CENTER FOR ECONOMIC AND POLICY RESEARCH - WASHINGTON, DC
FOR IMMEDIATE RELEASE CONTACT: Joyce Kim (202-293-5380 ext 206)
MONDAY, AUGUST 7, 2000
World Bank Research Faulted. CEPR Analysis Shows That World Bank Data Don't Support Their Conclusion That Globalization Has Benefited the Poor
WASHINGTON, DC-- The Center for Economic and Policy Research (CEPR) today released a study analyzing the World Bank's controversial paper, "Growth Is Good for the Poor" (March 2000).
The World Bank's paper (www.worldbank.org/research) had claimed to show that "growth generally does benefit the poor and that anyone who cares about the poor should favor the growth-enhancing polices of good rule of law, fiscal discipline, and openness to international trade." CEPR's analysis shows that the data from the paper do not support this conclusion. Among CEPR's findings and conclusions:
Economic growth in the developing world, excluding China, has declined dramatically over the last 20 years. "There is no region of the world that the World Bank and IMF could claim as success stories for their policies," said Mark Weisbrot, co-director of CEPR and the principal author of the study. "We need further research to determine how much these institutions are responsible for this slowdown in economic growth-- a slowdown that hundreds of millions of poor people in underdeveloped countries can ill afford." In Latin America, for example, per capita grew by 75% from 1960-1980, whereas from 1980-1998 it has only risen 6%. For sub-Saharan Africa, GDP per capita GDP grew by 36% in the first period, while it has since fallen by 15%.
Except for the positive correlation between economic growth and the incomes of the poor-- which is not controversial-- almost all of the statistical tests in the World Bank paper yield insignificant results. On the basis of such insignificant results, it is not possible to conclude, as the World Bank paper does, that IMF and World Bank policies such as increased openness or anti-inflationary macroeconomic policies benefit the poor.
Even the relationship between economic growth and the income of the poor is not as strong as the World Bank paper indicates. There are numerous instances in which not only the poor but the majority of the labor force have failed to share in the gains from economic growth. This is true in the United States, for example, where the real median wage today is the same as it was 27 years ago.
The full report, "Globalization May Be Good For the Poor-- But are World Bank and IMF Policies Good for Growth?" is available at www.cepr.net , along with the executive summary.
For a printed copy, please contact CEPR.
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