A Time to Choose, A Time to Act

It is my pleasure to welcome you to these Annual Meetings. I would like to extend my appreciation to the U.S. authorities for making our meeting in Washington possible and to the D.C. government, the D.C. Police Department, and to all the security personnel for all their support throughout the meetings.

I also thank my friend, Horst Köhler, for a collegial and cooperative working relationship in the last two years and for his thoughtful speech this morning. To our newest member country, the Democratic Republic of Timor-Leste—I join Chairman Macki in welcoming you to the Bank. Please accept our best wishes for every success in your efforts to build your nation.

When we gathered two years ago, I spoke of the opportunities and challenges of development. These have been a tough two years. In the rich world, collapsing stock markets and corporate scandals have shaken confidence and mutual trust. In the developing world, people have been badly hit by continuing wars and conflict, falling commodity prices, a slackening of demand, and continuing restrictions on trade with rich countries. The human toll in Africa and Latin America has been heavy.

Yet, in the face of these difficulties, much of the developing world has shown strong resilience. This resilience is a tribute to the progress that has been made in shaping and implementing policies. Many countries have taken on the problems of dislocation inevitably involved in reform. They have worked to improve institutions and governance. And through these difficulties and our collective action, we have, in many ways, seen the best of people. We have seen a coming together—a recognition that international problems require international responses.

On September 11 last year, the world finally came to recognize that there are not two worlds—rich and poor. There is only one. We are linked by finance, trade, migration, communications, environment, communicable diseases, crime, and drugs, and certainly by terror.

Today more and more people are saying that poverty anywhere is poverty everywhere—and their voices are getting louder. Their demand is for a global system based on equity, human rights, and social justice. It must be our demand too. For the quest for a more equal world is the quest for long-term peace—something that military power alone can never achieve.

The world is beginning to listen. We have seen a year in which the commitments reached at Doha, Monterrey, and Johannesburg have laid a new basis for a global deal. The development community has confirmed the Millennium Development Goals as our framework for action. In pursuit of these goals, we have witnessed the emergence of a global partnership built on a consensus that the countries of the world are interdependent. Our thinking and action must be local, regional, and global, and we must work and act together.

We have reached a remarkable consensus on what is needed for successful poverty reduction. First and foremost, developing country leaders have asserted that the responsibility for the future of developing countries is in the hands of those countries. Developing countries must drive their development and create a constructive environment to encourage growth that is equitable and just for poor people, indeed for all people.

This growth must be based on sound social and economic policies. To create the conditions for entrepreneurship, productivity, and jobs, the developing countries must invest in health and education, including early childhood education. These countries must also invest in effective legal and judicial systems, clear tax and regulatory frameworks implemented in approaches that fight corruption at all levels, and strong and well-regulated financial systems. Gains from reforms leading to economic and social growth must be channeled to empower poor people so they can shape their own lives. Poor people are assets, not liabilities.

In Monterrey and Johannesburg, developed countries agreed to work in partnership with the developing countries—to assist them to build capacity, to increase overseas development assistance where it is effective and well managed, to open markets to trade, and to reduce agricultural subsidies. They reaffirmed their commitment to the Millennium Development Goals for poverty and hunger, education and health, gender equality, and the environment.

We have set 2015 as the deadline for our results. We must now, together, move beyond words and set deadlines for our actions. We have said we are mutually accountable. It is time to deliver.

If the goals of 2015 are to be achieved, each of us must act now. In doing so, we must recognize that development is not about quick fixes. Achievement of lasting change requires vision. It requires time and patience. It requires a long-term commitment. It requires focus and discipline. And it requires us to measure effectiveness.

Some may say we need to learn more before we act. To those people I would say, of course, we will learn more as we go along, but we already know much about what works and what does not. We know enough to begin implementation now.

What must each of us do?

Let me start with the rich countries.

Deliver on the Doha agenda. We know that rich-country barriers to trade are too high. Bring down the tariffs and cut back the nontariff barriers that all too often are covert protectionism. Keep to the Doha timetable. But there is so much that can be done by rich countries without waiting for Doha

We know that agricultural subsidies in rich countries, at $1 billion per day, squander resources and profoundly damage opportunities for poor countries to invest in their own development. There should be a fixed timetable for the subsidies’ elimination. Take the opportunity at the World Trade Organization meeting in Cancun in 2003 to make firm commitments on subsidies, but I urge you to act sooner.

Deliver on the welcome commitments of increased aid made at Monterrey, and the excellent response at Kananaskis to financing of the HIPC Initiative shortfall. There appears to be an emerging willingness to increase aid that is productively used.

Remove conditions on the use of aid that tend to render aid ineffective, and move to better coordinate and harmonize development programs and policies. The fragmentation of donors’ efforts has long under-mined the effectiveness of aid. Many of the failures blamed on borrowing countries actually represent the failure of donors to coordinate their efforts.

Better development multilateralism will deliver better development results.

What must developing countries do?

They must continue to build capacity, good governance, and institutions—to push ahead with legal, judicial, and financial reforms and to invest in their people.

Like the developed countries, developing countries must increase their focus on results—on monitoring outcomes and managing programs so that growth and poverty reduction goals can be achieved. For many countries, the New Partnership for African Development shows the way.

What must the Bank do?

Focus on fulfilling our promises to work toward the Millennium Development Goals. Though as an institution we have changed greatly over the last decade, we must do more. Our operations must become more transparent. We must support developing countries in better building their capacity. Although we have been a leader in measuring the results of our projects and programs, we must measure our results more rigorously, and, with others, we must be held accountable in the broader context of country goals and the Millennium Development Goals.

We are anxious to move ahead with efforts to harmonize and coordinate our work with the International Monetary Fund, the United Nations, multilateral development banks, and other donors.

All partners in development must pay special attention to inclusion, participation, and empowerment:

• —Inclusion, because we cannot expect reforms to be sustained if poor people are excluded when choices and trade-offs are made.

• —Participation, because poor people know best what makes a difference in their lives.

• —Empowerment, because we will not have lasting change unless poor people acquire the assets and means to shape their future.

Societies the world over are changing. People demand to be informed, to be consulted, to have a say, to have a voice. Unless we build on their strengths, we will forgo the most powerful force for implementation.

But actions by governments of developing and developed countries and by international institutions are only part of the solution. We must all do more to enhance the role of civil society and the private sector. The old multilateralism included only governments. The new multilateralism must include the voices of the private sector and civil society. We must all be more accountable. Better partners. Better listeners. Better deliverers.

And we must keep track of our actions.

We have made real progress in reaching broad agreement that development must be addressed comprehensively—and that it must be owned by developing countries. For most poor countries, this approach is embodied in their Poverty Reduction Strategy, an approach that is transforming strategy and partnership in many countries. The comprehensive development framework is also proving effective for middle-income countries.

For the first time we have a tool—the Development Gateway—that enables us to collect information on and learn more about development projects around the world. According to the Development Gateway, more than 63,000 development projects, not including those programs undertaken by civil society or church groups, are ongoing. All too often, projects in one sector in a country are run by multiple agencies that do not talk to one another. We must use the Development Gateway to track our actions so that we can better coordinate our efforts.

We have come a long way. We do not have to start from scratch. We already have programs that can be implemented. The Education for All Initiative, for example, would enable us to work together to enroll some 17 million children in school for the first time.

We have programs on HIV/AIDS. As of today, 20 developing and transition economies have developed and are implementing AIDS strategies that build on existing prevention, care, and treatment.

We have programs for clean water and sanitation.

But we need to scale up these programs so that they can have national, regional, and global impact. And we need donor support to implement them.

Let education, AIDS, and clean water be a first test of our commitment to partnering for results.

If we are to meet the 2015 goals, we must agree to set deadlines now for our actions. But we must go further. The year 2015 is only a staging post on a much longer journey.

Over the next 50 years, we will likely see world population grow from 6 billion to 9 billion; almost 95 percent of that increase will occur in the developing world. Food needs will double; annual output of carbon dioxide will triple; and for the first time more people will live in cities than in rural areas, placing an enormous strain on infrastructure and on the environment.

If we are to meet the 2015 goals, and go on reducing poverty effectively, we will need an estimated average annual growth rate of the world economy of approximately 3.5 percent—giving us, perhaps, a $140 trillion world economy by 2050.

If we cannot protect our environment and make such growth ecologically responsible, we will not have sustainable development.

If we retain the current distribution of income in which 15 percent of the world’s population controls 80 percent of the world’s income, we will not have sustainable development.

If we continue to exclude the disenfranchised—women, indigenous people, the disabled, street children—from playing their rightful role in society, and if we ignore their human rights, we will not have sustainable development.

And if we do not have sustainable development, we may not have long-term peace. Sustainable development is the challenge that together we must meet.

I cannot conclude without saying that I am extremely proud of the staff in the World Bank Group. They are united by a desire to fight poverty with passion. I thank them, from the bottom of my heart, for their hard work and commitment.

My friends, working together, we have the opportunity, the responsibility, and the privilege of shaping the planet of the future. We are not hapless bystanders. We can influence whether we have a planet of peace, of social justice, of equity, of growth—or a planet of unbridgeable differences among people, a planet of wasted physical resources, of strife, of terror, and of war.

Ours can be a time of a new renaissance of values, of justice, of freedom from want and fear. We must set our sights high. We must not be distracted.

We must act now on our promises. We must deliver on them with a sense of urgency. Completing this task is our responsibility and our destiny.