2006世界银行Overview

Consider two South African children born on the same day in 2000. Nthabiseng is black, born to a poor family in a rural area in the Eastern Cape province, about 700 kilometers from Cape Town. Her mother had no formal schooling. Pieter is white, born to a wealthy family in Cape Town. His mother completed a college education at the nearby prestigious Stellenbosch University. On the day of their birth, Nthabiseng and Pieter could hardly be held responsible for their family circumstances: their race, their parents’ income and education, their urban or rural location, or indeed their sex. Yet statistics suggest that those predetermined background variables will make a major dif- ference for the lives they lead. Nthabiseng has a 7.2 percent chance of dying in the first year of her life, more than twice Pieter’s 3 percent. Pieter can look forward to 68 years of life, Nthabiseng to 50. Pieter can expect to complete 12 years of formal schooling, Nthabiseng less than 1 year.1 Nthabiseng is likely to be considerably poorer than Pieter throughout her life.2 Growing up, she is less likely to have access to clean water and sani- tation, or to good schools. So the opportuni- ties these two children face to reach their full human potential are vastly different from the outset, through no fault of their own. Such disparities in opportunity translate into different abilities to contribute to South Africa’s development. Nthabiseng’s health at birth may have been poorer, owing to the poorer nutrition of her mother dur- ing her pregnancy. By virtue of their gender socialization, their geographic location, and their access to schools, Pieter is much more likely to acquire an education that will enable him to put his innate talents to full use. Even if at age 25, and despite the odds, Nthabiseng manages to come up with a great business idea (such as an innovation to increase agricultural production), she would find it much harder to persuade a bank to lend her money at a reasonable interest rate. Pieter, having a similarly bright idea (say, on how to design an improved version of promising software), would likely find it easier to obtain credit, with both a college diploma and quite pos- sibly some collateral. With the transition to democracy in South Africa, Nthabiseng is able to vote and thus indirectly shape the policy of her government, something denied to blacks under apartheid. But the legacy of apartheid’s unequal opportunities and political power will remain for some time to come. It is a long road from such a (fundamental) political change to changes in economic and social conditions. As striking as the differences in life chances are between Pieter and Nthabiseng in South Africa, they are dwarfed by the disparities between average South Africans and citizens of more developed countries. Consider the cards dealt to Sven—born on that same day to an average Swedish household. His chances of dying in the first year of life are very small (0.3 percent) and he can expect to live to the age of 80, 12 years longer than Pieter, and 30 years more than Nthabiseng. He is likely to complete 11.4 years of schooling—5 years more than the average South African. These differences in the quantity of schooling are com- pounded by differences in quality: in the eighth grade, Sven can expect to obtain a score of 500 on an internationally compara- ble math test, while the average South African student will get a score of only 264—more than two standard deviations below the Organisation for Economic Co- operation and Development (OECD) median. 1 Overview 01_WDR06_Overview.qxd 8/16/05 3:38 PM Page 1 Nthabiseng most likely will never reach that grade and so will not take the test.3 These differences in life chances across nationality, race, gender, and social groups will strike many readers as fundamentally unfair. They are also likely to lead to wasted human potential and thus to missed devel- opment opportunities. That is why World Development Report 2006 analyzes the rela- tionship between equity and development. By equity we mean that individuals should have equal opportunities to pursue a life of their choosing and be spared from extreme deprivation in outcomes. The main message is that equity is complementary, in some fundamental respects, to the pursuit of long-term prosperity. Institutions and policies that promote a level playing field— where all members of society have similar chances to become socially active, politically influential, and economically productive— contribute to sustainable growth and devel- opment. Greater equity is thus doubly good for poverty reduction: through potential beneficial effects on aggregate long-run development and through greater opportu- nities for poorer groups within any society. The complementarities between equity and prosperity arise for two broad sets of reasons. First, there are many market fail- ures in developing countries, notably in the markets for credit, insurance, land, and human capital. As a result, resources may not flow where returns are highest. For example, some highly capable children, like Nthabiseng, may fail to complete primary schooling, while others, who are less able, may finish university. Farmers may work harder on plots they own than on those they sharecrop. Some efficient developing- country producers of agricultural com- modities and textiles are shut out of some OECD markets, and poor unskilled workers have highly restricted opportunities to migrate to work in richer countries. When markets are missing or imperfect, the distributions of wealth and power affect the allocation of investment opportunities. Correcting the market failures is the ideal response; where this is not feasible, or far too costly, some forms of redistribution— of access to services, assets, or political influence—can increase economic efficiency. The second set of reasons why equity and long-term prosperity can be complementary arises from the fact that high levels of economic and political inequality tend to lead to economic institutions and social arrangements that systematically favor the interests of those with more influence. Such inequitable institutions can generate eco- nomic costs. When personal and property rights are enforced only selectively, when budgetary allocations benefit mainly the politically influential, and when the distri- bution of public services favors the wealthy, both middle and poorer groups end up with unexploited talent. Society, as a whole, is then likely to be more inefficient and to miss out on opportunities for innovation and investment. At the global level, when devel- oping countries have little or no voice in global governance, the rules can be inappro- priate and costly for poorer countries. These adverse effects of unequal opportu- nities and political power on development are all the more damaging because economic, political, and social inequalities tend to repro- duce themselves over time and across genera- tions. We call such phenomena “inequality traps.” Disadvantaged children from families at the bottom of the wealth distribution do not have the same opportunities as children from wealthier families to receive quality education. So these disadvantaged children can expect to earn less as adults. Because the poor have less voice in the political process, they—like their parents—will be less able to influence spending decisions to improve public schools for their children. And the cycle of underachievement continues. The distribution of wealth is closely corre- lated with social distinctions that stratify peo- ple, communities, and nations into groups that dominate and those that are dominated. These patterns of domination persist because economic and social differences are rein- forced by the overt and covert use of power. Elites protect their interests in subtle ways, by exclusionary practices in marriage and kin- ship systems, for instance, and in ways that are less subtle, such as aggressive political manipulation or the explicit use of violence. Such overlapping political, social, cultural, and economic inequalities stifle mobility. They are hard to break because they are so 2 WORLD DEVELOPMENT REPORT 2006 01_WDR06_Overview.qxd 8/16/05 3:38 PM Page 2 closely tied to the ordinary business of life. They are perpetuated by the elite, and often internalized by the marginalized or oppressed groups, making it difficult for the poor to find their way out of poverty. Inequality traps can thus be rather stable, tending to persist over generations. The report documents the persistence of these inequality traps by highlighting the interaction between different forms of in- equality. It presents evidence that the inequal- ity of opportunity that arises is wasteful and inimical to sustainable development and poverty reduction. It also derives policy implications that center on the broad concept of leveling the playing field—both politically and economically and in the domestic and the global arenas. If the opportunities faced by children like Nthabiseng are so much more limited than those faced by children like Pieter or Sven, and if this hurts development progress in the aggregate, then public action has a legitimate role in seeking to broaden the opportunities of those who face the most limited choices. Three considerations are important at the outset. First, while more even playing fields are likely to lead to lower observed inequalities in educational attainment, health status, and incomes, the policy aim is not equality in outcomes. Indeed, even with genuine equality of opportunities, one would always expect to observe some differences in outcomes owing to differences in preferences, talents, effort, and luck.4 This is consistent with the important role of income differences in providing incentives to invest in education and physical capital, to work, and to take risks. Of course outcomes matter, but we are concerned with them mainly for their influ- ence on absolute deprivation and their role in shaping opportunities. Second, a concern with equality of oppor- tunity implies that public action should focus on the distributions of assets, economic opportunities, and political voice, rather than directly on inequality in incomes. Policies can contribute to the move from an “inequality trap” to a virtuous circle of equity and growth by leveling the playing field—through greater investment in the human resources of the poorest; greater and more equal access to public services and information; guarantees on property rights for all; and greater fair- ness in markets. But policies to level the eco- nomic playing field face big challenges. There is unequal capacity to influence the policy agenda: the interests of the disenfran- chised may never be voiced or represented. And when policies challenge privileges, powerful groups may seek to block reforms. Thus, equitable policies are more likely to be successful when leveling the economic play- ing field is accompanied by similar efforts to level the domestic political playing field and introduce greater fairness in global gover- nance. Third, there may be various short-run, policy-level tradeoffs between equity and effi- ciency. These are well recognized and exten- sively documented. The point is that the (often implicit) cost-benefit calculus that policymakers use to assess the merits of vari- ous policies too often ignores the long-term, hard-to-measure but real benefits of greater equity. Greater equity implies more efficient economic functioning, reduced conflict, greater trust, and better institutions, with dynamic benefits for investment and growth. To the extent that such benefits are ignored, policymakers may end up choosing too little equity. By the same token, however, those inter- ested in greater equity must not ignore the short-term tradeoffs. If individual incen- tives are blunted by income redistribution schemes that tax investment and produc- tion too steeply, the result will be less inno- vation, less investment, and less growth. The history of the twentieth century is lit- tered with examples of ill-designed policies pursued in the name of equity that seriously harmed—rather than spurred—growth processes by ignoring individual incentives. A balance must be sought, taking into account both the immediate costs to indi- vidual incentives and the long-term benefits of cohesive societies, with inclusive institu- tions and broad opportunities. While careful assessment of policy design in local contexts is always important, equity considerations need to be brought squarely into the center of both diagnosis and policy. This is not intended as a new framework. It means integrating and extending existing frameworks: equity is central both to the Overview 3 01_WDR06_Overview.qxd 8/16/05 3:39 PM Page 3 investment environment and to the agenda of empowerment, working through the impact on institutions and specific policy designs. Some may value equity for its own sake, others primarily for its instrumental role in reducing absolute poverty, the World Bank’s mission. This report recognizes the intrinsic value of equity but aims primarily to document how a focus on equity matters for long-run development. It has three parts. • Part I considers the evidence on inequal- ity of opportunity, within and across countries. Some attempts to quantify inequality of opportunity are reviewed but, more generally, we rely on evidence of highly unequal outcomes across groups defined by predetermined cir- cumstances—such as gender, race, fam- ily background, or country of birth—as markers for unequal opportunities. • Part II asks why equity matters. It dis- cusses the two channels of impact (the effects of unequal opportunities when markets are imperfect, and the conse- quences of inequity for the quality of institutions a society develops) as well as intrinsic motives. • Part III asks how public action can level the political and economic playing fields. In the domestic arena, it makes the case for investing in people, expanding access to justice, land, and infrastructure, and promoting fairness in markets. In the international arena, it considers leveling the playing field in the functioning of global markets and the rules that govern them—and the complementary provi- sion of aid to help poor countries and poor people build greater endowments. The remainder of this overview provides a summary of the principal findings. Inequity within and across nations From an equity perspective, the distribu- tion of opportunities matters more than the distribution of outcomes. But opportu- nities, which are potentials rather than actuals, are harder to observe and measure than outcomes. Within-country inequities have many dimensions Direct quantification of inequality of opportunity is difficult, but one analysis of Brazil provides an illustration (chapter 2). Earnings inequality in 1996 was divided into one share attributable to four predeter- mined circumstances that lie beyond the control of individuals—race, region of birth, parental education, and paternal occupation at birth—and a residual share. These four circumstances account for around one-quarter of overall differences in earnings between workers. Arguably, other determinants of opportunity are equally predetermined at birth but not included in this set—for example, gender, family wealth, or the quality of primary schools. Because such variables are not included in the inequality “decomposition,” the results here can be seen as lower-bound estimates of inequality of opportunity in Brazil. Unfortunately, predetermined (and thus morally irrelevant) circumstances deter- mine much more than just future earnings. Education and health are of intrinsic value and affect the capacity of individuals to engage in economic, social, and political life. Yet children face substantially different opportunities to learn and to lead healthy lives in almost all populations, depending on asset ownership, geographic location, or parental education, among others. Consider how access to a basic package of immuniza- tion services differs for the rich and the poor across countries (figure 1). There is substantial inequality in access between, for example, Egypt, where almost everyone is covered (on the left), and Chad, where more than 40 percent of children are excluded (on the right). Yet the disparities can be as large within some countries as they are across all nations in the sample. In Eritrea, for instance, the richest fifth enjoys almost complete coverage, but almost half of all children in the poorest fifth are excluded. Significant gender differences also per- sist in many parts of the world. In parts of East and South Asia, notably in certain areas in rural China and northwest India, the opportunity to life itself can depend on one single predetermined characteristic: sex. These regions have significantly more boy 4 WORLD DEVELOPMENT REPORT 2006 01_WDR06_Overview.qxd 8/16/05 3:39 PM Page 4 infants than girls, in part because of sex- selective abortion and differential care after birth. And in many (though not all) parts of the world, more boys than girls attend school. The hundreds of millions of dis- abled children across the developing world also face very different opportunities than their able-bodied peers. These inequities are usually associated with differences in an individual’s “agency”— the socioeconomically, culturally, and polit- ically determined ability to shape the world around oneself. Such differences create biases in the institutions and rules in favor of more powerful and privileged groups. This is seen in realities as diverse as the low chances for mobility of scheduled castes in a village in rural India and the frequent episodes of discrimination against the Quichua people in Ecuador. Persistent dif- ferences in power and status between groups can become internalized into behav- iors, aspirations, and preferences that also perpetuate inequalities. Inequalities of opportunity are also transmitted across generations. The chil- dren of poorer and lower-status parents face inferior chances in education, health, incomes, and status. This starts early. In Ecuador, three-year-old children from all socioeconomic groups have similar test scores for vocabulary recognition and are close to a standard international reference population. But by the time they are five, all have faltered relative to the international reference group, except for those in the richest groups and with the highest levels of parental education (figure 2). Such pro- nounced differences in vocabulary recogni- tion between children whose parents had 0 to 5 years of schooling and those whose parents had 12 or more years are likely to Overview 5 Percentage not covered 70 60 50 40 30 20 10 0 Poorest Wealthiest Eg yp t Jo rd an (* ) Co lo m bi a Rw an da Pe ru So ut h Af ric a K en ya M al aw i Br az il Za m bi a (* ) Vi et na m Tu rk ey Gu at em al a Ta nz an ia In do ne sia Tu rk m en ist an (* ) M or oc co Gh an a Be ni n Ph ilip pi ne s Ba ng la de sh Co m or os Bo liv ia Pa ra gu ay Ka za kh st an (* ) Ye m en Bu rk in a Fa so Ca m er oo n Ug an da In di a M au rit an ia Ha iti To go Et hi op ia Ce nt ra l A fri ca n Re pu bl ic M ad ag as ca r M oz am bi qu e Gu in ea M al i Ca m bo di a Pa kis ta n Er itr ea Ni ge r Ch ad Figure 1 Wealth matters for the immunization of children Source: Authors’ own calculations from Demographic Health Survey (DHS) data Note: * indicates that the poorest quintile have higher access to childhood immunization services than the wealthiest quintile. The continuous orange line represents the overall percentage of children without access to a basic immunization package in each country, while the endpoints indicate th