# **Box 1: The 1980 WDR’s two‐point strategy**

In 1973, just as the East Asian nations were starting to create what would be called an economic miracle two decades later, the World Bank’s president, Robert McNamara, was expressing concern about what was happening all over the developing world: _“The basic problem of poverty and growth in the developing world can be stated very simply. .... Despite a decade of unprecedented increase in the gross national product of the developing countries, the poorest segments of their population have received relatively little benefit. Nearly 800 million individuals—40 percent out of a total of two billion— survive on incomes estimated (in U.S. purchasing power) at 30 cents per day in conditions of malnutrition, illiteracy, and squalor. They are suffering poverty in the absolute sense...._ _The data suggest that the decade of rapid growth has been accompanied by greater maldistribution of income in many developing countries, and that the problem is most severe in the countryside. There has been an increase in the output of mining, industry, and government—and in the incomes of the people dependent on these sectors—but the productivity and income of the small farmer have stagnated._ _One can conclude that policies aimed primarily at accelerating economic growth, in most developing countries, have benefited mainly the upper 40 percent of the population and the allocation of public services and investment funds has tended to strengthen rather than to offset this trend.”_ Reflecting McNamara’s emphasis on the living standards of the bottom 40 percent of people in developing countries, the 1980 WDR took a good look at poverty and human development since the Second World War with the data it could muster. It essentially recommended a strategy with two important elements: policies to foster growth, especially in rural areas, and complementary policies for human development.

Compared with the 1990 WDR, it had one major difference: the implied unimportance of social insurance programs. WDR 1980 had exactly two paragraphs on transfers and subsidies (page 45). It concluded that while in industrialized countries the mainstay of antipoverty policy is income transfers and social insurance programs, the scope for such programs in developing countries is limited. The alternative approach was to subsidize goods and services that are especially important for poor people, such as food and fuel. This could help the poor raise their health and longevity, but such subsidies involved leakages to the non‐poor and could be costly. In essence, the report discouraged developing countries from relying much—if at all—on such transfers and subsidies.

A subtler difference lay in the 1980 WDR’s emphasis on fertility and population policies. Figure 5.6 on page 69 of the report, titled “Policy and Poverty” laid out the relationships between five principal aspects of economic development: Income, Nutrition, Fertility, Education, and Health. The WDR referred to the debate on family planning, and concluded that socioeconomic progress and family planning both affect fertility and are mutually reinforcing. Ten years later, WDR 1990 would make a similar judgment. But, influenced by the experiences in China and India, it recommended that the principal objective of family planning programs should be improved maternal health and mortality, not reduced fertility.

_Sources: McNamara (1973) and World Development Report 1980_ .

11