Speeches & Transcripts
Solidarity and the Imperative of Development
October 15, 2012
여러분 안녕하십니까. 반갑습니다.
우리말로 인사드리니 참으로 영광이며 기쁘고 시원합니다.
이처럼 소중한 자리를 베풀어 주신 여러분들께 감사드립니다.
Your Excellencies, honored ministers, distinguished guests, colleagues and friends,
I would like to begin by thanking President Hyun Oh-Seok of the Korean Development Institute and Minister Bahk Jaewan for your inspiring words, and for the opportunity to address this gathering.
We meet at a time of uncertainty for the global economy. Countries, firms, development institutions and communities are searching for solutions in a context of volatility.
We don’t yet have all those solutions. But we know one thing. We must find answers to global, regional and national challenges together, through collaboration and the sharing of knowledge. In today’s interconnected world, no country, company or social group can decide its destiny in isolation.
That’s why events like this conference are so important. Here, distinguished development leaders from around the world have come together to share experiences and chart directions for action.
Shared action is the antidote to pessimism about the global economy.
Korea: journey in development
The decision to convene this conference reflects Korea’s commitment to collaborative action in development, and this country’s growing global leadership.
Returning to Seoul, the city where I was born, gives me the chance to reflect again on Korea’s extraordinary journey. And on what this journey means, not just for the Korean people, but for the world as a whole.
The numbers are eloquent. In the early 1950s, Korea’s per capita gross national income stood at less than $70, on a par with some of the very poorest countries in the world at that time. And of course during this period Korea was not only poor. It suffered the cruelty of war and a traumatic division of its territory and people.
Today, sixty years later, Korea’s per capita GNI is above $20,000, and the country is a global leader in advanced technological industries. The message of the Korean experience is that even countries facing the most extreme adversity can develop and prosper.
For obvious reasons, I am especially inspired by the part of Korea’s story that concerns its relationship with the World Bank Group. In 1963, Korea received its first loan from the International Development Association, or IDA, the branch of the World Bank Group set up to serve the world’s poorest countries. During the Bank’s most recent IDA replenishment, finalized in December 2010, Korea was the 17th largest donor to IDA. And it is now among the 25 largest contributors to the World Bank Group overall.
Today, Korea and the World Bank Group are expanding our partnership in many areas of joint learning and development action, including financial sector services; information and communications technologies; green growth; and the emerging field of delivery. Earlier this morning, I signed a Memorandum of Understanding with the Ministry of Strategy and Finance for the establishment of a new World Bank Group office in Seoul. The office will provide a platform for our work together and give that work increasing national, regional and global profile. This conference itself is another expression of our strong and growing collaboration.
This conference shows Korea’s commitment to share the lessons from its experience, so that other countries can use those lessons to accelerate their own development progress.
Korean leaders pursue development collaboration because they understand that Korea’s future is bound up with economic progress in the rest of the world. For example, Korea’s growth opportunities will be substantially affected by how Africa’s economic development unfolds in the years ahead. Korean leaders approach these issues with a deep understanding of global economic interdependence. They recognize that other countries’ flourishing is good for Korea, too. And they act accordingly.
To describe this spirit, I use the term solidarity.
I believe that our success in achieving global development objectives in the years ahead depends on our ability to promote a spirit of reasoned solidarity on a global scale.
Three paths for the global economy
Last Friday in Tokyo, at the Annual Meetings of the World Bank Group and the International Monetary Fund, I argued that three possible paths lie ahead for the global economy and the fight against poverty.
- On the first path, current economic trends continue. We see a reduction of absolute poverty at the rate of about 1 percent a year, which has prevailed for the past decade. Given the current economic turmoil, this would already be respectable progress. But it is not good enough. We must do better.
- In the second scenario, global economic instability deepens. The number of people living in absolute poverty stagnates or even increases. We must do everything in our power to prevent this.
- On the third path, countries and their partners commit to bold collective action to speed the reduction of absolute poverty. This is an ambitious course. Borrowing words from Martin Luther King, Jr., I have referred to this path as our chance to “bend the arc of history” towards greater economic justice.
I urge that, collectively, we commit ourselves to the third path—to dramatically hasten the end of absolute poverty.
The need for solidarity
To reach the goal will require enormous collective effort and sustained contributions from many partners.
At our Annual Meetings, I also referred to the intense pressures that leaders are now feeling, to privilege short-term, narrow interests and withdraw from earlier promises of international cooperation. The policymakers in this room know those pressures first-hand.
At times of uncertainty, individuals, organizations and nations must return to our first principles.
Refusing isolation, we must reaffirm our commitment to global solidarity.
An interdependent world
The foundation of solidarity is the recognition of human interdependence.
Solidarity is not charity. Charity is admirable, but it too often fails in difficult times. Solidarity is about working with others toward mutually shared goals. Solidarity is about “win-win” solutions.
Martin Luther King, Jr., captured this idea in his famous “Letter from a Birmingham Jail”: “I am cognizant,” Dr. King wrote, “of the interrelatedness of all communities and states …. Injustice anywhere is a threat to justice everywhere. We are caught in an inescapable network of mutuality, tied in a single garment of destiny. What affects one directly, affects all indirectly.”
This is more than rhetorical flourish. It is evidence-based reality that we all must embrace.
Recent history confirms that global interdependence is a defining feature of our era. Our interdependence has many dimensions:
- Regarding security, upheaval in a sparsely populated area of northern Mali quickly threatens peace and stability across the region and beyond
- In public health, infections leap across borders and continents at jet speed, as the SARS epidemic taught us a decade ago
- In the global economy, networks of interdependence have grown ever more intricate. Drought in the American Midwest contributes to food price spikes that could weaken the young democracies of the Arab Spring. A substantially worsening situation in the euro zone could push 50 million South Asians below the absolute poverty line, through impacts on trade and remittances.
- Interdependence is clearest in the area of the environment and climate change. No country can solve these problems in isolation. And the fact that a country has contributed relatively little to climate change of course gives no protection. Bangladesh is not among the world’s largest polluters. But, if climate change raises sea levels by 1 meter, up to 17 percent of Bangladesh - an area currently home to 13 million people - will be inundated. Scientists expect that 1—meter rise within this century.
If interdependence brings new risks, global linkages are also our greatest strength. As Dr. King saw, only more connectedness can help us solve the challenges to which our connectedness gives rise.
At the World Bank Group, we apply this principle when we broker inter-country links for development collaboration. Let me give just one example. We are honored to have the distinguished Minister of Finance of Mongolia with us today. When the government of Mongolia recently sought advice on defining a new economic agenda, the Bank connected Mongolian leaders to counterparts in Chile and Kazakhstan. Both of these countries have large mineral sectors and have successfully implemented policies to diversify their economies. The exchange helped the Mongolian government shape policy directives and legislative reforms that have given new direction to the country’s economic development.
I cite this example not only because it is so encouraging, but also because successful development so often happens through these global linkages for dialog and learning.
These are “win-win” connections. They show solidarity in action. They embody our hope for a future of shared prosperity. Making these connections is the heart of the World Bank’s work.
New realities: Developing countries lead global growth
As we orient ourselves and weigh decisions in today’s complex landscape, new realities demand our attention.
Among the most fundamental is the decentralization of global economic power. This fact is not news to those of you in this room. You are among those who have driven this historic transition. But the consequences of the shift are so far-reaching that we must take a moment to consider them.
Today, developing economies account for more than half of global economic growth. This transformation reflects not just the emerging giants—Brazil, China, India, Russia—but progress in a host of developing economies around the world. It applies notably to sub-Saharan Africa. Over the past decade, many African countries have experienced average annual economic growth rates of 5 percent or above.
In 2002, the African region was the destination for a mere $ 10 billion in private investment. By 2012, 10 years later, that number was $ 50 billion and rising.
Many African countries have been reaping the rewards of wise structural and governance reforms that began in earnest in the late 1980s and 1990s. And these countries have continued to progress in the wake of the global crisis that struck in 2008. Sub-Saharan Africa as a whole, excluding South Africa, still grew at 5.5 percent in 2011.
We know that these gains are now potentially at risk, and that uncertain conditions in wealthy countries continue to affect developing economies. But what these data tell us is that leadership in the global economy is increasingly in the hands of governments, companies and people in developing countries and rising economic powers---For those of you in this room, it is in your hands.
The data captured in this graph carry another message: Vibrant economic growth in developing countries is good for everyone. Ensuring that such growth continues and expands must be a central policy concern in every capital in the world.
This is a theme I keep emphasizing, because it is so critical. Economic competitiveness at the global level is not a zero-sum game. The greater economic strength and competitiveness now emerging in African countries, for example, expands economic opportunity for all countries, everywhere. Investing in these new economies is a sure way to advance shared prosperity.
Particularly through our private sector arm, the International Finance Corporation, and through our Multilateral Investment Guarantee Agency, the World Bank Group provides advice and services to investors who want to take advantage of these opportunities.
Solidarity and growth
Enabling strong growth in all parts of the global economy is a dominant imperative. But can you have both growth and solidarity? In the past, some described an “economy of solidarity” as if it were an alternative to a pro-growth agenda. This is a grave mistake.
Solidarity and inclusive growth are not antithetical. They are mutually reinforcing on many levels. We all watch hopefully as European leaders move toward greater solidarity in order to restore growth.
In reality, growth and solidarity form a virtuous cycle. In his book The Moral Consequences of Economic Growth, Harvard economist Benjamin Friedman has marshaled strong historical evidence to argue that it is precisely when a country’s economic growth is high that the values, institutions and practices we associate with social solidarity tend to flourish there: as long as growth is inclusive. It is when economic growth is weak that social values of solidarity—along with tolerance and democratic participation—are most threatened.
We do not have to choose between solidarity and prosperity. By strengthening one, we reinforce the other. By strengthening both at once, we can change the world.
Two dimensions of solidarity
Solidarity has two dimensions that are especially critical today. The first can be called global solidarity. This is interdependence among countries and peoples. It also encompasses the connections among social groups within countries: like ethnic groups, genders, and socioeconomic classes.
The second dimension is intergenerational solidarity. This is the bond of interdependence and responsibility that connects us to future generations.
Global solidarity: working for all people
The Arab Spring reminded the world that deep inequalities in wealth and power are not sustainable. We must build global prosperity that can stand the test of time: prosperity that embraces solidarity.
Korea’s development process again offers lessons. The country’s development benefited from its early implementation of social protection programs for vulnerable groups, and its emphasis on education as a means to foster social inclusion and create opportunities for all members of society. These measures have mitigated inequalities and enabled a more inclusive sharing of the benefits of prosperity.
Or consider Brazil. Through systematic policies to strengthen social inclusion, Brazil reduced its Gini coefficient by 5 percentage points, and allowed many who were poor and marginalized to finally participate in the growth of the Brazilian economy.
These are models of economic and development policy based on solidarity. To drive poverty reduction and build inclusive prosperity, we must spread these models.
Intergenerational solidarity: working for the future
Our obligation of solidarity to future generations is to create a model of environmentally sustainable development that will slow climate change, preserve the natural world, and leave our children and grandchildren a viable planet.
The leaders in this room understand the complexity and conflicts around these issues. You also know that we must find solutions, that the challenge can no longer be postponed.
At the World Bank Group, we do not prescribe solutions to countries. Instead, we work with our member countries to ensure that the decisions they make are informed by the best scientific evidence, and by a realistic assessment of the costs of action and inaction. Today, for instance, compelling evidence of human-made climate change confronts us daily. The leaders I speak with are engaging their own deepest values as they consider choices that will shape the lives of future generations.
At the Bank, we are convinced that significant progress on the environment can be achieved by focusing on situations where the interests of the private sector, governments, communities and future generations are clearly aligned.
One example is the work of the International Finance Corporation, the Bank’s private sector wing, to encourage investment in energy-efficient industrial methods in Russia. The Russia Sustainable Energy Finance Program helps financial institutions and companies develop industrial modernization projects to reduce energy consumption and pollution. It also provides long-term credit to banks for energy efficiency loans. To date, 12 partner financial institutions have financed over 270 projects worth $242 million. These projects are expected to avoid nearly half a million tons of direct greenhouse gas emissions annually. Companies increase efficiency, save money, and reduce their carbon footprint, simultaneously.
By multiplying “win-wins” of this kind, we can advance tangible action on the environment, without waiting for binding high-level political agreements that may still be years away.
The challenge to wealthy countries
Let me consider some specific implications of our discussion for policy decisions in countries. I will make three recommendations to wealthier countries, then turn to developing countries.
A crucial consideration at this time is to resist falling into a reactive, short-term mode of thinking. Leadership informed by solidarity means taking the long view.
That is why I don’t hesitate to call on wealthy countries to take actions that may be politically challenging:
- To maintain or increase their levels of official development assistance
- To take resolute action on the environment, applying the “win-win” model I just described
- And to strengthen the multilateral system. Despite its flaws, we need this system now more than ever.
By supporting these agendas, countries will be investing in global solidarity—investing in a more just and stable future for all. Countries such as Australia, Korea and the United Kingdom, among many others, have understood this. Today these countries are maintaining or increasing their development aid and their support for the multilateral system.
When I visited Germany in September, the Government of Chancellor Merkel announced a new contribution of nearly 10 million Euros to the Climate Investment Funds, or CIFs, that the Bank manages with our partners. These funds support developing countries to test and deploy technologies with a high potential for reducing greenhouse gas emissions. Germany’s support represents a strong endorsement of this multilateral mechanism to promote our common interest in environmental protection.
Opportunities for developing countries
For developing countries, taking a long-term perspective is equally crucial. Countries must consciously build towards prosperity that can be sustained over generations.
Part of a forward-thinking agenda is to prepare for possible future shocks. Countries must rebuild buffers that in many cases were depleted following 2008.
For many, part of a long-range strategy must be strengthening agricultural productivity to lay foundations for future food security.
As Korea and others teach us, a long-term view also involves investing in core social programs—like education, health care and social protection systems. These measures protect the poor and vulnerable; reduce inequalities that could generate instability; build human capital; and create an enabling context for sustained growth.
Investment in core infrastructure is indispensable. No country has ever developed without adequate infrastructure. The World Bank Group has decades of experience in this area. We will continue to support countries in all facets of their infrastructure work.
Developing country governments and companies can take environmental challenges as an opportunity to innovate. If they do so, emerging countries have the chance to capture market leadership in sectors of the “green economy.” We know this is where the future lies. Countries can learn from considering the way Korea responded to its post-2008 economic slowdown by directing substantial new investment to support innovation in green technologies.
Breaking cycles of fragility
If we are serious about dramatically reducing poverty, if we are serious about global solidarity, then we must be serious about supporting Fragile and Conflict-Affected States. This is an ongoing World Bank Group commitment that is especially important to me, because of my nearly three decades of work and personal ties in countries like Haiti and Rwanda.
In these difficult settings, we need to emphasize the fundamentals that can help countries reconcile and rebuild: peace and security; justice and jobs. These were the keys that were highlighted in our World Development Report on conflict. These principles have been validated in action by successful post-conflict countries like Colombia, Mozambique and Rwanda.
The “Solutions Bank”
As countries face these complex challenges, more than ever, the world needs a strong World Bank Group.
In the 1990s, under President Jim Wolfensohn, the World Bank placed knowledge at the heart of its work with countries. Today, we are growing from a Knowledge Bank to a Solutions Bank.
The World Bank Group is positioned to provide countries and partners with evidence-driven, non-ideological support in finding and implementing national solutions to development challenges.
To fulfill our mission as a Solutions Bank at the service of countries, we will set ourselves an institutional bottom line, in the form of measurable poverty and prosperity targets. We’ll base these targets on the ambitious “third path” I described earlier.
We will streamline our administrative procedures and institutional architecture to serve countries and our private sector partners better.
And we will introduce a new institutional focus on delivery to help countries drive outcomes. We will work with countries and the private sector to build a science of delivery focused on development. Delivery is the critical link to translate solidarity into results.
Why we can’t wait
In closing, let me again recall the three paths on poverty reduction that I mentioned at the beginning of this talk: a “status quo” scenario of continued, moderate progress; a darker scenario, in which poverty reduction slows and may reverse; and a transformational scenario, in which countries and partners unite in solidarity to dramatically reduce absolute poverty.
As we survey today’s global economic landscape, all of these scenarios are plausible. The choice is ours.
Recent years have seen remarkable gains in the poverty fight, driven by robust growth in regions like sub-Saharan Africa. These gains are inspiring. But they are fragile.
That’s why now is the time for urgent action on poverty: to protect the progress countries have made and harness the momentum towards even more ambitious goals.
Goals like ending absolute poverty forever.
Dr. Martin Luther King’s “Letter from a Birmingham Jail” was a response to people who generally agreed with Dr. King’s ideas, but feared he was in “too great a hurry” to put those ideas into practice. They urged him to wait. To have faith that time would eventually right the wrongs that African-Americans confronted.
Listing the forms of violence and humiliation that African Americans suffered in a segregated society, Dr. King challenged his colleagues to realize “Why we can’t wait.”
Those who know the violence of poverty first-hand will understand why, today, poor people can’t wait.
This debate led Dr. King to reflect on the nature of time, and the different ways we use time. He wrote: “More and more, I feel that the people of ill will have used time much more effectively than have the people of good will…. Human progress never rolls in on wheels of inevitability; it comes through the tireless efforts of [people] … and without this hard work, time itself becomes the ally of the forces of social stagnation. We must use time creatively, in the knowledge that the time is always ripe to do right.”
Today, the time is ripe for a renewed global fight to end poverty by building shared prosperity. The World Bank Group is committed. Join us. Together, we’ll use time in the most creative way possible: by connecting our skills and our passion to make a better world.