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FEATURE STORY

Inequality of Opportunity Hampers Development

June 28, 2012

STORY HIGHLIGHTS
  • Economic growth alone will not build sustained and inclusive welfare.
  • The 2012 World Bank Conference on Equity focused on the connection between poverty and inequality.
  • Social unrest in the Middle East and other parts of the world has been due, in part, to growing inequality.

Now we know: Growth alone won’t do the trick. A model for sustainable development must also be inclusive if we are to lift another 1.3 billion people out of deep poverty.

That was the message World Bank Managing Director Mahmoud Mohieldin brought to the June 27 – 28 2012 Conference on Equity, held at the Bank’s headquarters in Washington.

“Until recently,” Mohieldin told participants, the mantra was, “Growth will trickle down and we can always clean up afterwards.”

Such economic assumptions have been debunked in recent years, he said. Increasingly, World Bank clients and stakeholders are focusing on concepts such as inequality of opportunity and relying on measurement tools such as the Human Opportunity Index to monitor their progress.

The World Bank is hosting the Conference on Equity for a second year in row and sponsoring a number of other initiatives to focus attention on the connection between poverty and inequality. The conference brings together academics and development professionals to discuss how to incorporate and develop more data and better strategies on equity issues that, in turn, will strengthen overall development efforts.

A growing body of research is showing that economic growth and political stability cannot be sustained in a society with growing inequality.

The social unrest in Northern Africa and the Middle East in 2011 was caused, in part, by a growing frustration over unfairness and lack of opportunity. So was the Occupy Wall Street movement in the United States and recent student protests in Chile.

“Inequality of opportunity is when you’re looking at what people might have, and what their starting point is,” said speaker James Foster, a professor at George Washington University who focuses on welfare economics. “It’s the fairness that people are after. Why should we have one group that’s in terrible shape, when it was only circumstance that put them there?”

Circumstance begins at birth – or before that with your parents and their education or income, and perhaps the situation their parents were in before that. It has to do with gender, geography, race, household income and a variety of other factors that policies may or may not be able to address.

Open Quotes

Why should we have one group that’s in terrible shape, when it was only circumstance that put them there? Close Quotes

James Foster
Professor of Economics and International Affairs, George Washington University

Esteban Puentes, a researcher and assistant professor at the University of Chile, showed results from a new study suggesting that mothers with a higher socio-economic status tend to have children with better motor skills.

Just as government nutrition programs in the 1940s and 1950s helped even out differences in weight and height among Chilean children, the country now needs policies that address differences in motor skills – perhaps through home visits and other educational programs, he said.

Florian Wendelspiess Chavez, an economics doctoral student at the University of Geneva, showed in his presentation based on data from Mexico that while the education of parents is important, it’s the long-term economic situation of the family that matters in the end for children’s education.

The data showed, for example, that a father’s educational level alone won’t have a significant impact on the kids’ schooling, but his education often “helps to promote the financial stability of the family and therefore the education of the child,” Chavez said.

In fact, inequality of opportunity has a direct negative impact on a country's gross domestic product, data presented by Ezequiel Molina, a doctoral student of political economy at Princeton University, showed.

"The evidence...is clear," his presentation said. "People who face better opportunities in life are able to develop their human potential in full."