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Bank and Poverty Reduction
A close reading of the World Bank's World Development Report 2015 shows that it works on the assumption that human beings generally think automatically, socially, and with mental models, and that future development policy, poverty alleviation, and even policy design need to be modified taking this into account. Poverty is a "cognitive tax" suffered because people are incapable of taking advantage of the opportunities that are open to them. The assumption that development experts improving the behaviour of the poor will reduce poverty, however, fails to confront the growing problem of unsustainable inequalities.
An earlier version of this text was presented at the National Seminar on World Development Report 2015, organised by Kerala Economic Association, at Thiruvananthapuram, in August 2015.
This is a short critique of World Bank’s World Development Report 2015, which advances “a new set of development approaches” to contain poverty. Established in 1944, the World Bank, originally called the International Bank for Reconstruction and Development (IBRD) and with a limited mandate to reconstruct the war-torn countries of the world, has evolved into a major global development and lending agency with 188 countries as its members. Not based on the democratic principle of “one country, one vote,” but on the economic strength of member countries, the bank’s president invariably has been an American. No wonder the United States (US) has come to wield a decisive role in the evolution and working of the institution. Today, it has become the most powerful and influential development policy think tank in the world, besides a repertoire of economists and domain experts whose number is well over 12,000. The overarching mission of the World Bank Group carved in stone at its Washington DC headquarters is “our dream is a world free of poverty.” For the world’s poor, estimated to be over one billion by the bank (living on $1.25 per capita per day), this could mean a bastion of hope and a deliverer of justice.
From 1978 onwards, the World Bank has been publishing the annual World Development Reports (WDR), each year focusing on a particular theme. The bank’s development philosophy, approach, and policy are exemplified in these reports. Although only a few (for example, WDR 1980, 1990, 2000–01, 2004, 2006) focus directly on poverty, most reports address the issue of poverty in some way or the other. In this note I try to critique WDR 2015 titled Mind, Society and Behaviour, which apparently is based on several field visits and “laboratory” experiments. A close reading of the report shows that it works on the assumption that human beings generally think automatically, socially and with mental models, and that future development policy, poverty alleviation and even the policy design process itself need to be modified taking this into account. I shall first outline the organising frame and explain the concept of poverty, followed by a critical evaluation of the development policy implications on the basis of that.
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