Contacts:
In Kathmandu: Rajib Upadhya (9771) 4226792/3
rupadhya@worldbank.org
In Washington: Erik Nora (202) 458 4735
enora@worldbank.org
KATHMANDU, March 16, 2009 – History shows that severe crises can cause nations to become inward-looking, sometimes with negative consequences. The World Development Report 2009: Reshaping Economic Geography, released today, argues that the most effective policies for promoting long-term growth are those that facilitate geographic concentration and economic integration, both within and across countries. “The world’s most geographically disadvantaged people know all too well that growth does not come to every place at once,” said Indermit S. Gill, Director of the World Development Report (WDR) and Chief Economist, Europe and Central Asia. “Markets favor some places over others. To fight this concentration is tantamount to fighting prosperity. Governments should facilitate the geographic concentration of production. But they must also institute policies that make the provision of basic needs—of schools, security, streets, and sanitation—more universal.” The new World Development Report challenges the assumption that economic activities must be spread geographically to benefit the world’s most poor and vulnerable. Trying to spread out economic activity can hinder growth and does little to fight poverty. For rapid, shared growth, governments must promote economic integration which, at its core, is about the mobility of people, products, and ideas. “Throughout history, mobility has helped people escape the tyranny of poor geography or poor governance,” said Gill. “The report sees this as part of a vital process of economic integration, since mobile people and products form the cornerstone of inclusive, sustainable globalization.” Integration should be the pivotal concept in the policy discussions involving the location of production, people and poverty—in particular, the debates on urbanization, regional development, and globalization. Instead, all three overemphasize place-based interventions.
“The ideas that the report bring to the table are highly relevant to the transitions that Nepal is currently undertaking,” said Susan Goldmark, the World Bank Country Director for Nepal. “Economic planners and policy makers in Nepal are discussing many of the same issues in the preparation of the Government’s National Development Strategy and the ideas presented in the report should be useful as the country embarks on the path of redefining institutions to support a peaceful, inclusive and prospering New Nepal.” The WDR reframes the policy debates to include all the instruments of integration—common institutions, connective infrastructure, and targeted interventions. By common institutions, the report means regulations affecting land, labor and commerce, and social services such as education and health financed through taxes and transfers. Infrastructure refers to roads, railways, ports, airports, and communications systems. Interventions include slum clearance programs, special tax incentives to firms, and preferential trade access for poor countries. Geography matters greatly in deciding what is needed, what is unnecessary, and what will fail, argues the report. By calibrating the blend of these policies, developing nations can reshape their economic geography, much as today’s high income economies did in the past. If they do this well, the report concludes, their growth will still be unbalanced, but their development will be inclusive. Today’s event was co-hosted by the World Bank Nepal Office and the Management Association of Nepal. Vice Chairman of the National Planning Commission Dr. Guna Nidhi Sharma chaired the event. Finance Secretary Mr. Rameshore Prasad Khanal also shared Nepal’s experiences in planning and implementing development. Dr. Bimal Prasad Koirala, head of the Management Development Center of the Management Association of Nepal moderated the discussion. For more information about the World Bank’s in Nepal, please visit
http://www.worldbank.org/np To access this report on line, please visit
http://go.worldbank.org/K2CBHVB7H0
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