Slide 12 of 12

What are the broad conclusions of the report? Looking ahead, we are optimistic. We see many advantages in the growing flow of goods, services and capital, and see considerable benefits in—and appreciate the urgency of—bringing government closer to people.

The big question: how to do it successfully? Here the WDR is rich with ideas and proposals. Many of these have to do with the rules and customs that affect the relationships between individuals, organizations, and governments. In other words, with institutions.

Let me give some examples. Take global finance. Since the East Asian crisis, there has been some questioning of the merits of unfettered international capital flows. But what we find in this WDR is that the problem lies not so much with international flows but with the lack of an international mechanism to contain contagion effects and the weakness of domestic banking regulation in the countries affected by the recent crises. Strengthening the financial sector, improving regulation, managing capital flows and increasing policy coordination between countries are some of the directions in which we need to move.

Or take decentralization: What we find is that many of the problems in countries that are decentralizing are largely transitional. There are many examples of successful decentralized countries. The difficulty lies in shifting from a centralized system to a decentralized one. The report therefore has recommendations on the sequencing of changes in the rules governing relationships between levels of government.

Overall we think we have seen the future. And we think it can work. But clearly there is a need to focus on the rules of the game, to ease the birthing process. This constitutes a call to action not only for national governments, but also for sub-national leaders, community groups, and of course the international donor community.