .66). 'Deviations from estimated values derived from an equation where literacy in 1960 (LIT) is related to per capita income Likewise, figres on averag life expect- in 1967 (Y) in the following way: LIT -9.23 t .1595 Y - .0000658 Y' (A' - .44). Likewise, figures on average life expect- '4Data for average growth rates and life expectancy refer to a sample of 83 countries, while that for literacy covers 63 ancy, or average infant mortality, do not countries. give us any idea of the range between the rich and the poor. Two countries with identical average statistics for infant mor- But even if we use these selected social annum-was substantially higher than the tality, for instance, could have quite differ- indicators to measure progress in meeting average of all 83 countries in our sample. ent infant mortality rates for their least fa- basic needs, the problem of identifying Further, the populations of this group of vored groups. It would be more useful if causality remains. Is the progress in meet- countries clearly had above-average life ex- social indicators provided data separately ing basic needs shown by these indicators pectancy at the beginning of this period: 61 for different income groups within a pop- a result of growth in output, or is it one of years, compared with an overall average of ulation. There is no reason why we could the causes? One way to overcome this 48 years in all 83 countries. not construct distribution statistics for so- problem is to look at the data for growth This would seem to demonstrate that cial indicators similar to our measures of rates of different countries compared to the improving the provision of basic needs can income distribution. levels of basic needs at the beginning of a augment the rate of growth. While this Until better indicators are produced, particular period. If past achievements in may be true, the data in the table contain a however, we are forced to use what we meeting basic needs now require high lev- considerable bias. The countries that grew have readily available. It seems appropri- els of consumption expenditures, the data the fastest in the 1960-77 period were ate to use life expectancy at birth as one then should show that good basic needs also countries which already had above- crude measure of the effectiveness of a performance has been associated with low average levels of income. Since levels of country's success in providing for basic growth. On the other hand, if provision of income and life expectancy tend to be needs. This single measure can encompass basic needs leads to an improvement in closely (but not perfectly) correlated, it is the combined effects on mortality of health people's productivity, the indicators should not surprising to find that the statistics for care, clean water, nutrition, and sanitation show that basic needs are related to higher our 12 countries show above-average life improvements, although it is admittedly growth. expectancy. an average of country experience with no Com arative evidence To overcome this bias, an equation was feel for how well these have been provided P established to relate life expectancy to in- for different groups within the population. The simplest way of identifying the re- come and to establish the "expected" level Progress in meeting needs for primary ed- lationship between the provision of basic of life expectancy for every country. Better ucation can be measured by adult literacy- needs and growth is to examine the record than normal performance on life expect- a better indicator than primary school en- of countries that have grown very rapidly ancy could then be measured by the devia- rollment, since it is oriented toward effects in the past and to compare their basic needs tion between the actual and the expected rather than efforts. These two indicators- performance-measured by life expectancy levels. In a sense, this formula adjusts the life expectancy and adult literacy-give and adult literacy-with that of the average level of life expectancy for the level of in- crude but fairly useful measures of prog- countrv. Table 1 presents data for the 12 come. These deviations are shown in the ress in meeting basic needs. Both indica- fastest growving countries between 1960 and third column of Table 1. The 12 countries tors are generally available for most devel- 1977 (excluding the oil exporting countries in the sample have life expectancies that oping countries on a fairly reliable basis, and those with populations of under one are, on average, 5.6 years higher than what which is not true for some alternative million). The average per capita growth normally would have been expected on the measures, such as infant mortality. rate of these countries-5.7 per cent per basis of their relative income level. Con- 24 sequently, there does seem to be a positive ond group of 12 countries-4.0 per cent per being recognized as important as the re- association between life expectancy and annum-is still considerably higher than turns from investments in the more stand- growth, even when allowing for the fact the average for the larger group. ard forms of physical capital. In other that some of the more rapidly growing One might argue, however, that the words, investing in people may be a good countries are also those at more advanced simple statistical analysis presented here is way to both eliminate the worst aspects of stages of development. inadequate for drawing firm conclusions. poverty and to increase the growth rate of Adult literacy is another useful measure The growth performance of countries is output. of a basic needs performance. Table 1 shows dependent on a variety of factors, such as that in the rapidly growing countries, about the level of investment, export earnings 65 per cent of adults were literate in 1960, and capital flows, and the general nature compared with about 38 per cent for the of development policies pursued. sample of 63 countries. Even when ad- The influence of these factors, as well as Related reading justed for income differences, literacy lev- the emphasis on basic needs, can be com- els in the rapidlv growing countries were bined and analyzed using multiple regres- \l t, Ahlu%%alia .and H B Chener% A about 12 percentage points higher than in sion techniques on the cross-country data. Che'ne, 0r Dt RtaLri,tn and Gwroth 'rin the other countries at the beginning of the This has been done for the period 1960-73 iO'tord Otxord LUnier.it% Presr '10741 period. (see Hicks, 1979), regressing the growth iark Blaug Human Capital Theon A rate of per capita GNP on the investment Slightlv laundiced Survey ' 1mral of rate, the growth rate of imports, and the E-),I0PPIi, Literf,l, Vol \IR' (September. levels of either literacy or life expectancy 1,7hli. pp '.-5n. Table 2 in 1960. (The growth rate of imports com- Hector Correa 'Sources of Growth in Growth and life expectancy, selected bines the effects of export growth and cap- Latin uAmerica. 'oulhern Economic lhL,r- countries ital flows.) This analysis concluded that the IIL7. \ ol 37 iJulv 1970i pp 17-31 Deviation from basic needs variables were significantly re- E. F. Denms.on. IVlii, Grothit Riateh Ditlcr expected level lated to the growth rate, even after allow- Po;rwar Eiis'rtene iti Nm. Iein Coun- Of life Growth rate, t rt~s. lWashington. D C The Brookings expectancy 1960-77 ing for the influence of the other variables. st r. n (or nn- h'd (In per It was found that countries which had life Sa' ~'o,.UOtI 99 % Sri Lanka 22.5 1.9 expectancies ten years higher than ex- Wliashington. D C Brookings InShtu- Taiwan 15.5 6.5 pected tended to have per capita growth tion. 194-4. 4i0z1ft`i,% totr 5l0'eF C.rowth Korea 11.1 7.6 rates 0.7 to 0.9 percentage points higher. tiWa4hington. DC.. Brooklngs Lnshtu- Thailand 9.5 4.5 Thus the more sophisticated techniques tlion lQ79)1 Malaysia 7.3 4.0 confirm the simpler ones shown here, Norman Htck-. "Growth vs. Basic Needs: Paraguay 6.9 2.4 which already concluded that those coun- Is There a Trade-Oti"' 1'orld Develop- Philippines 6.8 2.1 tries which do well in providing for basic nfe'iI '.,I tNovemberDecember 1979), Hong Kong 6.5 6.3 needs tend to have better than average Nr Hiks 94. Panama 6.1 3.7 . . Norman Hicks. and Paul Streeten, "Indi- Burma 6.0 0.9 performance i terms of economic growth. cator- o Dev elopment The Search for a Greece 5.7 6.1 This would also seem to suggest that a Basic Needs N ardntick " World Develop- Kenya 5.5 2.4 basic needs emphasis in development, far inen! V'ol 7 iJune 1979t, pp. 567-80. Average, 12 from reducing the rate of growth, can be Anne 0. Krueger, "Factor Endowments countries 9.1 4.0 instrumental in increasing it. and Per Capita Income," Economic jour- Average, all It would appear that economists who nal, Vol. 7.S t.September 1968), pp. 641- countries 0 2.4 formerly focused on human capital may 59. have concentrated too narrowly on one as- David Morawetz, Twenty Five Years of Eco- Source: World Bank, World Development Indicators, nomic Development (Washington, D.C.: 1979. pect of human capital, namely education. nmcDvl~et(ahntn .. Note: For explanaition of variables, see Table 1. It seems possible that other aspects of a The World Bank, 1977). basic needs approach to development, M. Ishaq Nadiri, "International Studies of ____________________________________ ~~~~~~~Factor Imports and Total Factor Produc- which aim to improve the health and living tivih A Brief Survey," Review of Income The preceding analysis suggests that conditions of the poor, should also be con- and Wealth, Series 18 (June 1972), meeting basic needs may contribute signif- sidered as building up a country's human pp. 129-54. icantly to growth, but it does not prove capital. Exactly how health and related basic George Psacharopoulos, Returns to Educa- that the approach is a sufficient condition needs improvements help increase pro- :;i San Francisco/Washington: Jossey- for high growth. In Table 2, we turn the ductivity and growth in the economy is Bass, 1973). question around and look at the 12 coun- difficult to pinpoint. The most obvious re- F. Stewart, and Paul Streeten, "New Strat- tries that have the highest deviation from lationship is that healthv workers can pro- egies for Development: Poverty, Income expected levels of life expectancy. Manv duce more, work harder and longer, and D,.trtbutmon and Growth," Oxford Eco- norn,i fPapet - 2", 11976). of the same countries shown in Table I so on. In addition, healthy students are apt G. I Stigler Tpeud in Output and Employ- appear here, namely, Taiwan, Korea, Thai- to learn more. Improved health conditions m in Ourp, and employ land, Hong Kong, and Greece. In add- reduce the waste of human and physical Economic Research, 1947). ition, there are a number of other resources which results from the bearing P.til 'treeten Ba,ic Needs: Premises and countries which have done well in terms of and raising children who die before they Prrrii,"e, i'u,t,11I Of P0hicy.'ll,;. 1, life expectancy but have not had excep- reach productive ages. The prospect of a i ig :Fipp 1 lb-46 tionally high growth rates during the pe- short life expectancy reduces the potential a'auiI'rr*ten cnl'- 1. Burki, "BasicNeeds: riod, such as Sri Lanka, Paraguav, the gain from long years of schooling. These 0`me 1lIrs lzt- Vorl Development, 6 Philippines, Burma, and Kenya. Neverthe- kinds of gains in productivitv from invest- tNkarch l-'"l rp 4Z11-21. less, the average growth rate for this sec- ments in health and education are now 25 Poverty and progress- w choices for the developing world Two different concepts of progress lie at the heart of much of the controversy about development strategy. One is based on the objective of catching up to the industrialized countries, the other on -i securing greater equity and reducing poverty. Comparative studies E- of the experience of countries with different policy approaches can help to shift this argument from the ideological to the empirical _ - level. The author surveys some recent results of Bank research in J this field and proposes a pragmatic approach to poverty alleviation. Hollis B. Chenery Concepts of progress in most developing fall considerably short of the needs of pol- countries are heavily conditioned by their icymakers. This article explores some of i-' colonial past. Many of them express their the implications of the prevalent views of objectives in terms of "catching up" with progress in developing countries in the the advanced industrial societies and pat- light of the information available on the re- I tern their economies on this model. This sults. tendency is reinforced by political objec- K - p tives in countries that wish to acquire mil- Concepts of progress itary power and influence. Catching up. The material success of the j_ One drawback to the emphasis on growth industrialized West has been a powerful is that its benefits have usually been con- incentive to the rest of the world to adopt centrated on the modern sectors of the elements of Western experience that are economy, and increasing inequality of in- conducive to accelerated growth. The suc- comes has often led to political tensions. cess of countries with different historical An alternative view of progress focuses backgrounds and economic and political suggest that the process of borrowing tech- more on achieving an equitable society and systems has served to reinforce this objec- nology from more advanced countries is reducing poverty, with growth regarded as tive. now virtually completed and that Japan is a necessary but by no means sufficient The concept of catching up with the in- likely to attain the income level of the condition. dustrial leaders is a product of the indus- United States by 1990 (Jorgensen and The postwar experience of relatively rapid trial revolution and its outward spread from Nishimizu, 1978). growth in developing countries has pro- Western Europe. This concept both pro- The Japanese example has had a power- vided a rich body of data on this set of re- vides a goal for social action and suggests ful effect on Taiwan, Korea, Singapore, lations that is only now being analyzed. a means by which this goal can be achieved. Thailand, and other countries of East Asia. Since there is relatively little established The technology and forms of economic or- All of these economies are now growing theory to guide this analysis, the collection ganization created by the advanced West- considerably faster than those of the ad- of data and the formulation of hypotheses ern countries have provided the means for vanced countries, and some may be able to have gone hand in hand. Although sub- accelerated growth for countries in all parts complete the transformation from a state of stantial progress has been made in under- of the world. Nations following this model underdevelopment to one of maturity in standing the economic forces at work, the have differed primarily in their choice of less than the 60 years taken by Japan. results to date are largely speculative and the economic and social elements to be in- Several of these East Asian countries corporated in their societies. provide modern approximations to the The prototype of a successful process of earlier idea of progress as a process in Tn,hi article ,s adapted trrm a paper lt appear catching up is Japan, whose economic which "good things come in clusters" In G Almond .M1 Chodor.rc ant R Pearce structure and income level in 1910 were not (Keohane, 1979). Unlike most developing tediior;l' Progress and Its Discontents significantly different from those of the countries, the benefits of growth have Stanlard Unievr.itu Press poor countries of today. Econometric esti- been widely distributed in Japan, Taiwan, mates of the sources of Japanese growth Singapore, and Korea, and the incomes 26 of the poor have grown almost as fast ure of poverty to physical estimates of the Although there is no scientific way to as those of the rich. Postwar govern- inputs required to achieve minimum determine the appropriate welfare function ments have been growth minded and au- standards of nutrition, health, shelter, ed- for any given society, the concept is useful thoritarian but not very repressive, and ucation, and other essentials. These indi- in bringing out potential conflicts in the these countries have ranked high on most cators of basic needs provide a way of eval- idea of progress and in deriving alternative indicators of social progress. In more typi- uating the effectiveness of any set of policies measures of performance. It will be used cal cases growth has been achieved at the designed to reduce poverty (Streeten, 1979). for this purpose in the following section. expense of increasing the concentration of The "basic needs" approach focuses par- . . .s.ui wealth and income, however, and the poor ticularly on the distribution of education, Experience wth distributon have benefited much less. health, and other public services as a nec- Perceptions of the nature of progress Equity. Although the more equitable essary element of policies designed to raise have evolved considerably as a result of the sharing of income features prominently productivity and to alleviate poverty. This varied experience of the postwar period. among the political objectives of virtually is an area in which some of the more effec- Many of the early postcolonial govern- all governments, it is taken much less se- tive socialist societies, such as the People's ments set forth optimistic objectives that riously in practice than is the objective of Republic of China, showed marked im- now seem highly oversimplified. How- rapid growth. Even though widespread provement. ever, there has also been a notable willing- government intervention in production and Formulating social objectives. The social ness to learn from experience in countries income distribution is justified largely on goals of developing countries-and of in- with varying ideologies. Equity-oriented the grounds of reducing poverty, in fact ternational bodies representing them-tend countries such as the People's Republic of most studies show that on balance the ef- to be stated in political terms that confuse China, Cuba, Sri Lanka, and Tanzania have fects of government revenue collection and ends and means and ignore the different found it necessary to give greater attention expenditure in developing countries favor dimensions of progress. For example, the to economic efficiency and growth, while the upper-income groups rather than the goal of catching up with more advanced some of the leading exponents of rapid poor. countries is a poor proxy for improving growth-Brazil, Mexico, Thailand, Tur- A few developing countries have, how- welfare because it often leads to emphasis key-are now taking poverty alleviation ever, gone beyond the endorsement of eq- on heavy industry and other policies that more seriously. uitable growth and have adopted policies concentrate growth in the modern sectors Although scholarly interest in these re- designed to achieve it. Notable examples of the economy. Similarly, many of the lations has expanded rapidly in recent include the People's Republic of China, goals announced by international agencies, years, the statistical measures needed to Cuba, India, Israel, Sri Lanka, Tanzania, such as the attainment of given levels of test and refine hvpotheses are only now and Yugoslavia. Although their social goals nutrition, education, shelter, or industry, becoming available. Twenty-five years ago, vary with the form and extent of govern- are misleading because they ignore the need Simon Kuznets addressed the question: ment control of the economy, there is a to achieve a balance among the several di- "Does inequality in the distribution of in- common emphasis on providing a mini- mensions of social progress. come increase or decrease in the course of mum level of income to the poorest groups. The economist's answer to this problem a country's economic growth?" Although In the more extreme socialist formulations, is to replace a set of separate objectives by his answer was based on evidence for only greater equality is considered a goal in it- a social welfare function that defines the a handful of countries and was labeled self, even if it is achieved with an adverse goal of a society in utilitarian terms as the "perhaps 5 per cent empirical information impact on efficiency-that is, lowering the increase in a weighted average of income and 95 per cent speculation," it has pro- incomes of the rich rather than raising those or consumption of its members over time. vided the starting point for empirical work of the poor. Although the national income is one such in this field (Kuznets, 1955). Kuznets hy- A pioneering attempt to reconcile the average, the typical income distribution pothesized that the distribution of income objectives of growth and the alleviation of gives a weight of over 50 per cent to the tends to worsen in the early phases of de- poverty in an operational framework was rich (the top 20 per cent) and less than 5 velopment and to improve thereafter. This made in 1962 by the Perspective Planning per cent to the poor (the bottom 20 per "U-shaped curve" hypothesis has been Division of the Indian Planning Commis- cent). If the growth of aggregate national subsequently verified in several cross- sion (Srinivasan and Bardhan, 1974). This income is used as a goal, it therefore im- country studies based on samples of 50 or approach was based on a formulation in plies giving 10 to 20 times as much weight 60 developing countries (Ahluwalia, 1976). which the rate of poverty reduction in In- to a 1 per cent increase in the incomes of There are several reasons for the earn- dia was determined by the growth of the the rich as to a 1 per cent increase in those ings of middle-income and upper-income national income, while the extent of redis- of the poor (Ahluwalia and Chenery, 1974). groups to rise more rapidly than those of tribution considered feasible was based on In principle, any set of weights could be the poor in the early stages of growth. De- the experience of other countries. This ap- applied to the income or consumption of velopment involves a shift of population proach has been refined in the concept of different groups to remedy this bias. One from the slow growing agricultural sector "Redistribution with growth" (Ahluwalia possibility is to give equal weight to a given to the higher-income, more rapidly grow- and Chenery, 1974), which forms the basis percentage increase in the income of each ing modern sector. In this process inequal- of the comparative analysis in the follow- member of society, which is the equivalent ity is first accentuated by more rapid pop- ing section. If the idea of a feasible limit to of weighting by the population in each ulation growth in rural areas and ultimately the redistribution that can be achieved with group. A more extreme welfare function, reduced by rising wages produced by more a given set of institutions is accepted, the which corresponds to the announced goals rapid absorption of labor in the modern conflict between growth and distribution is of a few socialist societies, concentrates en- sector (Frank and Webb, 1977). The more reduced. tirely on raising the incomes of the poor capital-intensive type of development A further refinement in the concept of and gives social value to increasing other strategy followed by Mexico or Brazil ab- poverty alleviation has been achieved by incomes only to the extent that they con- sorbs less labor and produces greater con- shifting from the use of income as a meas- tribute to this objective. centration of income, while the more labor- June 1980 27 the variation in income shares was com- The ReImt curve wth county obermations puted separately for each quintile, the gen- k_mfww eral phenomenon is depicted in the chart 3_ c by considering only two groups: the rich (upper 40 per cent) and the poor (lower 60 per cent). As national income rises from the lowest observed level to that of the middle-income countries, the share re- ceived by the poor declines on average from 32 per cent to 23 per cent of the total. 2503 I IIn a hypothetical country following this av- erage relationship, 80 per cent of the in- crease in income would go to the top 40 per cent of recipients. The relationship between the income growth of different groups and that of the 7* I I . i * - whole society can be brought out more clearly by expressing it in terms of the per capita income of each group. This is done in the chart, which plots the per capita in- come of the poor against that of the rich. 5 l., .' . ' '4 @/ *- Since the income level "Y" of the society is a weighted average of the two groups _ ;5, _ i - - a and b" (Y = .4Ya + .6Yb), the down- k .. 1 / ward sloping straight lines define given . E / / *--levels of per capita income. Points on these .e I I lines indicate different distributions, and a i, . | / ';/ ". growth process with a constant distribu- tion is represented by a straight line through the origin, as in the case of Yugo- Ix :,I - slavia. A line deviating toward the vertical axis indicates growing inequality, as in the case of Mexico or Brazil. Growing equality is shown by Sri Lanka and Taiwan. The Kuznets curve shown in this chart consists of two segments: a phase of wors- * , ., . ening distribution up to an income level of 500 - about $800 (of constant purchasing power) and a phase of improving distribution thereafter. In the first phase the per capita income of the rich grows from about $300 to $1,600 while that of the poor increases from about $100 to $300. For the poorest 20 per cent, the rate of growth is considerably 11 soo 100 150C less. Since an increase in national income Per capiti income of 8ttom 60 psr cent of this magnitude may take 40 or 50 years S.,u, h,ai.i CerC. Cur errr,,, 97, even with the relatively rapid growth rates 2 j a 3,h rIrSJIc rg 11 e weird, ,n rresurecently experienced m developing coun- tries, in the typical country the very poor intensive forms of Taiwan and Korea dis- these tendencies? Is social conflict an in- cannot look forward to an annual increase tribute the benefits of modernization more evitable concomitant of economic ad- of much more than 1 per cent-even though widely. A number of other factors, such as vance? Although none of these questions the economy is growing at two or three the greater demand for skilled than for un- can be answered with great confidence, the times that rate. Furthermore, there is noth- skilled labor and the concentration of pub- average relationships and the variety of in- ing automatic about the improvement in lic expenditure in urban areas, also con- dividual experience can be brought out by distribution above $800, as shown by Mex- tribute to growing inequality in many combining the available cross-country and ico and Brazil. countries. time-series evidence for the postwar pe- Tradeoff between growth, equity. Although My present concern is with the broader riod. acceptable time-series data are only avail- aspects of the relations between growth The average relationship between rising able for a dozen or so countries, they indi- and distribution. How universal is the ten- income and its distribution is best shown cate a considerable variation around this dency toward less equal distribution in de- by estimates of the Kuznets curve from average relation. The table gives selected veloping countries? Does it lead to an ab- data for all countries having comparable measures of overall growth and of the share solute decline in welfare for some groups? measures in some recent period (Ahluwa- going to the lower 60 per cent for countries What kinds of policies have served to offset lia, Carter, and Chenery, 1979). Although having observations for a decade or more. 28 Changes in income and its distribution Income level' DistribLution Growth rates Percentage Increments share of bottom 60 per cent (In per cent) Ratio of bottom 60 Initial Top Bottom Initial Final Increase Bottom per cent Country year Total 40 per cent 60 per cent year year incremental Total 60 per cent to total Good performers Taiwan (1964-74) 562 508 758 341 36.9 38.5 39.5 6.6 7.1 1.1 Yugoslavia (1963-73) 1,003 518 822 316 35.7 36.0 36.5 4.2 4.3 1.0 Sri Lanka (1963-73) 388 84 58 101 27.4 35.4 51.3 2.0 4.6 2.3 Korea (1965-76) 362 540 938 275 34.9 32.3 31.1 8.7 7.9 0.9 Costa Rica (1961-71) 825 311 459 212 23.7 28.4 33.6 3.2 5.1 1.6 Intermediate performers India (1954-64) 226 58 113 21 31.0 29.2 25.8 2.3 1.6 0.7 Philippines (1961-71) 336 83 155 35 24.7 24.8 25.0 2.2 2.3 1.0 Turkey (1963-73) 566 243 417 128 20.8 24.0 27.9 3.6 5.1 1.4 Colombia (1964-74) 648 232 422 106 19.0 21.2 24.0 3.1 4.3 1.4 Poor performers Brazil (1960-70) 615 214 490 31 24.8 20.6 15.5 3.1 1.2 0.4 Mexico (1963-75) 974 446 944 114 21.7 19.7 18.0 3.2 2.4 0.8 Peru (1961-71) 834 212 435 63 17.9 17.9 17.9 2.3 2.3 1.0 Source: Ahluwalia, Carter, and Chenery (1979), Table 5. Measured by per capita income expressed in 1970 U.S. dollars of constant purchasing power. They are divided into three groups accord- better or worse is indicated by comparing tradeoffs between growth and equity are ing to the share of the increment in income these increments to the initial distribution illustrated by the other cases. Although Sri going to the poor. The five good perform- and by the ratio of the growth of the per Lanka has grown much less rapidly than ers show over 30 per cent of the increment capita income of the poor to the national Mexico or Brazil, the poor have done con- going to the bottom 60 per cent, while the average in the last column. siderably better in the former case. Cuba three poor performers show less than 20 T i t w presents an even more extreme trade-off, per cent. Whether distribution is getting This dation togetrith les snce the welfare of the poor has risen de- complete data on other countries, provi spite a continuous fall in the nation's per a basis for describing the following pat capita income since 1960 (Seers, 1974) terns of growth and distribution observe ca l income since1 (See 1974). in the developing world: Only i the few cases where economlc Hollis B. Chenery i * Growthi-orieni ted pattern, illustrated by growth has been both rapid and fairly eq- _~~~Bai and Mexico. uitably distributed Is it possible to make a* Eqity-oriented low growt. , illustrated by unambiguous comparisons among coun- r Lanka , ilutae by. tries-or among different development e@x?Q W } ,Sri Lanka. i Rapid growth with eqtiity, illustrated bv strategies for a single country. In other a U.S. citizen, is Vice Taiwan, Yugoslavia, and Korea. rcases it is necesosa lfare functon to m ake President, Development -^ These cases illustrate the main types of de- such comparisons. To take two extreme Policy, of the World Bank. viation from the average pattern that can s fom the To the tw o the He joined the Bank at the be observed in the 12 countries of the table cases from the table, the incomes of the end of September 1970 as e India, Turkey, the Philippines, and Col- poor have grown nearly four times as fast Econiomic Adviser to the ombia follow the average relations of the over a decade In Sri Lanka as In Brazl, President. Mr. Chenery has degrees in mathematics Kuznets curve while the opposite is true of the incomes of and e ngiineering from the Universities of Arizona the rich. Since the latter receive greater and Oklahoma and received his Ph.D. in economics These examples suggest the following weight in the national income, per capita from Harvard. For the past 25 years, lie lhas observations on the relationship between income has grown 50 per cent faster in Bra- specialized in economic development, dividing hiis income growth and social welfare in devel- zil; conversely a population-weighted in- ttme between teacling, researcl, and government oping countries. First, a small group of dex of welfare increases 50 per cent faster assignments. countries has achieved rapid growth with for Sri Lanka. Even this limited sample nMerous plicatins, icluing Arcabia oil considerable equity. In addition to therefore demonstrates that judgments n imerouis puiblications, including Arabian UlOil> (North Carolina, 1949), Interindustry Economics Taiwan, Korea, and Yugoslavia, this about economic progress cannot be sepa- (tohnt Wiley and Sons, 1959), Studies in group includes Israel, Singapore, and rated from social and ethical postulates. Development Planning (Harvard University perhaps the People's Republic of China. Reducing world poverty Press, 1971), Redistribution with Growth The policies underlying this successful (Oxford University Press, 1974), Patterns of performance vary from primary reliance Attempts to extend the concept of mate- Development (Oxford University Press, 1975), on market forces in Taiwan, Korea, rial progress to a global scale run up against and Structural Change and Development Policy and Singapore to substantial income more acute problems of equity than the na- (Oxford University Press, 1979). transfers and other forms of intervention in tional issues described above. Although Yugoslavia and Israel. Second, substantial most governments recognize their national 29 income as one dimension of national wel- What are the possibilities of more rapid it not be necessary to establish enforceable fare, no one has suggested that global in- progress in the face of these and other con- standards of performance to assure that come has much relevance to an assessment straints? In an attempt to compare ap- the benefits actually reach the poverty of global welfare. Instead political and eco- proaches to poverty alleviation, Ahluwalia, groups? The new emphasis on poverty al- nomic efforts of international institutions Carter, and Chenery have simulated in- leviation does not resolve these old dilem- are increasingly focused on the reduction come growth and the numbers of absolute mas in the field of intemational economic of poverty and other aspects of equity as poor over the next 20 years for a large sam- cooperation. It may even accentuate them. objectives that command the support of ple of developing countries (Ahluwalia, people of widely varying political views. Carter, and Chenery, 1979, Tables 3 and 9). In recent years considerable efforts have If the trends of the past 20 years-a period been made to establish measures of pov- of relatively rapid growth of income-con- erty based on standards of nutrition, health, tinue, the number of absolute poor in 2000 shelter, education, and other essentials. would be at about the same level as in Conservative estimates set the proportion 1960. This represents rapid progress in one of the world's population that falls below sense, since the proportion of the poor Related reading a poverty line based on such minimum would fall from 50 per cent to 20 per cent standards at between 20 and 25 per cent. of the population of developing countries. M. 5 Ahlut4alia.Inequal oer and Although this proportion has declined However, since this result would be Development.' voliral 3 I Develo'eh nt Although ~~~~~~~~~~~~~~~~~~~E,.o~wnmic. \Vol 3 iSeptember 1976i. somewhat in the past 30 years, the overall achieved only by a reduction in absolute pp 307-4 increase in the world's population has poverty in middle-income countries that M. S. Ahluwalia, N. Carter. and H. Che- meant that the absolute number of people offsets the rising numbers in the very poor nery, "Growth and Po%ertv in Develop- below this poverty line has continued to countries, it is not a long-term solution. ing Countrie-." Ch. 1I in H. Chenery, grow and is currently of the order of 800 The reduction in poverty will have to S1ti,.clral Clhan,%'e Ind Dc.relonmen' Policy million. come from one of three sources: improved (Oxford, U.K., OxIord L.ni%ersit- Press, In technical terms the reduction or even distribution, accelerated growth, or a more 1979). elimination of world poverty seems decep- rapid decline in population growth. Im- M. S. Ahluwalia and H. Chenery, "The tively easy. If resources could be shifted to proved distribution is particularly impor- Economic Frame%vork.- in H. Chenery satisfying the needs of poverty groups ef- tantinmanymiddle-incomecountries, such U.K., OxfordtUnih erwith Preot 1Q\4T ficiently, it would only require a realloca- as those in Latin America (where income is J. Edelman and H. Chenery, "Aid and In- tion of 2 to 3 per cent of the world's output quite unequally distributed), but some ac- come Di.trnbuthon in The New Interna- per annum from 1980 onward to meet the celeration of growth is essential in the poor tional Economic Order: The Nortli-uLI,ah identifiable costs of eliminating poverty by countries of Africa and South Asia. Al- Debate edited by J. N. Bhagwati (Cam- the year 2000 (Streeten and Burki, 1978). though there are some short-term tradeoffs bridge, Mass., U.S.A., NM I T. Press, Since three fourths of the world's poor live between growth and distribution, in the 1977). in very poor countries, however, the an- longer term it is more likely that all three C. R. Frank and R. C. Webb (Editors) In- nual cost of eliminating poverty in these types of policy will be mutually reinforc- come Distribution and Growt,h in th, Lc-- countries is more meaningfully stated as ing. Even within restrictive limits to capital Developed Cot nlrie4 (Princeton, New Jer- equal to about 15 per cent of their gross na- transfers, the industrial countries can con- sey, U.S.A., Princeton University Press, equal ~~~~~~~~~~~~~~~~~~~~~~~~1977) Ch. 2. tional product (GNP), even if expenditures siderably improve the outcome by giving D Torgen'en and MIf Ni-him,zu "U.S. and could be designed to serve only the target greater priority to poverty alleviation in al- lapanese Economic Growth, 1952-74: groups. In the light of the distributional ex- locating aid among countries (Edelman and ANn International Comparison," Eco- perience outlined in the previous section, Chenery, 1977). nomic Journal, Vol. 88 (December 1978), the problem is seen to be vastly more dif- These projections lead to the conclusion pp. 707-26. ficult. that although the elimination of poverty is Nannerl Keohane, "The Idea of Progress Some of the principal constraints to a much more difficult than is sometimes Rexi'sred,"StanfordLUni'ersit. miimeo. more realistic attempt to reduce global suggested, it remains a plausible goal for 1979. poverty include: international policy. One of the principal Income Inequality," American Economic (1) The multiple objectives of nation means to this end would be accomplished Review, Vol. i4 tMrch 1955), pp. 1-28. states, among which the alleviation of pov- if the tendency of the poor to lag behind Pitambar Pant, [erspecr1ie of Develop- erty is usually subordinated to a variety of the higher-income groups in the process of ment (1961-1976): Implications of Plan- nationalistic goals. development could be eliminated. There is ning for a Minimum Level of Living," (2) The limited scope for resource trans- increasing acceptance of the idea that in- reprinted in T. N. Srinivasan and P. K. fers in the existing international economic ternational efforts should be more directly Bardhan, Po;'crri, aid Income Distribution order. Official development assistance from focused on reducing poverty in order to in India, Statistical Publishing Society the industrialized countries has declined offset this tendency of the international (Calcutta, India, 1974). from 0.50 per cent of their GNP in 1960 to system. Enough examples of how this re- Dudley Seers, "Cuba" in Chenery et at., 0.35 per cent or less since 1970. Transfers sult can be accomplished have been cited Oxford University Press, 1(r4 . from the Organization of Petroleum Ex- in economic systems ranging from socialist Paul Streeten, "Basic Needs: Premises and porting Countries (OPEC), while substan- to free enterprise to suggest that it is a fea- Promises," Jourmal of Policy Modeling 1 tial, do not offset the negative effects of sible objective. (1979), pp. 136-46. higher oil prices on the growth of the oil This conclusion leaves several funda- Paul Streeten and Shahid Javed Burki, importing developing countries. mental issues unresolved. To what extent "Basic Needs: Some Issues," World De- (3) Rapid growth of population, which should poverty alleviation replace the velopment, Vol. 6, (March 1978), pp. 411- will double in the next 35 years even though principle of self-help as a guide to interna- 21. the rate has started to decline. tional action? To achieve this objective, will 30 Mahbub ul Haq An international perspective on basi'c needs The concept of providing for the basic needs of the poorest has been widely misunderstood. The author briefly reviews some of the misconceptions, and discusses how a wide variety of development strategies can be used to reduce the prevalence of absolute poverty. These include programs for human resource development which aim to increase the productive potential of the poor, and the provision to them of additional public services. International donors can assist developing countries in carrying out such strategies, but the final choice of policies, and the ultimate responsibility, remains with the individual country. - - n'f't1d r:ri 1 bei-cniini :,n -*nd.in- in; Iflncrf.-t, in Ihtiur pr1dL1tr -t', I tL pa', g , :,rt. d d . vord T -' niv th, roncupt ot r. *r I;' ni I ^' r. Ih r, . riiltt i dhi, t i nil- proi. idingn ttr tlh b".nsi: neled or tht' ni.'rc o mi v Ht 'bid ot nI oti-n , nl d c lo enwnt reprc l't' a tLhit itt-ni p t. r,%h ' rrihi, " , Ikch -houild v h3 pt naton nij plaii ng tor ino ni . rnd. p i t'itaru r or ini ,t-ntiunt pr. , tlIChi a-. n11 1 an o unip- I 1t poo r 'UthLJt itin'.atinf, corre,.ponid- Iti, T, -. mci 1 conin-Lr r L l tp l i m angte i1 a move toward socialism, and whispered increased productivity (see World Develop- ited access to such public services as edu- references are made to the experience of ment Report, 1980). cation, health care, and water supplies China and Cuba. To others, it represents The pursuit of basic needs is not a dis- which they need if they are to break out of a capitalist conspiracy to deny industriali- tinct development strategy in itself. It is a the vicious circle of low productivity and zation and modernization to the develop- major goal of development which can be, poverty. ing countries and thereby to keep them and has been, achieved through a variety * Second, many poor people have no dependent upon the developed world. To of development strategies. However, the physical assets-neither a small farm nor still others, it is a pragmatic response to explicit adoption of this goal as an impor- a small industry. They are landless or ur- the urgent problem of absolute poverty in tant development objective involves gear- ban poor. The only "asset" they possess their midst. It is amazing how two such ing production, investment, and income is their own two hands and their willing- innocent, five-letter words could mean so policies to meet basic needs in a cost- ness to work. In such a situation, the de- many different things to so many different effective fashion and according to a specific velopment of human resources through people. time frame. education and health programs is essential It is possible that "basic needs" has be- These are issues that have been concern- to increase their productivity. come such a code word that it is impossible ing the World Bank for some time, and the * Third, it is not enough to enable the by now to restore a meaningful perspective previous articles in this series have re- poor to earn a reasonable income. They on this issue without abandoning the code ported on the findings of the Bank's stud- also need goods and services on which to word itself. That should not be too much ies on meeting basic needs in different spend it. Markets do not always supply of a loss. What needs to be protected is the areas and different spheres of activity (see wage goods, particularly public services. objective, not the word. A redefinition is box). Specifically, the Bank has studied the Expansion and redistribution of public needed of the objective of development as application of the basic needs approach in services becomes essential if basic needs increasing the income-earning capacity of particular countries and in certain sec- are to be met. the poor, both through greater national tors-health, education, water, nutrition, * Finally, it may take a long time to in- production and through the extension and and housing. The studies also attempted crease the productivity of the absolute poor the redistribution of public services. to understand the linkages between the to a level where they can afford at least the It should be recognized, too, that terms application of this concept to particular minimum bundle of basic needs for a pro- like "basic needs strategies," "basic needs sectors, and its effects on growth in an ductive life. In the interim period, some sectors," or "basic needs projects" are mis- economy. income groups-particularly the bottom 10 leading. They confuse an ultimate goal to 20 per cent-may need short-term sub- with intermediate means. Many different Increasing productivity sidy programs. activities can help meet basic needs and The only way that absolute poverty can Third World suspicions reduce absolute poverty-from building be eliminated on a permanent and sustain- infrastructure to constructing a health dis- able basis is to increase the productivity of So the implications of the Bank's work pensary. The indirect impact of some pol- the poor. But this concern with direct on how to reach the very poor in a society icies may be just as important as their di- methods to increase the productivity of the are quite clear: both increasing their rect impact. This confusion between ends poor needs to be supplemented, for at least income-earning capacity and meeting their and means lies at the heart of the current four reasons. basic needs are essential. But ultimately heated international debate on basic needs. * First, education and health are re- the decision to try to reduce poverty, and An attempt is made in this article to clarify quired, besides machines and land and the choice of a development strategy, rests some major issues in this debate and to credit, to contribute to a higher level of with the country concerned, and not with offer an international perspective on the productivity. Most poor people have lim- any outside institution. In this context, the role of basic needs in the development ef- suspicion with which Third World nego- fort. tiators in international forums regard the Misconceptions about the concept Mahbub ul Haq concept of basic needs has to be examined seriously, particularly since one of the The concept of basic needs brings to any principal objectives of their national de- development strategy a heightened con- velopment plans is to meet basic needs. cern with meeting the consumption needs LI r. It is always difficult to separate myths of the whole population, particularly in the - a Pakistan holds and reality in a debate like this. But some areas of education and health, but also in gaduatestand, Phold. of the reasons for the disenchantment of nutrition, housing, water supply, and san- c L degrees from Cambridge the Third World negotiators with interna- itation. In formulating policies aimed at re- (England) and Yale tional discussions on basic needs can be ducing poverty, a good deal of attention (U.S.A.). He is Director identified. has generally been paid to restructuring 3. of the Policy Planning and To begin with, the negotiators suspect patterns of production and income so that Program Review Department of the World Bank. that the developed countries are belatedly they benefit the poor. But similar attention Before joining the Bank, Mr. Haq was the Chief becoming concerned with basic needs be- has not been devoted to their needs for Economist of the Planning Commission of his own cause they think it will mean providing less public services. country. He is associated with a number of assistance. In fact, current official devel- It should be recognized, however, that intellectual forums and is regarded as a leading opment assistance (ODA) levels may have basic needs is not exclusively a welfare economic issues. His most recent publications to be at least doubled in real terms if sig- concept. Indeed, one of the major conclu- include The Third World and the International nificant progress is to be made in meeting sions of recent World Bank studies is that Economic Order (Overseas Development Council, the basic needs of the absolute poor over sufficient empirical evidence exists to dem- Washington, D.C., 1976) and The Poverty the next two decades, and if the problems onstrate that improved education and Curtain (Columbia University Press, 1976J. of transition are to be cushioned in the re- health often make a major contribution to cipient country so that the programs will 32 September 1980 not inflict a totally unacceptable price on of objectivity. In a way, there is always needs and the New Intemational Economic the rich and powerful sections of society. some degree of policy intervention by the Order begins to fade if basic needs is ac- But few donors have indicated their will- donors: its objectives and form may change cepted as a priority objective which should ingness to provide more assistance while over time. But the heart of aid diplomacy be met both by reforming the national and they advocate the adoption of a basic needs is for officials in donor countries to identify the international orders and by the more approach by the developing countries. The the point beyond which policy interven- automatic provision of additional financial real assurance on this issue can come only tion becomes counterproductive. Perhaps support for the developing countries. from the rich nations; they should commit a distinction has to be made here between themselves to specific targets for raising a donor's signals on overall policy, which A constructive approach the level of their assistance to support pro- are generally more acceptable to recipient What can be done at the intemational grams which provide basic needs for the countries, and specific project and policy level to support the adoption by the de- majority of the poor in the Third World conditionality and detailed monitoring, veloping countries of a strategy that will within a reasonable period of time. which are far less acceptable. For instance, provide for basic needs of the poor? Third World negotiators also suspect overall policy signals can make clear that As a start, it may be useful to note what that the current stress on basic needs will additional assistance will be given to those has not succeeded so far at the interna- be used to deny assistance to them for in- countries which commit themselves to giv- tional level. Many United Nations confer- frastructure, modernization, or industrial- ization. This again reflects a confusion be- tween ends and means. Basic needs is an objective, not a specific route toward de- Concrete targets to meet basic needs can be velopment. Developing countries may well i o i s establish steel mills, or any other industry, set and implemented only in specc nahonal situatons. and still remain consistent with their aim to reduce poverty so long as the benefits of the consequent growth are channeled to the poor. So the support of the donors for ing higher priority to basic needs. There is ences in recent years have attempted to set such projects should be based on their an additional consideration: in general, specific dates for meeting global targets in judgment of whether the overall develop- performance auditing by multilateral insti- the fields of education, health, water sup- ment plans and policies of the country con- tutions, such as the IDA, or special ar- ply, nutrition, and housing. Although this cerned are consistent with the objective of rangements for participatory monitoring, has certainly helped to create greater meeting basic needs, rather than on an as was the case with the Marshall Plan, are awareness of the magnitude and urgency evaluation of individual projects. more acceptable than similar action by bi- of the particular problems, these global tar- There is also suspicion that emphasis on lateral donors. In any case, the developed gets have had little operational signifi- basic needs will divert ODA from some countries will have to be very careful about cance. Concrete targets to meet basic needs middle-income countries to the poorest the extent and form of policy intervention can be set and implemented only in spe- countries. Such a diversion, in fact, would they can usefully apply at a time when the cific national situations. Moreover, the costs be a logical development. At present, 55 developing countries are seeking greater of individual global targets are generally per cent of bilateral ODA is still allocated equality, independence, self-reliance, and assessed by totaling the costs of each sector to the middle-income countries, which participation in international decision analyzed in isolation. This leads to inflated contain only 20 per cent of the global pop- making and when they are in the least re- aggregates which do not take the cost- ulation of absolute poor. If ODA were to ceptive mood for such intervention. reducing impact of sectoral linkages fully be reallocated according to a basic needs Finally, there is an overwhelming con- into account. Furthermore, these global criterion, it would have to be diverted to cern on the part of the Third World ne- targets are often not fitted into any con- the poorest nations. The impact of such a gotiators that the current debate over basic sistent, overall development strategy for diversion could be cushioned, however, by needs may be used by the developed coun- the developing world, so that they often enabling the middle-income countries to tries to divert attention from the North- do not make much sense when pursued at have a greater and more assured access to South dialogue on the New International a national level. Further, the dates for their the capital markets of the developed coun- Economic Order. There is a concern that achievement are generally a matter of ar- tries and by channeling ODA increasingly the advocacy of basic needs will be used bitrary choice. through multilateral institutions. The In- by the donors to tell the developing coun- In order to incorporate goals for meeting ternational DevelopmentAssociation (IDA), tries to reform their own national priorities basic needs into an operational program, for instance, could use more funds and has before they question the inequities of the three distinct steps are necessary. First, all the advantage that professional criteria are international system. Moreover, the basic developingcountriesshouldformulatetheir applied in determining its country alloca- needs debate is concerned exclusively with own national development plans for meet- tions. Over 90 per cent of IDA resources resource transfers while the dialogue on ing the basic needs of their population over are allocated to the poorest countries al- the New International Economic Order in- a defined period of time. Naturally, the ready, compared to 45 per cent of ODA cludes discussion of areas such as trade, priority that each society gives to meeting through bilateral channels. credit markets, technology, and multina- basic needs and the time frame within A: further concern of the Third World tionals. A parallel can be drawn here to which it plans to achieve this objective will negotiators is that the donors will inter- attempts at achieving equality of oppor- vary widely, depending on its stage of vene more in the internal economic and tunity at the national level: if the poor are economic development, resource base, and political management of their countries to achieve greater equality of opportunity, political and social compulsions. Interna- under the convenient banner of auditing they need not only resource transfers but tional targets should be derived as an ag- basic needs programs. This is a delicate also a restructuring of various institutions gregation of these national plans, and not policy area to discuss with any semblance and markets. Any conflict between basic as independent estimates. 33 any incremental operating costs required for the implementation of education and IBRD/IDA lending by sectors training projects. Specifically, this includes (In fiscal years) financing of incremental costs of teachers' Average annual salaries and materials, which in many in- 1970 (Preliminary) 1gr7oFtrBho stances is a more effective way of expand- In millions of In In millions of In In ing or improving education than an exclu- 1980 dollars per cenf 1980 dollars per cent per cent sive preoccupation with buildings and Sectors of lending equipment. The financing of such incre- Infrastructure' 3,784 58.3 4,090 37.2 0.8 mental operating costs by the Bank will not Sectors directly linked to extend beyond the implementation period increasing the of the project. The Bank will also satisfy productivity of the poor 506 7.8 3,352 30.5 20.8 itself that these incremental operating costs Production sectors can be financed subsequently by the gov- "New style ernment concerned. projects`2 166 2.6 2,053 18.7 28.6 A greater Bank role in providing for basic "Basic needs programs"3 340 5.2 1,299 11.8 14.4 needs also suggests some movement to- Other production sectors4 2,197 33.9 3,558 32.3 4.9 ward sector lending. Sector lending can be Total 6,487 100.0 11,000 100.0 5.4 defined in general terms: it means that a donor provides a certain amount of re- Source: World Bank. sources for the implementation of a set of Note There is some overlap between various categories. Also, all lending has varying degrees of impact on poverty, directly or indirectly The table is only illustrative to bring out the major shift in sectoral emphasis over time. projects conceived within a satisfactory Includes communications, energy, power, transportation, and tourism Includes rural development and small-scale industry projects where over 51 per cent of the total benefit is directed to sector strategy. Sector lending, therefore, poverty target groupsth Includes education, population, health, sites and services, and water supply presupposes the existence of national in- Includes agriculture (excluding rural development), development finance companies, industry, technical assistance, and stitutions that are capable of implementing nonproject lending coherent sector strategies and of handling various aspects of project work. This con- dition has not often been met in the social sectors. Second, each national development plan to the objective of poverty alleviation. The The Bank will adopt an explicit policy of should identify the range of national and proportion of such projects and programs creating and developing institutions in ed- international policies needed to assist in in the total lending program has risen from ucation, health, water supply, and so on, meeting the basic needs of their poor peo- 8 per cent in fiscal year 1970 to 30 per cent that can, over time, be relied upon to make ple according to the country's own specific by fiscal year 1980 (see table). Thus, over good use of sector loans. At the same time, timetable. The International Development the last decade, resources devoted by the the Bank will expand its sector lending in Strategy for the 1980s, which is currently Bank to programs of increased productivity the relevant sectors of education, nutrition, being formulated, should fully reflect these of the poor have inicreased about four times water supply, sanitation, and housing in policy options. In particular, it should fo- as fast as the Bank's overall rate of expan- those countries in which adequate insti- cus on those international actions which sion, However, there is considerable scope tutional bases already exist. are vital for the success of these national for further adjustment within sectors. For plans-whether these are additional re- example, only 14 per cent of the benefits Primarily a national decision source transfers or changes in the prevail- from water and sanitation projects are be- ing international trade and monetary sys- lieved to go to the absolute poor. The share This discussion has concentrated on the tem. of basic education in total Bank lending in international implications of adopting basic Third, the international community the education sector at present is estimated needs as the principal objective in national should commit itself to a much higher level at 25 per cent. development plans. In the final analysis, of support for the efforts of the developing Greater emphasis on the objectives of however, the initiative for adopting such countries if absolute poverty is to be elim- alleviating poverty and meeting basic needs an objective rests entirely with the devel- inated in a manageable period of time. In has some important implications for the oping countries. The weight they give to fact, a coherent international development lending procedures of the Bank, particu- this objective is their choice. The interna- strategy, based on the priorities of national larly for operating costs and sectoral lend- tional community cannot be far ahead of development plans, can give specific con- ing. It is a characterisfic of many projects the national governments. It can offer tent to the changes in the international en- and programs that are aimed at meeting help. It can give the right signals in lending vironment which are needed to meet cer- basic needs that operating costs are high policies. But it can neither define nor dic- tain defined development objectives. in relation to capital costs. Some financing tate basic needs targets. It is a national de- of incremental operating costs is already cision, in the light of each country's own Issues for the World Bank being done by the Bank. In agricultural ex- political and economic compulsions, the tension projects, for example, the Bank in- accumulating pressure of their absolute What are the implications of this discus- cludes the salaries of extension workers in poverty, and the quiet footsteps of political sion for the policies of the World Bank it- the costs of the projects. Practices have revolutions that their governments hear in self? varied, however, among sectors; in edu- the dark distance. Without a national com- Over the past 12 years, the Bank has cation, for example, this type of opera- mitment to eliminating such poverty, no swvitched its sectoral priorities so that an tional financing has been limited. amount of international concern can suc- increasing proportion of its lending is now The Bank has recently generalized this ceed in providing for the basic needs of the committed to sectors directly contributing approach by making eligible for financing world's poorest. 34 All these articles originally appeared in Finance & Development, a quarterly magazine published jointly by the International Monetary Fund and the World Bank that presents articles written by staff members of the two institutions on issues concerning international finance and economic development. ,j lo , } l | | | | | R R World Bank Headquarters: 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. U Telephone: (202) 477-1234 Cable address: INTBAFRAD WASHINGTONDC Ewmpeam Offkc 66 avenue d'16na 75116 Paris, France Tokyo OUcr. Kokusai Building 1-l NMarunoucki 3-chome Chiyoda-ku, Tokyo 100, Japan ~~~~~~~~.. . . . . ..*