Weisbrot†and colleagues write of flaw in World Bank researchers' claim on crises' effect on the poorest:
"In a paper released last March by the World Bank's Development Research Group, Bank economists David Dollar and Aart Kraay†confront critics of World Bank/IMF†policies with new empirical research on incomes in both developed and less developed countries.
The authors conclude that "growth generally does benefit the poor and that anyone who cares about the poor should favor the growth-enhancing policies of good rule of law, fiscal discipline, and openness to international trade."...
...Apart from the general problem of measurement error, there are measurement problems which are systematic. For example, there is likely to be a very strong selection bias issue.
This operates both within countries and across countries.
Across countries, those that don't appear in the sample are likely to be disproportionately the countries which are doing especially poorly. ...
††††††††† The problem within countries is
perhaps more serious. The identity of the bottom quintile of households is
going to depend in part on economic conditions.
If conditions for the poor turn very bad, then many of the households that would have otherwise made up the bottom quintile may not exist.
In some cases, young people who may have otherwise married and formed their own household, instead stay with their parents.
The same may also be the case with elderly people moving back in with children.
Some young families may emigrate and look for jobs in other countries.
And, in many cases, some of the poor will die due to bad economic conditions.
In short, the bottom 20 percent of households will not be the same group of people under all economic circumstances.
††††††††† This effect can be large. Suppose
that 10 percent of the households who would have comprised the bottom quintile
under normal economic conditions don't exist because of factors related to an
The sample would instead include the households who would have otherwise been in the 21st and 22nd percentile of the income distribution, as part of the bottom quintile.
This would lead to a substantial upward bias in the measure of the income of this group.
In the case of the United States, this substitution would increase the reported income of the bottom quintile by approximately 7 percent.
It would be necessary to examine the pattern of household creation and mortality†rates within each country to determine the extent to which economic circumstances affect the composition of households within the nation.
Without this information, a test of whether economic crises† disproportionately hurt poor households, like the one that appears in the DK paper, does not shed much light on the question."
Growth May Be Good for the Poor-- But are IMF†and World Bank†Policies Good for Growth?
A Closer Look at the World Bank's Most Recent Defense of Its Policies
By Mark Weisbrot, Dean Baker, Robert Naiman, and Gila Neta†
Mark Weisbrot and Dean Baker are co-directors of the Center for Economic and Policy Research (CEPR). Robert Naiman is senior policy analyst at CEPR. Gila Neta is a research associate at CEPR. The authors are grateful to Joyce Kim for valuable research and editorial assistance.
Draft published August 7, 2000 web.archive.org/web/20000815073236/http://www.cepr.net/response_to_dollar_kraay.htm