institutions help preserve such social and cultural differences by making all countries stakeholders in the global polity. the 1930s have shown that without multilateral cooperation, the lack of national self - responsibility and of international cooperation can have dramatic and devastating effects. ladies and gentlemen : a recent world bank1 study gives clear evidence that opening markets and integrating them into the world economy has contributed to enormous economic progress for many developing countries over the past 20 years. countries such as brazil, china, india or mexico have doubled their ratio of trade to income. many of these countries have moved up the value chain from mere raw material exports to intermediate and even to finished products and services. the average annual per capita economic growth has increased from 1 % in the 1960s to 5 % in the 1990s. real per capita income in china has increased more than fivefold since 1978. hence on average, the global income distribution has improved rather than deteriorated. 2 life expectancy, too, has improved : for example in china, it has subsequent references to the world bank refer to “ globalization, growth and poverty ”, a world bank policy research report, world bank and oxford university press, 2002. xavier sala - i - martin, the disturbing “ rise ” of global income inequality, nber working paper 8904, april 2002. increased by nearly 30 years. 3 hovever, some countries, especially countries in africa which have not been integrated into the global economy and have not been exposed to globalization, have been left behind. dramatic and distressing poverty is still widespread. and i believe that one of the major challenges the international community as well as international institutions face is the eradication of poverty. according to a world bank classification, nearly 1. 2 billion people continue to live in absolute poverty, with incomes of less than usd 1 a day. in many countries, durable economic and social progress remains elusive. in most of these countries, trade has decreased and on average, economic growth has not kept pace with population growth. the situation in africa is particularly dramatic because it is aggravated by the aids pandemic. the fight against global poverty is therefore the greatest challenge for stability and security in the 21st century. in its fight against poverty the international community is following a strategy based on three interrelated elements : first, the un has set a specific objective with the millennium development goals ( mdgs ) which have identified eight key areas, including for example the halving of absolute poverty or the reduction of child mortality by two thirds by 2015.

and perseverance are needed. effective poverty reduction requires that the recipient countries receive consistent support from donor countries, international financial institutions ( ifis ), and un organizations to help them pursue the right policies unswervingly for very long periods. angus maddison, the world economy : a millennial perspective, oecd 2001. james boughton, who ’ s in charge? ownership and conditionality in imf - supported programs, imf working paper wp / 03 / 191. i believe that if we follow through with the elements i have outlined, developing countries stand a reasonable chance to eradicate poverty. therefore, i do not think it is productive to constantly start new initiatives to fight poverty, which i also judge to be a sign that the involved parties are not willing to live up to their responsibilities. poverty will only be eradicated by economic growth, which also depends on integrating in particular african countries into the world economy and offering them fair and equitable access to markets in developed countries. trade is one of the best forms of self - help. therefore, it was very disappointing that the multilateral trade talks in cancun failed a few weeks ago. however, at the annual meetings of the imf and the world bank in dubai, there was a general consensus that the parties have to return to the negotiation table as soon as possible. ladies and gentlemen : next to the fight against poverty, i perceive the strengthening of the international financial architecture as a major challenge. since the asian crisis, the international financial system has undergone significant reform. an important outcome of these reforms has been the relative resilience of international financial markets to a series of shocks over the past three years : owing to the decisive intervention and cooperation of the federal reserve system and the eurosystem, september 11 did not produce a major financial crisis, the synchronised economic slowdown of major industrial countries has not led to any major stress in the financial system, and the financial meltdown in argentina did not entail any significant contagion except on uruguay, which proves that financial market agents may be pricing risk better and have become more discriminating without falling into irrational herding behavior. i see that particular progress has been made on three fronts : first, the international dialogue has been broadened and has been made more inclusive. the committees of the bis as well as the creation of the g - 20 have enabled emerging market countries ( emcs ) as well as developing countries to get involved in the