Rural Development Contents

T'1Afr -)1.1 11\1S ( Rt \IhU 1)j Vl I(.)I '1 N 1)I I (A 11()N, \NI ) I 11-\l III - Public Disclosure Authorized kYD 5Z FILE COPYi 11171 Report No.:11171 Type: (PUB) Title: THE ASSAULT ON WORLD POVERTY : ,Author: WORLD BANK Ext.: 0 Room: Dept. OLD PUBLICATION Public Disclosure Authorized .1 If~~~~~~~~~~~~~~~~~~1II TP0 Public Disclosure Authorized Public Disclosure Authorized The Return to BRDC, I 8 -203 ASSAULT on WORLD The ASSAU LT on WORLD POVE RTY Problems of Rural Development, Education and Health With a preface by Robert S. McNamara Published for THE WORLD BANK by THE JOHNS HOPKINS UNIVERSITY PRESS Baltimore and London Copyright © 1975 by the International Bank for Reconstruction and Development All rights reserved Manufactured in the United States of America Library of Congress Catalog Card Number 75-7912 ISBN 0-8018-1745-5 (clothbound edition) ISBN 0-8018-1746-3 (paperbound edition) iv PREFACE Among our century's most urgent problems is the wholly unaccept- able poverty that blights the lives of some 2,000 million people in the more than 100 countries of the developing world. Of these 2,000 million, nearly 800 million are caught up in what can only be termed absolute poverty-a condition of life so limited as to prevent realiza- tion of the potential of the genes with which they were born; a condition of life so degrading as to be an insult to human dignity. The collection of papers in this volume, while dealing with five related subjects, share a common theme. They seek to analyze the causes of that poverty, to examine ways in which it can be alleviated, and to outline programs in which the World Bank plans to help. These sector policy papers reflect a sobering fact: that although there has been encouraging economic growth in most of the developing countries over the past three decades, a very large proportion of their people have not shared in its benefits. On average, the poorest 40% of their societies is not much better off than it was. As I pointed out in my address at the Bank's Annual Meeting in Nairobi, the basic problem of poverty and growth in the developing world can be stated very simply. The growth is not equitably reaching the poor. And the poor are not significantly contributing to growth. Development strategies, therefore, need to be reshaped in order to help the poor to become more productive. By far the largest number of the poor live in the rural areas of the developing world. The centerpiece of this volume is, therefore, the paper on Rural Development. As it points out, the objectives of rural development extend beyond any one particular sector. Rural poverty is reflected in poor nutrition, inadequate shelter and low health stan- dards. These, in turn, affect the productivity of the rural poor and their quality of life. What are required are production improvements, and mutually reinforcing programs of better nutrition, preventive health, improved water supply, basic sanitation and practical education. The papers on Agricultural Credit and Land Reform examine certain aspects of the productivity problem in greater detail. Agricultural credit is a key element in helping the poor become more productive. But traditionally the flow of credit to small farmers has been inadequate, both because they lack sufficient collateral and because of the high administrative costs of small loans. The World Bank is experi- menting with new methods to help governments overcome these obstacles. Similarly, realistic land reform is consistent with the development objectives of increased agricultural production, more equitable distri- v bution of income and expanded employment. Such programs are, however, difficult to carry out, for they affect the power base of the traditional elite groups in the developing society. The Bank will sup- port such programs when they are designed to increase agricultural output and to improve the lives of the rural poor. The final papers on Education and Health are also concerned with rural poverty, though not exclusively so. They provide insights, as well, into the problems of poverty in the urban areas whose slums entrap nearly 150 million of the developing world's people. Educational systems in developing countries are all too often inequitable, favoring city dwellers and the relatively rich, and in many countries, they have served educational objectives that were irrelevant to economic and social development. What is required is that the systems should be reshaped to ensure that all members of society get at least a minimum basic education. More equal educational opportunities would enable the poor to become more productive, and to participate more fully in the development process. The same can be said of most health programs in developing countries. They too need to be redesigned so that they can reach the poor more effectively. In the long run, virtually nothing going on in our time is likely to affect the future of mankind more than the drive towards development. These papers are offered as a modest contribution to the under- standing of that task. While they do not pretend to provide final answers for the questions they raise, they will, I hope, encourage a more intensive search among governments for feasible solutions to the massive problem of absolute poverty. If, in the end, governments fail in that effort, then I fear it will matter a great deal less what their other successes may be. President, World Bank Group vi CONTENTS Page Preface . ......................................................... v The World Bank Group ............................................. xi Rural Development . ................................................ 1 Summary and Recommendations ................................... 3 Chapter 1: The Nature and Extent of the Problem ...... .............. 16 Toward an Operational Strategy .............. .................. 16 The Measurement of Rural Poverty ............................... 19 The Dynamics of Rural Poverty ........ .......................... 24 Chapter 2: Policies and Programs for Rural Development ..... ......... 28 The Policy Framework .......................................... 29 Organization and Planning .......... ............................ 33 Implementing Rural Development ................................ 40 Chapter 3: The World Bank's Program ....... ....................... 58 Past Trends ................................................... 58 The Way Ahead ............................................. 62 Deployment of Bank Resources .................................. 70 Annexes ............. .......................................... 77 Agricultural Credit ................................................. 99 Introduction ..................................................... 103 Summary and Guidelines ........... .............................. 105 Chapter 1: Agricultural Credit Practices and Problems ..... ............ 121 Evolution of Current Approach ........ .......................... 121 Problems of Agricultural Credit Markets ...... ..................... 126 Constraints on the Role of Credit in Development .................. 131 Chapter 2: Agricultural Credit Programs and Policies .............. ... 135 Designing Credit Programs ......... ............................. 136 Financial Viability of Credit Institutions ............................ 140 Chapter 3: Systems for Delivering Agricultural Credit .................. 151 Policy Making and Administrative Issues ........................... 151 Channels of Agricultural Finance ........ ......................... 153 Agricultural Credit Agencies ..................................... 154 Guidelines on Delivery Systems .................................. 161 Principles ............. ........................................ 162 Annexes ............. .......................................... 165 vii Page Land Reform ................................ ............... 187 Introduction . .................... ...... ............... 191 Summary ..... .................... ....... ....... ..... 193 Chapter 1: Characteristics of Land Reform ....... ............. .... 203 Man and Land ...... ......... ........... .......... 203 Context of Land Reform ....... 204 Dimensions of Land Reform .......... .. ........... ......... 208 Chapter 2: Land Reform and Economic Development . 213 Implications for Productivity .......... 215 Land Reform and Employment. ............. 217 Land Reform and Equity.... ..... 218 Effects on Marketed Surplus and Savings. ........ 219 Tenancy Reform ...... .. ............ .......... .. ....... 222 Implementation Issues .......... ............................... 223 Chapter 3. The World Bank and Land Reform .226 Changing Concerns ... ............................ ......... 226 Technical Assistance . .................................. 226 Lending Operations .............. ............. ......... 228 Major Policy Options . .................. .......... ....... 234 Annexes ..... ................. ......................... 235 Education ................................. ....... ............ 263 Foreword ..... ....... ... ......... 265 Summary ..... ............ ....... ... 269 Chapter 1: Trends in Education and Development to 1970.... .. 276 Chapter 2: Education Development Strategy for the 1970's and Beyond.... 280 Poverty-oriented Development Strategy .......... ....... .... 280 Major Issues Facing Education Systems ........... ...... 281 Formation of Skills Corresponding to the Needs of Developing Countries 286 Development of Skills for Rural Areas . I ........ ...... 289 Ensuring

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