The Guardian

London, April 7:

Developing countries grew at their sharpest rate for three decades last year, faster than wealthy nations, the World Bank said. It warned, however, that wealthy nations were not increasing aid fast enough to stamp out poverty. Even sub-Saharan Africa, which includes some of the world’s poorest nations, became wealthier last year, helped by soaring commodity prices - the region is rich in oil and metals.

Tony Blair said when he released his Commission for Africa report last month that poverty on the continent was the “greatest tragedy of our time’’. But he added the increasing number of democratic countries and the decrease in conflicts meant this was a good time to stimulate growth. The Bank noted in its report yesterday that such factors helped to increase the gross domestic product of the sub-Saharan region last year by 3.8 per cent, compared with 2003.

China was the fastest growing nation last year with its economy increasing by 9.5 per cent. India and Russia also performed well, expanding by 7 per cent. Overall, the Bank expects global growth to ease from 3.8 per cent to 3.1 per cent this year. However, developing nations will continue to outpace wealthy countries.

“The Bank welcomes the strong growth of developing nations. We see this as a reflection of the policies that have been put in place over the last 20 years,’’ said Andrew Burns, a senior World Bank economist. George Bush this month announced the appointment of one of his favoured neo-conservative advisers, Paul Wolfowitz, as the new head of the World Bank, replacing James Wolfensohn.

The appointment caused anger among the development community but Wolfowitz has attempted to win over his critics by striking a conciliatory tone and underlining the World Bank’s multilateralist role. Yesterday the Bank criticised the shortfall in aid to developing nations.

In real terms, aid grew by just 5 per cent in 2003. The international community has promised to achieve the Millennium Development Goals to cut extreme poverty in half by 2015.

Jeffrey Lewis, the manager of international finance at the Bank, said, “Reaching the Millennium Development Goals is going to require a lot more resources from the wealthy nations.’’ The United Nations has said wealthy countries should spend 0.7 per cent of GDP on aid; only five nations at present spend this much, with the United States contributing only 0.14 per cent of its GDP to aid.

“The shortfall on aid is particularly noteworthy and unfortunate,’’ said Lewis. “Developing nations have matched their promises of undertaking reforms but the wealthy nations have failed to match their side of the bargain.’’ The report called for action on four fronts if the goals are to be achieved. “Donors must fulfil commitments to substantially increase aid and other resources,’’ said the report.

It also urged donors to pursue efforts to make aid flows more reliable and aid spending more effective. The development community should also support policies to allow poor countries better access to rich countries’ markets, which are often protected by high tariffs, said the report.