Introduction

The mission of the World Bank is to achieve a ‘world without poverty’. Over the 50-plus years since the end of the Second World War when the Bank was founded, there have been radical shifts in views about how this might best be achieved. In this chapter we chart the highly non-linear development of thinking: from the ‘trickle-down’ views of the early 1950s, to McNamara's war on poverty, to a new version of ‘trickle down’ again in the heyday of the ‘Washington consensus’ in the early 1990s, to the current re-rejection of this view. Thinking about this issue is complicated by the fact that we must think not only about the effects of growth on distribution and poverty but also about the effects of distribution and poverty on growth. It will be a central claim of this chapter that we should think of these links as consisting of a twofold reciprocal relationship.

The World Bank is not independent of either the intellectual world or the political world in which it operates. The Bank's thinking on poverty thus closely parallels academic concerns with poverty, and its actions with regard to policy relief reflect the political priority afforded to poverty in the world at large. That being said, there has never been unanimity in the economics profession about policy issues, and at every point of time a wide range of political positions has been in evidence. Furthermore, the Bank can lead as well as lag; it is large enough to influence both academic opinion and the political climate.