A TIME TO ACT James D. Wolfensohn President The World Bank Grouip Address to the Board of Governors Washington, D.C. September 29, 2002 THE WORLD BANK A TIME TO ACT James D. Wolfensohn President The World Bank Grouip Address to the Board of Governors Washington, D C September 29, 2002 THE WORLD BANK Washington, D C. A_z, 1 %-r- i \la4thringum, I) C 2002 it Is my pleasure to welcome you to these Annual Meetings. I wVoull like to extend my appreciation to the U S authorities for makinig otir meeting in Washington, D.C , possible and to the D C government, the D C. Metropolitan Police Department, and to all the security personnel for all thcir support thioughlout the meetings I also thank my friend Horst Koehler for a collegial anci coopera- tive working relationship in the last two yeais and for his thoughtful speech this morning To our newest membei country, the Democr-atic Reptiblic of Timor-Leste-I Join Chairimiani Macki in welcoming you to the Bank Please accept our best wishes for every success in your efforts to bLIlId yotir nation Wheni we gathered two years ago, I spoke of the opportUtlities and challenges of development These have been a rough two years In the rich world, collapsing stock maikets and corpoiate scan- dals have shaken confidenice and mutiual trrist In the developing world, people have been badly hit by contin- uing wars and conflict, falling commodity prices, a slackening of demaind, and contintiing restrictions on tracle \\ith rich cotintries The humain toll in Africa ancl Latin America has been heavy Yet, in the face of these dIffictilties, muich of the developing world has shown strong resilience. This resilience is a tribtIte to the progress that has been made in shaping and implementing policies Many cotinti ies have taken on the problems of dislocation inevitably involved in reform They have worked to improve institutions and governance. And throughl these difficultles and our collective action, xe have, in maniy ways, seen the best of people. We have seen a coming togerher-a recognition that international problems reqtlire International responises. On September 1I last year, the world finally came to recognize that there are not two worlds-rich and pooi There is only one A T,me to Act We are linked by finance, trade, migration, communications, environment, communicable diseases, crime, and drugs, and certainly by terror. Today more and more people are saying poverty anywhere is poverty everywhere-and their voices are getting louder Their demand is for a global system based on equity, human rights, and social Justice. It must be our demand too. For the quest for a more equal world is the quest for long-term peace- something that military power alone can never achieve. And the world is beginning to listen. We have seen a year in which the commitments reached at Doha, Monterrey, and Johanneshurg have laid a new basis for a global deal. The development communlity has confirmed the M illenniUn Development Goals as our framework for action. In pursuit of these goals, we have witnessed the emergence of a global partnership built on a consensus that the world is inter- dependent. Our thinkiig and action must be local, regional, and global, and we must work and act together And xwe have reached a remarkable consensus on what is needed for successful poverty reduction. First and foremost, developing country leaders have asserted that the responsibility for the future of their countries is in their hands They know that they must drive their development and create a constructive environment to encourage growth that is equitable and just for poor people, indeed for all people. This growth must be based on sotind social and economic poli- cies. To create the conditions for entrepreneurship, productivity, and jobs, the developing countries must invest in health and education, including early childhood education. These countries 4 W4a,hnigwriu D C 2002 must also invest in effective legal and judicial systems, clear tax and regulatory frameworks implemented in approaches that fight corrLIption at all levels, and sLrong and well-regulatecl financial systems Gains from reforms leading to economic and social growth must be channeled to empower poor people so that they can shape their own lives. They know about poverty andc what they need to do to improve their lives They must be given responsibilities and they will perform. Poor people are assets, not liabilities In Monterrey and Johannesburg, developed countries agreed to work in partnership with the developing countries-to assist them to build capacity, to increase official development assis- tance where it is effective and well managed, to open markets to trade, and to reduce agrictiltural subsidies. They reaffirmed their commitmient to the Millennium Development Goals for poverty and hunger, edtIcation and health, gender equality, and the environment Together, we have set 2015 as the deadline for our results We must now, together, move beyond words and set deaclines for our actions. We have said we are mutually accountable. It is time to implement. It is time to deliver If the goals of 2015 are to be achieved, each of us must act now In doing so, wle must recognize that development is not about quick fixes Bringinig lasting change requires vision. It requires rime and patience It requires a long-term commitment. It reqtiires focus and discipline. And it reqtlires tis to measure effectiveness over time Some may say we need to learn more before we act. To those I would say, of course, we will learn more as we go along, but there is already strong evidence on what works and what cloes not. We know enotgil for implementation now 5 A Ttnie to Act What Must Each of Us Do? Let me start with tlhc rich countries Deliver on the Doha agenda. We know that rich countries' bar- riers to trade are too high. Bring down the tariffs and cut back the nontariff barriers that all too often are covert protectionism Keep to the Doha timetable. But there is so much that can be done by rich countries without waiting for Doha. We know that agricultural subsidies in rich countries, at $1 billion per day, squanider resources and profoundly damage opporttinities for poor countries to invest in their own develop- merit There should be a fixed timerable for these subsidies' elimination. Take the opporttinity at the World Trade Organi- zation meeting in Cancun in 2003 to make firm commitments on subsidies, but I Lrge you to act sooner Deliver on the welcome commitments of increased aid made at Monterrey, and the excellent response to financing the shortfall for the HIPC [Heavily Indebted Poor Countries] Initiative made at Kananaskis There appears to be an emerging willingriess to increase aid that is productively used Untie aid, and move to better coordinate and harmonize devel- opment programs and policies. The fragmentation of donors efforts has long plagued the effectiveness of aid Many of the fail- ures blamed on borrowing countries actually represent the failure of donors to coordinate their efforts. Better development multilateralism will deliver better develop- ment results. What Must Developing Countries Do? They must continue to builId the capacity of their administration and push ahead with legal and judicial reform so that human and property rights can be protected. 6 Washnlg,n, D) C 2002 They should move ahead witlh financial sector reform that is transparent, that makes funds available to all levels-from the biggest business down to the microcredit enterprise. They must combat corrLption and create environments for thelr people to enjoy equal access, and cqual opportunity and voice In doing these tasks they must seek comprehensive ways tc) develop and act on their priorities, incorporating the broad views of their people. Like the developed countries, developing countries must micrease thelir focus on results-monitoring outcomes and manlaging programs so that growth and poverty redLIction goals can be achieved. For many countries, the New Partnerwhip for African Development shows the way What Must the Bank Do? Focus on implementation of our promises to work toward the Millennlium Development Goals Thouglh as an instituLtion wve have chaniged greatly over the last decade, we must cdo more Our operations must become more transparenit. We mulst stipport developing couLntries to better build their capacity. Although we have been a leader in measuring the restilts of our projects and programs, we must measure our results more rigor- ously and, with others, we must be held accountable in the context of broader country goals and the Millennlum Develop- ment Goals We are anxious to move aheacl with efforts to harmonize and coordinate our work with the International Monetary Fund, the Unitecd Nations, multilateral development banks, and other donors. All partners in development mtist pay special attention to mnclu- sion, participation, and empowerment. 7 A Time to Act -Inclusion, because we cannot expect reforms to be sustained if poor people are excluded when choices and trade-offs are made. -Participation, because poor people know best what makes a difference in their lives. -Empowerment, because we will not have lasting change unless poor people acqulire the assets ancl means to shape their future Societies the world over are changing. People demand to be informed, to be consulted, to have a say, to have a voice Unless we build on their strengths, we will forgo the most powerful force for implementation But actions by governments of developing and developed cotin- tries and by international institutions are only part of the solu- tion. We must all do more to enhance the role of civil society and the private sector The old multilateralism was government to government. The new multilateralism must include the voices of the private sector and civil society. We must all be more accountable. Better partners. Better listeners. Better deliverers. And we must keep track of our actions. We have made real progrcss in reaching broad agreement that development nmust be addressed comprehensively-and that It must bc owned by developing countries. For most poor countries, this approach is embodied in their Poverty Reduction Strategy, an approach that is transforming strategy and partnership in many countries The Comprehensive Development Framework is proving effective for middle-income countries. For the first time we have a tool-the Development Gateway- that enables us to collect information on and learn more about development projects around the world. As the Development Gateway shows, there are more than 63,000 ongoing develop- ment projects, not including those programs undertaken by civil society or church groups. All too often, projects in one sector in one country are iun by many varied agencies that are not talking to one another. We must use the Development Gateway to track Wnshingrio, 1) C 2002 our actions so that we can better coordinate our efforts and learn from the experience we all have. We have come a long way. We do not have to start from scratch We already have implementable programs The Education for All Initiative, for example, would enable us to work together to enroll some 17 million children in school. These would be chil- dren going to schiool for the first time We have programs on HIV/AIDS As of today, 20 developing and transition economies have developed and are implementing AIDS strategies that build on prevention, care, and treatment We have programs for clean water and sanitation. But we need to scale up these progratms so that they can have national, regional, and global Impact. And we need donor support to Implement them. Let education, AIDS, and clean water be a first test of our comiiitimient to partinering for results To move implementation forvard, wve must agree to set deadlines now for OuL actions if we are to meet the 2015 goals But we must go farther. 2015 is only a staging post on a much longer journey. Over the next 50 years, we will likely see the world popLilation grow from 6 billion to 9 billion, with almost 95 percent of that Increase occurring in the developing world Food needs will doLible, aninual OutpLit of carbon dioxide will triple, and for the first time more people wvill live in cities than in rural areas, placing an enormous strain on InfrastrLucture and on the environment If we are to mneet the 2015 goals, ancl go on reducilIg poverty effectively, we estimate that we will need an average annual growth rate of the world economy of approximately 3.5 percent- giving US, perhaps, a $140 trillion world economy by 2050 In sucIh a world, the GDP of developing countries would approaci $50 trillion, tIp from $8 trillion today. 9 A Time to Act If we cannot protect our environment and make such growth ecologically responsible, we will not have sustainable development. If we retain the current distribution of income in whlich 15 percent of the world's population controls 80 percent of the world's income, we will not have sustainable development If we continue to exclude the disenfranchised-women, indige- nous people, the disabled, strCeCt children-from playing their rightful role in society, and if we ignore their human rights, we will not have sListainable development. And if we do not have sustainable development, we may not have long-term peace. Sustainable development is the challenge that together we must meet. I cannot conclude without saying that I am extremely proud of the staff in the World Bank Group They are united by a desire to fight poverty with passion. I thank them, from the bottom of my heart, for their hard work and commitment. My friends, working together, we have the opportunity, the responsibility, and the privilege of shaping the planet of the future. We are not hapless bystanders We can influence whether we have a planet of peace, of social Justice, of equity, of growth- or a planet of unbridgeable differences among people, a planet of wasted physical resources, of strife, of terror, and of war. Ours can be a timc of a new renaissance of values, of justice, of freedom from want and from fear. We must set our horizons hligh. We must not be distracted. We must act NOW on our promises. We must deliver on them with a sense of urgency. This is our responsibility and our destiny 10 THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433 U.S.A Telephone: 202-473-1000 Facsimile: 202-477-6391 Internet: www.worldbank.org E-mail: feedback@worldbank org 31774