How The World Bank CouldSucceed In Its Mission

Allen ChaoIan T. Haufrect

June 1, 2006

Overview

I. The World Bank’s Mission

A. Programs

B. The missing objective

II. Evidence this will reduce poverty

III. Implementation

The World Bank

• http://worldbank.org/

• Primary objective: End world poverty

Organizational Objectives

• Promoting growth to create employment opportunities

• Helping poor people to take advantage of these opportunities

www.worldbank.org

World Bank’s Mission

• The World Bank is a vital source of financial and technical assistance to developing countries around the world

• It’s mission is to reduce global poverty and the improvement of living standard

www.worldbank.org

Program Objectives• End extreme poverty and hunger• Make sure all children receive a

primary education• Promoting equal rights for women

and give them power to help themselves

• Reduce child death rate• Improve the health of pregnant

women and mothers• Tackle HIV/AIDS, malaria and other

diseases• Protect the environment and natural

resources• Develop an international partnership

for development

www.worldbank.org

Missing Program

Primary Mission is to end world poverty

It is failing that mission The main programs

missing are FAMILY PLANNING to reduce unintended pregnancies and increase the average age of first pregnancy among women in poverty

Why will this reduce poverty?

Poverty Begets Poverty• Compared to children from non-poor

households, it is mostly children from poor (<$1/day/person) households who are likely to dropout of school

• Orphaned girl-children more likely to drop out of school than boy-children

• Children born to married parents are not likely to drop out of school vs. children from single, divorced, separated, widowed and polygamous parents

• Poor education is the main medium through which poverty is passed from one generation to the next

Muyanga, Milu “Poverty Begets Poverty: Breaking the Vicious Poverty Cycle Via Education” Kenya 2006www.iariw.org/abstracts/2006/muyangaa.pdf

Number of People living on less than 1$ per day

Region % No. (in millions)

1987 1998 1987 1998

Total

Including China

28.9 24 1,183.20 1,198.90

Excluding China

28.5 26.2 879.8 985.7

East Asia

Including China

26.6 15.3 417.5 278.3

Excluding China

23.9 11.3 114.1 65.1

Eastern Europe/Central Asia

0.2 5.1 1.1 24

Latin America/the Caribbean

15.3 15.6 63.7 78.2

Middle East/North Africa

4.3 1.9 9.3 5.5

South Asia 44.9 40 474.4 522

Sub-Saharan Africa

46.6 46.3 217.2 290.9

http://www.guttmacher.org/pubs/journals/2804102.html

China as an Example

• 1 child/married couple• Mandated and enforced by

the government• Reduced the # of people

living on <$1/day by 90 mil over a decade

• This is a 39% reduction of poverty in China vs. the World’s 17% reduction from 1987 to 1998, and the Developing World’s reduction of 25% from 1990 to 2001

Supporting Thesis

• Fertility decline would slow population growth in developing countries and thus reduce poverty – High birthrates create large

numbers of children relative to the number of working adults

– Underpowered women are often unable to act on their own behalf to obtain contraceptive services to regulate their childbearing

http://www.guttmacher.org/pubs/journals/2804102.html

Further Reasoning

• Children in large families perform less well in school and less well on intelligence tests than do children from small families

• Children in large families also tend to have poorer health and lower survival probabilities

http://www.guttmacher.org/pubs/journals/2804102.html

Steps of Poverty Reduction

1. Implement Family Planning Services

• Birth control delays and reduces fertility

• This reduces the ratio of youthful dependents to working adults which will increase developing countries’ human and physical capital

2. Invest the retained human and physical capital in national infrastructure and education to raise the living standard and transform the work force (EX: South Korea and Taiwan)

http://www.worldbank.org/research/journals/wber/revsep98/pdf/article%203.pdf

Implementation Obstacles

• Political

• Religious

• Monetary & Logistical

Political Obstacles

• 184 member countries of the World Bank

• Many, including the United States (the largest shareholder) would object to family planning objectives because of the association with abortion

• It is so controversial that it is not even mentioned anywhere on the World Bank’s website

• Non-coercive policies stand the best chance of gaining acceptance

www.worldbank.com

Non-coercive Policies

• Provide free passive birth-control

• Provide free follow-up exams to minimize/eliminate side-effects

• Provide monetary incentives in territories with high rates of women living on <$1/day

<$1/day Poverty Rates by Region

• 1.1 Billion people total in 2001

Religious Obstacles

• Religious organizations may object and advise (command) followers to reject family planning

• Clinics receiving family planning funds may be the target of religious fundamentalist attacks

Monetary & Logistical Obstacles

• Costs of passive birth control

Mirena: $175–$500/ exam, insertion, and follow-up visit >99% Effective for 5 years

Implanon: Cost approx $11799.9% Effective for 3 years

• Estimate $200 per person for birth control with all costs (implantation, marketing, etc.)

www.plannedparenthood.com

The Cost

• 1.1 Billion people live on less than $1 per day

• Approximately ½ are female• Average life expectancy approx 50

years• If family planning starts at age 12

and is subsidized through age 21 (ten years):

• 1.1B * ½ * 1/5 = 110 mil• 110 mil * $200/person = $22 B• Assume this amount is only spent

every 4 years = $5.5 B / year

Comparative Numbers

• The World Bank sells about $12B in bonds per year

• Their operating income is about $1B per year

• As of June 30, 2005, they had $138 B in outstanding loans

The World Bank’s 2005 Annual Report

Considerations

• Childhood poverty and a single-parent household are among the strongest predictors that a child will have a criminal future

• As the numbers of people living below $1/day falls over the following 2 decades after implementation, the need for these family planning services will decrease, and so will the cost of providing them

Levitt, Steven J. and Dubner: Freakonomics 2005 p138

Conclusions

• The World Bank is failing its mission to end world poverty

• Family Planning Services will best accomplish the World Bank’s mission

• Cost is attainable• Political and Religious

objections are the main obstacles