Agence France Presse
PRAGUE, Sept 19 (AFP) - Poverty has soared in the transition countries of Europe and Central Asia, while inequalities have also increased in some former Soviet states, according to a World Bank report released Tuesday.
The number of people living in poverty had shot up from two percent in 1988 to 21 percent in 1998, according to figures in the new report on poverty and inequality in the region, "Making Transition Work for Everyone".
The ten-fold increase in poverty -- defined as living on less than two dollars per day -- "is much larger and more persistent than many would have expected at the start of the process," said the report.
But the timing was "fortuitous" because it coincided with an overall economic upturn in the region, where an average growth rate of four percent was now expected, said Johannes Linn.
In his foreword to the report, Linn wrote: "It is an important contributon to our ongoing reflections about how we at the World Bank can work most productively with our clients and partners to reduce poverty."
Linn, the World Bank's vice president for Europe and Central Asia, was speaking to reporters at the presentation of the report.
The report was being presented as a riposte to anti-globalization critics of the World Bank and the Intenaitonal Monetary Fund, who claim that their policies hurt the poor.
The report's overview said: "Virtually all transition countries experienced a collapse in economic output in the initial years of the transition, but the drop was much sharper and the recovery slower in some parts of the region," said the report.
The report explored the different responses to this collapse and their implications for poverty and inequality.
"Incomplete market reforms, high levels of bureaucratic corruption, and the capture of national governments by powerful business elites account for some of the major differences in poverty and inequality outcomes among countries," it said.
Linn acknowledged that the World Bank had stopped lending to Belarus and Turkmenistan because of state corruption.
Russia's reform plans, formulated in the spring and approved by the government, were "a good first step," he said, adding that World Bank officials would return to Russia for discussions in the near future.
The World Bank also will work with the European Commission on a conference later this year dealing with the accession process of the European Union, he said.
The report identified four main factors that contributed to the economic collapse and increase in inequality in the region:
- large macroeconomic imbalances; - over-industrialization; - little experience with market institutions; - relativley ineffective implementation of only limited reforms.
Anna Revenga, a co-leader of the study, said that researchers found that children had a higher risk of poverty than the elderly, especially in central Europe, where pension systems have generally provided protection.
She pointed to sharply rising disparities between the well-off and the poor in Armenia and Russia.:
