Financial Times

A better world for the poor
Excerpts of a presentation made by Mohamed Muhsin, Vice President and Chief Information Officer, World Bank Group, at an E-Transformation Conference in New Delhi on March 16. Mushin, the only Sri Lankan to be a VP at the World Bank, spoke on "e-nabling a Better World."

There are the global issues that confront the world in the next millennium where less than 20% of the people control 80% of the income; by 2050, the world's population will reach 9.1 billion people, and virtually all the growth will be in the developing world, especially in the 50 poorest countries, and 6 of the 20 poorest countries have suffered a civil war in the last ten years.

These issues are interconnected - we live in one world. In this world, poverty somewhere is poverty everywhere. This is the concern of the World Bank, one of the largest sources of development assistance in the world today. This is also the concern of governments, central banks, and financial institutions, who are represented here today.

Just last fall, on a visit to New Delhi, World Bank President Jim Wolfensohn stated, "India is central to global stability, peace and economic prosperity, since its development is not just an issue for Indians but for the entire planet."

He spoke of a "two-speed India" - the global fast lane of entrepreneurial talent and technological creativity, a lane where Indian companies are becoming a global presence; and in the other lane, are the 600,000 villages of rural India where most of India's over 250 million poor people live on less than $1 a day.

The challenge is how to empower everyone to travel the global information highway - through access, tools, and knowledge. The first and most critical pillar is creating the right investment climate. China's growth over the last 20 years has been unprecedented, lifting 400 million people out of poverty. India has more than doubled its average growth rate since the 1970s, making big inroads into poverty reduction. Uganda achieved a growth rate from 1993 to 2002 that was eight times the average in Sub-Saharan Africa, also slashing poverty.

How did they do it? The roots can be found in their respective efforts in improving key elements affecting the Investment Climate, whether they are property rights in China, tariff and licensing reform in India or macro-economic stability and tax and court system reform in Uganda. As the result, they all managed to bring down the poverty level drastically.

For all this there were important elements of government policy and behaviour:

* First, macro-economic stability and openness to trade;

* Second, good governance and effective public sector, financial and legal institutions;

* Third, adequate transportation, power, and communications infrastructure.

* Fourth, the right incentives to business including small and medium enterprises; and

* Fifth, the aggressive use of Information Technology.

It has now been clearly demonstrated that poverty reduction is linked with growth, and growth requires investment. Investment follows where the investment climate is good. And as a result more jobs are created.

When the World Bank interviewed 68,000 poor people, they identified getting a job - through self-employment or earning wages - as the most promising path out of poverty. Better job opportunities increase incentives for people to invest in their education and skills, and this complements efforts to increase development and improve the quality of life.

Interestingly, the private sector accounts for 90 percent of the jobs in developing countries. And these are primarily not big corporations, but small and medium sized businesses, and farmers who are putting capital and ideas to work.

For all this to work, the business environment must have the right incentives and motivation. Businesses in poor countries face much larger regulatory burdens than those in rich countries. This could be due to the various policy impediments and/or lack of leveraging the recent technology development. These barriers need to be removed.

Advances in information technology, especially the Internet, are paving and creating new ways for an enabling environment that will make a difference. The second pillar is providing services to the poor. Providing services to the poor is a well-known imperative for fighting poverty and achieving the MDG's. The fact, however, is that in most developing countries we are failing the poor: be it water, sanitation, energy, transport, health, and education. And all of us should take some responsibility for the state of affairs.

There are many ways in which we can all address these issues, but directly linked to this conference is that we can together make Information Technology play a significant role in the needed transformation. Countries and regions within countries are often at different stages of development, and the services needed may vary. We have seen a constellation of solutions, each matching various needs of the service and of the country or region.

Among these, a recurring theme is what information and technology can do - as quick and cost effective global connectivity, as a stimulus for public action, as a catalyst for change, and as an input for making other reforms work.

What's common in these examples is the use of information and technology which can create a level playing field, and even more, provide leap-frog opportunities for developing countries.

Indeed, Information Technology - systems, data, and information - can help to connect the two pillars - that of creating a better investment climate and that of improving services to the poor.

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