Poor fail to benefit from World Bank trade aid: study

WASHINGTON, March 22, 2006 (AFP) - Billions of dollars of World Bank money to promote trade in poorer countries has given disappointing returns in alleviating poverty, an independent study said Wednesday. Over three decades of trade assistance, the global lender has failed to do enough to cushion the blow of liberalisation on poorer citizens in targeted countries, the World Bank's Independent Evaluation Group (IEG) said. The report could prove timely for campaigners who argue that in their own push to tear down commercial barriers, the richest members of the World Trade Organisation risk leaving the world's poor further behind.

'The evaluation confirms that liberalizing trade alone is not enough to generate growth and fight poverty,' IEG director-general Vinod Thomas said.

'The World Bank has done the right thing in promoting more open trade worldwide, but not necessarily done everything right to help generate the desired payoffs,' he said.

The IEG report said that over 1987 to 2004, about eight percent of total World Bank lending or 38 billion dollars went to 117 countries to help better integrate them into the global economy. It found that the money was effective in helping countries to bring down tariffs and barriers to trade.

But it was less successful in putting countries on the path of sustained export-led growth, especially in Africa.

'Many of the Bank's clients in Africa have not succeeded in diversifying their exports, making them still vulnerable to commodity price shocks,' it said. 'Because of the lack of diversity in their exports, some of these reforming countries have not successfully integrated into the global economy and have actually lost market share.'

Necessary measures to accompany Bank-sponsored trade reforms, such as competition policy, reducing labour market rigidities and improving the regulatory environment, did not always materialise. And where trade has boosted growth, the benefits have not been shared widely in a recipient country. David Greenaway, head of the report's external advisory panel and director of the Leverhulme Centre for Research on Globalization and Economic Policy at Britain's University of Nottingham, said the report was 'very timely'. 'This acknowledgement that developing countries must aspire for open markets while simultaneously receiving support to adjust to the impact on their local economies is most welcome, and a valuable contribution in informing ongoing trade negotiations,' he said.