The Bank today is the largest external financier of developing countries' investment in education, health, nutrition, and AIDS prevention. It is also a leading investor in early childhood development, family planning, water and sanitation, and environmental protection. But by itself, it is not enough. No country has managed to raise living standards over the long term without growth. We have seen how high inflation in many Latin American countries in the late 1980s and early 90s, for instance, led to a worsening of income distribution and social disintegration.
Sectoral policies are key.
Strengthening basic infrastructure, and building strong local capital markets and well-functioning labor markets. Agriculture, in particular, is key. Policies that fail to benefit farmers will bypass most of the poor. Openness to trade and private investment is also key. Expanding trade means more jobs and higher incomes.