Caroline Anstey, Managing Director, World Bank
Warsaw, National Bank of Poland,
Ladies and Gentlemen
It is a pleasure to be here and speak to such a distinguished gathering of leaders and opinion makers in Poland. My thanks to the National Bank of Poland for providing this opportunity. We are grateful for the partnership that we have been able to develop with NBP, and for the leadership provided by Marek Belka, including in our institution, with his election as Chair of our highest policy making body, the Development Committee.
Tectonic Plates are Shifting
Some simple statistics illustrate some major economic shifts around the globe.
In 1944, the year of the birth of the IMF and WB, developed economies’ share of global GDP was about 80 percent, with the United States alone accounting for over 40 percent. Back then, developed economies accounted for over two thirds of world’s trade.
Today, the drivers of global growth are the developing countries, which attract about 45 percent of global investment. Over the past ten years, developing countries have grown nearly four times faster than developed countries, and it is a trend that is expected to continue.
Some forecasts estimate that by 2025, six major emerging economies – Brazil, China, India, Indonesia, the Republic of Korea, and the Russian Federation – will collectively account for more than half of all global growth.
Already we live in a world where, if China’s 32 provinces were countries they would be among the 33 fastest growing countries in the world. Today, China is consuming over 1/2 world’s cement; almost 1/2 world’s iron ore, steel, and pigs; 1/3 of the world’s eggs. Today, China is also the world’s biggest consumer of minerals such as copper, aluminum, and nickel.
If China reaches $16,000 in income per person by 2030 (up from today’s $4,000) – the effect on the world economy would be equivalent to adding 15 South Koreas.
But in China today, policy makers are grappling with the question of how to avoid the “middle income trap” – making a successful transition to a high income country.
It’s a different debate here in Europe, with concerns about debt and how the developments in the eurozone will affect the global economy. As you would know, a recently released World Bank report, sponsored by the Polish Presidency of the European Council documents the impressive achievements of the European economic model. It made the point that over the last five decades, Europe created a convergence machine that has helped poorer countries reach high income levels; became a global brand instantly identifiable with a unique combination of design and engineering, and grew to become the world’s “lifestyle superpower” by facilitating the highest quality of life on the planet.
The Scottish philosopher, Thomas Guthrie, wrote that nature and art have shown that it is rough treatment which gives shiny stones and shining souls their luster. This may also be true for economics. Europe is getting rough treatment these days, but it is too early to write Europe off. FDR once told the US public “You have nothing to fear but fear itself.” The same thing can be said about Europe. You have nothing to fear from loss of confidence except loss of confidence itself. This would be a mistake.
In the Middle East, the conversation is different: it is about the unfolding of the huge political upheavals that started last year, which are so rich in promises and yet fraught with risks. And of course in respect to the United States, there are questions about public debt and creating jobs for nearly 13 million people.
In Africa, growth rates were at 5-6 percent in the years leading up to the crisis. I recall at a G-20 Sherpas meeting before the Pittsburgh summit over 3 years ago saying Africa could become a pole of growth. One of my Sherpa colleagues responded "Not in my lifetime." But since the crisis many African countries have bounced back, growth is strong, and Africa as a pole of growth is a possibility. And yes, well within my lifetime.
As we rush from one emergency to the next, it is easy to lose sight of some of the more fundamental trends that are transforming our world.
What I would like to discuss today is what these trends mean for economic development – and for the international aid community.
Let me highlight in particular three developments, which I believe will largely shape the environment in which we will be living our lives in the coming decades.
As just discussed, we are now living in a multi-polar world. Growth in developing countries increasingly matters for global growth. We have now a tremendous opportunity, with the emergence of a variety of successful development models. The flow of knowledge is no longer North to South, West to East, rich to poor. Rising economies, including Poland, bring new approaches and solutions and the peer to peer dialogue has intensified. There is a growing body of evidence on what works — in New Delhi, in Sao Paolo, in Beijing, in Cairo, and here in Warsaw. The days of the “third world”, of “the West vs. the rest”, of North to South, West to East, top- to-bottom development are gone.
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Second, the world is increasingly interconnected. Globalization is not only an economic phenomenon. It is not only about trade and finance. It is about people learning about other parts of the world, and realizing what happens in one country can affect all of us. It is a world where there are global public goods, public commons that we need to manage together. The sense that what happens on the other side of the Globe can affect us can be disorienting or disempowering. But it provides us with unique opportunities. People can learn from a much larger pool of experience. They can take heart from seeing how efforts are paying off elsewhere. They can find hope in others’ progress. This can help quench the thirst for knowledge in even the most isolated parts of the Globe.
Third, new technologies are driving significant social changes. The internet and social media have transformed the way information is communicated and shared globally. Information flows at the speed of light – and is more easily accessible than ever. Technology is driving development. I was recently in Kenya where I saw how new apps are being developed to provide small-scale farmers with real time price information at different markets and locations – so that they can maximize the value of their sales. In Korea, the government is using social media to get citizens’ feedback on public policies, budgets, and other initiatives. Such technologies are used to reach citizens in the most remote places, bringing into the national community those who were traditionally marginalized.
Transforming citizen engagement
All over the world, from the isolated rural areas to the booming urban centers, in all continents, a new generation is emerging. It's a generation that does not want to be governed as subjects, but as citizens, as empowered and participating citizens. It’s a generation that is looking for pragmatic solutions. It’s a generation for whom the concepts of openness, of transparency, of accountability, of voice are critical. And these are not theoretical issues. These are not political issues. These are issues about good development outcomes, and so central to the remit of a development institution – albeit a non-political one – like the World Bank.
Openness, transparency, accountability, voice – these are the pre-requisites for democratizing development. Openness and transparency breeds accountability and a focus on results – for the citizen a sense that monies are being put to good use and being used wisely.
It is about moving from a textbook blue print, one-size fits all, technocratic approach to true development solutions, customized for particular situations and particular challenges. And we've seen it happen: from increasing transparency in financial management in Rwanda to developing a citizen-to-government portal in Singapore; from participatory budgeting in Southern Brazil to engaging with Romas in Central Europe. These cases are all different, they reflect each country’s specific situation and traditions. They also signal a willingness to adjust and respond to today’s changing world.
Poland’s commitment to supporting democracy is well known. Less well known, but equally important, is the way your country is determinedly engaging in a process to harness the power of new technologies and the energy of the “facebook generation”, recently exemplified with the launch of the Congress on Freedom in the Internet to work on a chart on the use of internet.
Between 6 and 7 million Poles now own smartphones, with half of that number bought in the last year. In Kenya, smartphones are being used to purchase groceries, pay for taxis, monitor project outcomes and keep a check on corruption. And Kenya is just the beginning.
Implications of technology use for economic development
What does this mean for economic development – for the international aid community? And for the World Bank, for the Polish bilateral aid, for the non government organizations active overseas?
Let me highlight three areas in which I believe we need to make continued adjustments to respond to the emerging challenges.
First, we need to broaden our approach to foster economic development. We need to help countries face the social transformations that are at work. This is not limited to getting the macro right, improving infrastructure, or enhancing social services delivery. We need to also focus on supporting institutional and social changes – on transforming the institutions, and the governance systems to help give more space to the new concepts of openness, transparency, voice, and accountability.
Second, we need to recognize the importance of knowledge, of sharing experiences. Aid and loans are not the main drivers of development. Good policies and good institutions are – and good policies and good institutions are the product of experience and knowledge. The challenge is to identify what works, to transfer this experience, to adapt it to new environments, and to apply it in new contexts. Traditional aid projects remain useful, but the transformational impact can only be achieved by influencing policies, institutions, and mindsets.
And third, we need to focus on results – and to be able to measure them. We need to know what works if we are to provide sound policy advice. We need strong monitoring and evaluation systems that can allow us to measure the results and impacts of our programs, and to learn from them. Such systems also demonstrate to the people in the developing countries and in the donor countries that the moneys they entrusted to development organizations are put to a good use, that they yield results. And we need the fundamental data to allow us to benchmark progress, design effective interventions and hold policymakers accountable. In too many countries around the world, critical decsions are made on the basis of old or non-existent statistics.
Now, of course, we also need to hold ourselves to the same standards that we are encouraging other countries to adopt. We encourage them to be open – we need to be open ourselves. We encourage them to be transparent – we need to be transparent ourselves. We encourage them to provide a voice to all – we need to do the same. We encourage them to be accountable – we need to be accountable ourselves. What is right for developing countries is right for multilateral institutions, bilateral donors, or NGOs.
In the World Bank, our Open Development agenda started with opening up the Bank. Two years ago we launched an Open Data Initiative opening up 7,000 data sets online and for free. A revolution for the Bank. Our Access to Information policy, which went into force in July 2010, broke again new ground. Just this week we launched the Open Knowledge Repository (OKR), a new online site which will release over 2,000 research works under an Open Access Policy with the most liberal Creative Commons license. For the first time, anyone can distribute, reuse, and build upon our research, including commercially.
So, let me move to perhaps a provocative question: how is this all relevant to Poland ? As a country, Poland is a relatively small donor…. The question you may ask is – should you not focus on economic growth at home before talking about democratizing development overseas?
The answer is simple. In good and even in tough times – and especially in times of fiscal consolidation, governments should ensure an effective use of public resources. This applies also to resources devoted to development assistance.
We are already partnering with you in this agenda. Poland is an active member of the World Bank, a voice that is listened to at our Board. Poland is also a contributor to IDA, our fund for the world’s 79 poorest countries. Poland has a direct interest in ensuring that the resources that have been entrusted to us yield results, that IDA remains one of the most efficient ways to channel development resources so that your country can consider increasing its contribution in the next replenishment of IDA funding in 2013.
The answer lies also in Poland’s legitimate ambition to further strengthen its voice within the EU, and to play a greater role on the global stage. Poland has made efforts in this direction – by showing diplomatic leadership in several instances, most recently during the eurozone crisis and with some of its neighbors. Providing development assistance, especially when it is focused on supporting sound policies and institutions and on sharing the country’s experience, is a powerful way to complement such efforts, and to project influence beyond borders.
In conclusion, a country like Poland has a special role to play. Poland has the knowledge and experience. Poland has the expertise. Poland has a track-record of transformation and transition that is unrivalled. There are not many countries that have so successfully managed their development efforts, that have seen living standards rise at a fast pace without undermining the social fabric of the nation, that have combined economic and political transformation. Poland’s experience shows how sound policies and strong political leadership can deliver success. Poland has become a role model for many struggling nations. This is especially true for countries who shared Poland’s experience of a socialist past. And this is increasingly true for some of the young democracies which are emerging on the southern side of the Mediterranean Sea. These countries are looking for relevant experience, for lessons that they can learn from. And with the crisis hitting large swaths of the European Union, Poland’s experience appears increasingly robust and relevant. This experience – the “Polish know how” – is an important ingredient for others to learn from, and only Poland can provide it.
So let me finish with a request – that we work together to meet the challenges and opportunities of transforming development assistance from charity to investment in multiple poles of growth, sharing knowledge and experience, and harnessing the power of openness, transparency, voice, and accountability. We need to rise to these challenges. We need to listen and democratize development.
We at the World Bank look forward to working with Poland on this ambitious agenda.