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Wednesday, 21 August, 2002, 17:24 GMT 18:24 UK
Cities to drive world economy
The World Bank has urged governments to act decisively at the Johannesburg summit to tackle global poverty and environmental deterioration.
But in an upbeat assessment, it says that in the next 50 years, the global economy could expand by four times, reaching $140,000bn compared with today's $35,000bn.
However, if the gains are to be equally shared, then the growing income gap between rich and poor will have to be tackled.
And the environmental problems of urban slum dwellers and the rural poor living on "fragile lands" that cannot sustain them will have to be tackled.
"The $140,000bn world of five decades time simply cannot be sustained on current production and consumption patterns," said Nick Stern, the World Bank's chief economist.
"A major transformation - beginning in the rich countries - is needed to ensure that poor people have an opportunity to participate."
Growing wealth gap
The World Bank, whose role is to stimulate economic growth in poor countries, admits in its latest report that the gap between rich and poor countries has doubled in the past 40 years.
The average income in the richest 20 countries is 37 times higher than the income in the poorest 20 countries.
The economic output of Switzerland is $266bn, while the whole of sub-Saharan Africa, the world's poorest region, has an economy worth $316bn.
But Switzerland has 7 million people, while sub-Saharan Africa nearly 700 million.
There are 1.2 billion people who live in extreme poverty, on income of less than $1 per day, a decrease of just 200 million in 20 years.
Absolute poverty has diminished in China, which has seen strong economic growth since it began to open its markets in the 1970s.
But poverty has continued to increase in sub-Saharan Africa, which has faced economic stagnation.
Pressures on environment
The World Bank also says one quarter of people in developing countries (1.3 billion in all), including many of those in extreme poverty, live in zones with fragile ecosystems, including forests, arid regions, mountains and wetlands.
Since the 1950s, 23% of all cropland, pastures, forest and woodland have been degraded, while tropical forests are disappearing at a rate of 5% per decade.
The biggest problem is water shortage, which the bank estimates could affect up to half of the world's population by the middle of the next century.
About 1 billion people lack access to safe drinking water.
The ecological problems are most severe in the Middle East, North Africa, and sub-Saharan Africa, where four people in 10 live in areas that cannot sustain them.
The bank recommends - controversially - that water should be allocated through market mechanisms in future.
But it adds two crucial provisos.
First, poor people must be given prior property rights to water, with the choice of whether to use it for farming or to sell it.
And governments must go beyond the market in deciding how much water must be kept back for environmental reasons, to maintain river levels.
The bank says that the next 50 years could show potentially huge gains as the world goes through a "demographic transition", shifting from high to low population growth.
World population will grow by 2 billion in the next 20 years, but by just 1 billion more in the next 30 years, as better educated women decide to have fewer children.
The result will be falling dependency ratios in most developing countries, as fewer children means more people of working age in the population as a whole.
In addition, productivity could be boosted by the fact that most population growth will be seen in cities.
By 2050, two-thirds of the world's population is expected to live in cities, with developing countries claiming 54 megacities - those containing more than 10 million people - compared with 15 now.
Urbanisation "increases the catchment area of markets and the returns to economic endeavour", while cities are incubators of risk-taking, innovation, and technology, the bank says.
But the challenges are immense.
In the poorest cities, half the population lacks access to water or sanitation, and one-quarter has no electricity.
Lacking legal title to land, 837 million people live in shanty towns or favelas - half the urban residents in Africa, one-third of those in Asia, and one-quarter of those in Latin America and the Caribbean.
To face all these environmental challenges, the World Bank advocates better tools to measure the effects of the depletion of resources on the economy.
And although it says that while market mechanisms must be made to work more effectively, for example by ending perverse subsidies on energy, market failures must also be addressed - by governments and other institutions.
As the Bank increasingly recognises, markets alone cannot solve the ecological challenges of the next 50 years.
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