INTER-AMERICAN DEVELOPMENT BANK (IDB) - BANQUE INTERAMERICAINE DE DEVELOPPEMENT - BANCO INTERAMERICANO DE DESARROLLO

Mr. Waldemar W. Wirsig, Manager, Social Programs and Sustainable Development Department of the Inter-American Development Bank (IDB)

Despite the rapid improvement in the region's economy during the past decade, poverty and food insecurity remain tragic constants in the lives of almost 200 million Latin Americans. Urbanization has grown very rapidly and with that urban poverty. Nevertheless, the highest incidence of poverty is found among the rural population where close to 60 percent are poor. To address poverty the Inter-American Development Bank's strategy rests on three pillars: economic growth, social equity and sustainability. This is also how we understand the essence of this Summit's Declaration which we fully support.

In Latin America, as in other regions of the world, the attack on poverty and hunger focuses on more than just agricultural and rural development. Issues of social equity need to be addressed in order to break the vicious cycle of poverty especially in a region which has one of the most unequal income distributions in the world. Inequality breeds violence and political instability discouraging investments which in turn reduces economic growth, job creation and income-earning opportunities. Strong economic growth is one of the most effective means of reducing poverty. Growth almost always increases employment, hours worked and the take home pay of unskilled labourers who make up the bulk of the poor.

The countries of Latin America and the Caribbean have already taken important steps to restore economic growth and we are witnessing an economic rebound as governments adopt sound macro-economic policies and private sector activities are encouraged. Nonetheless, more new jobs are not enough to reduce poverty. The bottom line in the fight against poverty and hunger lies in the ability of the poor to raise their income-earning potential so as to be able to improve their standard of living in a sustainable manner. That is, the activities of the poor in those jobs must also improve. The role of government is to choose policies to encourage labour-intensive production savings, investments and exports. But the scope for government actions to alleviate poverty goes well beyond this. Governments have a responsibility to protect the least fortunate to safety net programmes and to use their fiscal powers to finance the provision of services to the poor which at the very least will improve their living conditions.

Another pillar to support the process of poverty reduction is social equity. Achieving social equity requires focusing on the disadvantaged groups in society and their potential. Four groups of people that are over-represented in the ranks of the poor in Latin America can be highlighted. Micro-entrepreneurs, women, indigenous people and the rural poor. Micro-entrepreneurs provide employment for approximately one-third of the region's labour force and account for 80 percent of all business in Latin America. The Bank has a long tradition of activities promoting micro and small enterprises through financial intermediaries who know how to deal with the particular needs and characteristics of smaller clients. We also support the establishment of the enabling environment for small entrepreneurs at the country level.

It is noteworthy that women-owned business is one of the fastest growing segments of the micro-enterprise sector accounting for over 50 percent of all micro-enterprises in the region. These businesses are major sources of employment and income for women and their family members. On the other hand, an important way to increase the income of poor families is by investing in the education, training and health care of women. The greater the education level of women, the greater the education and nutrition level of their children. Educated women tend to make sure that their children are well prepared to earn a good living in the job market. Hence, investing in the education of women is a way of breaking the inter-generational transmission.

Indigenous people comprise about 10 percent of the population of the region representing over 400 different ethnic groups, each with its own culture and own way of adapting to the natural environment. There is a high degree of correlation between poverty and ethnic affiliation. In the indigenous world, such concepts as poverty and wealth are not defined in economic terms, nonetheless indigenous people will respond to new economic opportunities when they perceive they can do so without losing their cultural identity and social integrity.

I am coming to the third and last pillar of our strategy for sustainable agricultural development. Agricultural production in Latin America accounts for about a quarter of the region's GDP and 40 percent of its exports. The economic transformation of the last decade particularly liberalised trade, and regional integration, together with the generation and diffusion of technological innovations, have created new opportunities to increase the contribution of agriculture to economic growth while preserving the natural resource base.

On the threshold of the twenty-first century we face a unique opportunity to realize the potential of the region's rural sector. The Bank is developing strategies to incorporate a new vision of the role that agriculture can play in using this potential. This vision includes investment in institutional change, the modernization of key agricultural services, investments and credit in effective land markets, and human capital for information. We are cooperating with other development organizations, such as FAO, the World Bank and other regional and bilateral agencies in developing these concepts. Building strategic alliances to stimulate synergies for implementing them is, in our view, an imperative.

In conclusion, the region's approach for addressing poverty, focuses on promoting economic growth with social equity in a manner that is financially and environmentally sustainable. The IDB will contribute to implement this strategy to the full extent of its mandate and possibilities. As a regional institution, where the stakeholders - the borrowing governments themselves are the majority owners - the Bank has a unique opportunity to gain an awareness and understanding of the needs of this particular region of our world. But such a privileged position brings with it equally unique responsibilities. We pledge to you, today, to redouble our efforts, to live up to these obligations.