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5.1.1 Background: From Neoliberalism to poverty reduction

In the 1960s the conviction that development could be achieved through economic growth and trickle-down effects dominated the policies of the World Bank and the IMF.  With Robert McNamara as World Bank President from 1968-1981, the policies of the Bank already appeared to emphasise poverty reduction in the form of a “basic needs” approach. However, in the 1980s the idea of development through economic growth regained importance. The often criticised Structural Adjustment Programmes (SAPs) were introduced during this period. The vision of World Bank and IMF institutions was organised around the so-called Washington consensus, which emphasised the importance of sound macroeconomic policies and free markets. In the 1990s criticism of the SAPs increased considerably, not only externally by NGOs and UN organisations such as UNICEF, but also within the World Bank: an internal report from 1992 (the Wapenhans Report) stated that over one-third of World Bank projects were failures. Furthermore, other Bank reports were showing little or no reduction in poverty in Africa. 

Beside the mounting criticism of the SAPs, two other aspects may be responsible for the change in the World Bank’s policy towards poverty reduction:

  • Firstly, the World Bank conducted a reassessment of its role, and concluded that the Bank’s programmes should give greater weight to poverty reduction.
  • Secondly, a vision of development emerged. Starting in the 1990s, a shift occurred in the understanding of this concept within the international development community, and was marked by a series of events such as the introduction of the Human Development Index (HDI) by the United Nations Development Programme (UNDP) in 1990, the UN’s decision to name 1992 the “International Year for Eradication of Poverty”, the “World Summit for Social Development” in Copenhagen in 1995 and the formulation of the Millennium Development Goals (MDGs), as well as the Highly Indebted Poor Countries (HIPC) debt relief initiative in 1996. 

Since the latter shift, poverty is not only measured in terms of its monetary aspects, but also along a social and political dimension. Development for its part is no longer viewed purely as a technical process of capital accumulation in the context of sound macroeconomic policies, but also as a change affecting the entire society. This shift meant that the development policies of countries could no longer be defined by donors alone. Instead, the ideas and policies for development had to emerge from the affected countries and societies themselves. All of these changes led to the introduction of the concept of PRS in 1999. In 2008 more than 70 countries conducted their own PRS process.

More information

The Whireled Bank Group: The Wapenhans Report 

World Summit for Social Development:

The Millennium Development Goals:

About relationships within the world, see Hope, Anne and Sally Timmel (1995): Training for Transformation: A Handbook for Community Workers, Book 3, Chapter 9A: The Evolution of Global Thought and Policy, pp. 6-30.

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