A: The fallout of September 11 is profound. However, we also have to consider the pre-September 11 situation more realistically. From 1980 to 2000 the number of people living in poverty—defined as $1 or less income a day in purchasing power parity—declined by about 200 million, despite the global population increase of about 1.6 billion. A new World Bank study, "Globalization, Growth, and Poverty," written by Paul Collier and David Dollar, divides developing countries into two groups. The first group of 24 countries, which includes Bangladesh, China, and India, has doubled its ratio of trade to GNP in the last two decades, while the second, less "globalized" group on average trades less than it did 20 years ago. In the "more globalized club," where about 3 billion people live, income per person grew by 5 percent a year during the 1990s, faster than in the industrial countries. Life expectancy is much longer than it was 30 or 40 years ago, and the literacy rate is far higher. In China, for example, during the last two decades illiteracy dropped from 35 to 16 percent. In the less globalized group, however, average incomes fell by nearly 1 percent a year during the same period, and the development gap between these and the rich countries, as measured by per capita income, widened significantly. Thus billions of people—even many in the more successful countries—were left behind, excluded from a better life.

Thus we must look to a much more inclusive approach toward reaping the benefits of globalization. Developing countries should participate more actively in the technological progress of our age, share more equitably in the benefits of international trade, and enjoy the social and economic advantages of living in open societies. We must also recognize that integration can take many different forms; there is no "one size fits all solution." Countries that have succeeded in their development efforts have all encouraged entrepreneurship, reduced government harassment and obstacles to private enterprise, and opened up to trade—but they did this in their own ways.

So I wouldn’t simplify the present situation as an escalating confrontation between rich and poor, but certainly we need to recognize that we have to build an integrated world with much stronger inclusion and with more leeway for diversity. If we can integrate a diverse world while avoiding any traps of standardization, development efforts will be more successful and the world we live in will be a more harmonious place. But I don’t think that a radical change in the Bank’s longer-term approach to development will be necessary. Indeed, I think it underlines the importance of the message of inclusion that is at the center of our approach.

A: The World Bank anticipates that the worldwide economic slowdown will reverse in six to nine months, and that the world economy will begin to return to higher growth in mid-2002. We are predicting 1.3 percent global GDP growth for 2001 and 1.6 percent for next year. The United States, with a combination of fiscal and monetary measures, is doing a lot to revitalize its economy. Europe could do a little more, but Japan is the one that really needs to boost its economy, probably with a combination of structural reform and moderate inflation. And the world’s trading system has to be strengthened. The international community made an excellent start at Doha, and we have been working throughout the last year to support this outcome. In general, the Bank will play an even more central role in the future, because of its improved understanding of the importance of multilateral efforts.

As I indicated a moment ago, the broad thrust of the Bank’s strategy has not changed in response to September 11. We believe that our emphasis on poverty reduction already had us on the right long-term course, and we were also taking steps before September 11 to respond to the short-term problems caused by the cyclical global slowdown. But we have, of course, made some additional adjustments in response to the changed conditions since the attacks. We have put support mechanisms in place for countries that suddenly find themselves hosting large numbers of new refugees. We are providing financial and other support to maintain the momentum of reform in the nations most affected by the shock to international capital markets, such as Turkey. We have gone through our portfolio of activities, country by country, and in cooperation with the countries’ authorities have worked through the implications of the attack and have adjusted our programs accordingly. We will deliver on our existing programs—which, as I have said, are directed at the long-term challenge of promoting development—while doing our best to respond to new needs. As it becomes necessary and feasible, we will actively participate in the rebuilding of Afghanistan. We must also recognize that the slowdown will further depress some commodity prices, which will inflict serious losses on some countries, particularly in Africa.

A: The big challenge is to get growth going. The large output declines in much of Europe and Central Asia in the 1990s have put many into poverty and severely damaged social sectors. The Bank will focus more intensively on helping improve the investment climate in transition economies, particularly for small and medium enterprises and farmers. This is also closely related to the efforts to include the poor in the development process. Investing in and empowering poor people will be fundamental.

A: In China, life for the new small and medium private companies has been much easier than in Russia, despite the more radical political changes in the latter. In the early 1980s the Chinese authorities removed entry barriers and gave the green light to the development of small and medium businesses. As Deng Xiaoping himself admitted, the authorities couldn’t foresee the full consequences and were surprised by the intensity of the response. However, they were ready to follow the course of adaptive learning, and as their successful accession to the World Trade Organization has illustrated, were also ready to undertake courageous steps. In Russia, attempts to legislate almost instantaneously a large array of institutions for a market economy, of which the population had no memory, may well have been counterproductive, particularly in an environment where governance was weak and deteriorating. The result was a slow emergence of the sound institutions necessary to support the markets. In agriculture, for example, and in contrast to China, the knowledge of how to be a peasant farmer and of who owned what land were simply gone, and bringing it back is hard.

We also have to remember that Stalin’s strategy was for an incredibly overintegrated, rigid production system, motivated by politics and ideology, that held everybody hostage to the state and to party apparatchiks. In contrast, China was much more decentralized, so that people’s mutual dependence was much more local. There, if a new opportunity came along and somebody wanted to start a business, inputs were locally available. And liberalization, instead of knocking down a rigid system as it did in Russia, produced gains from internal as well as external trade. So the message is not that one country should exactly follow the model of another country, but that one should build on existing institutions. I may add that recently the Russian economy is also showing more hopeful signs. The government is making serious efforts to stabilize the economy, move ahead with structural reforms, and reduce poverty.

A. As a former university teacher I believe in the importance of ideas, and thus of exposition, persuasion, clarity, argument, and evidence. I believe that we have to show people evidence of the role that integration into the world economy has played and the success stories of development. And we can demonstrate the failures when countries have turned inward. So we have to set those facts out, and our new study on globalization, which I mentioned earlier, is doing just that. However, we have to recognize that people worry about exclusion. They also worry about cultural and economic domination and about standardization. The development community has to act to address those concerns. For example, we have to make sure that trade rules recognize the interests of the developing countries much more strongly than they do now. The industrial countries spend a total of up to $1 billion a day on agricultural subsidies, which is more than six times the amount they provide in development assistance. Better market access for developing countries is essential. We also have to make sure that intellectual property rights, rules, and regulations are not implemented in a rigid or inflexible way, and that the industrial countries open up their markets more to imports of agricultural goods from developing countries.

Trade alone, of course, is not enough. Sound policies and institutions are crucial, and here the Bank has a central role to play. With good policies, governance, and institutions in place, overseas assistance can be a powerful force for growth and poverty reduction.