Pro-Growth is Not Pro-Poor

COLLEGE PARK, MARYLAND – Zia Qureshi recently argued that economic growth is the way out of inequality – and, by extension, poverty. In Qureshi’s view, more direct redistributive policies are too “controversial and divisive.” In fact, there is ample reason to believe that the world will never grow its way out of inequality and poverty, and that redistribution is our only hope for greater social justice.

“Pro-growth is pro-poor” has been the informal slogan of the World Bank and the International Monetary Fund for decades, resulting in 35 years of neoliberal economic policies known as the “Washington Consensus.” These policies comprised the structural adjustment programs (SAPs) of the 1980s and 1990s, when developing countries were forced to cut social programs, privatize public services, deregulate industries, eliminate trade protection, and make their labor markets more “flexible” (a euphemism for making it easier to fire workers). These programs yielded modest growth at best; what they did succeed in boosting was poverty, inequality, and social protest.

Dissatisfaction with the Washington Consensus came to a head during the economic crisis in Southeast Asia in the late 1990s, leading to a search for alternatives. Since 2000, the Bank and the IMF have been forced to work with a new template, Poverty Reduction Strategy Processes (PRSPs), which supposedly differ from the SAPs in two ways; they put more importance on social safety nets, and they encourage extensive participation of civil society in decision-making.

Unfortunately, the PRSPs have failed to deliver. Their safety nets are full of holes, and, too often, civil society is barely consulted. Indeed, the 1,200-page technical manual that must be followed to produce a plan belies the fundamental idea that these programs are owned and governed by those who adopt them. In the end, PRSPs look a lot like SAPs.