Draft of World Development Report 2006: equity and development

The draft version of the World Development Report 2006 analyses the relationship between equity and development. Its key message states that equity is complementary, in some fundamental respects, to the pursuit of long-run prosperity. Institutions and policies that promote a level playing field, where all members of society have similar chances to become socially active and economically productive, contribute to sustainable growth and development.

The report first explores the domestic context and then the global. It describes some of the key dimensions of inequalities relevant to equity within countries. It also documents why particular inequities are bad for long-run prosperity and then discusses implications for the design and implementation of policy.

The report is structured as follows:

• Chapter 1 Equity and development: examines inequalities in different outcome spaces and how they are interrelated. It summarises evidence on the extent of inequality of opportunity in developing (and some industrial) countries, and on its costs for long-term efficiency and prosperity.
• Chapter 2 describes inequalities in five dimensions that are key in shaping opportunities: health, education, income (or private consumption), access to services, and political power, with emphasis on their joint distribution. It queries whether some people are systematically at the bottom of the pecking order in these various dimensions, and if so, are they being denied the opportunity to participate fully as productive members of society?
• Chapter 3 examines the evidence that unequal opportunities are intrinsically objectionable, and summarises various kinds of evidence to demonstrate concern about equity and fairness.
• Chapter 4 reviews the microeconomic evidence documenting that inequalities in the distributions of wealth, land and power can lead to inefficient allocations of effort, and of investment in physical and human capital.
• Chapter 5 draws on historical evidence from different contexts to argue that political equality helps the development of good institutions in two key areas:
  • economic institutions enforcing property rights in an inclusive manner, and thus spreading benefits of secure property rights to the entire population
  • political institutions that keep checks on the possibility that the state may be captured to serve only a small group, not all people
• Chapter 6 considers equity implications for policies investing in people. The emphasis given is on keeping options open from fostering personal development in early childhood, through lifelong health, education and social protection services.
• Chapter 7 recognises that opportunities require more than human development: they require that people are able to relate to the world around them, have access to other productive inputs, and to the world markets.
• Chapter 8 views the state in its roles as regulator of markets and provider of the public good of macroeconomic stability. Policy suggestions discussed within this section are consistent with the World Bank Poverty-reduction policies, that have been advocated since WDR 1990.
• Chapters 9 and 10: Through focusing on inequities in the international arena, the report queries whether policy changes at the global level could help developing countries in their pursuit of poverty reduction through equitable development. It argues that changes to the international trade regime, to the management of global capital flows, to the rules that regulate labour mobility and to the magnitude and direction of aid could have a positive impact on equity, both across and within nations. This is presented through a discussion of empirical trends and the policy arguments.

[adapted from author]