Equity and development

the long version

World Development Report 2006 analyzes the relationship between equity and development. The report documents the persistence of inequality traps by highlighting the interaction between different forms of inequality. It presents evidence that the inequality of opportunity that arises is wasteful and inimical to sustainable development and poverty reduction. It also derives policy implications that center on the broad concept of leveling the playing field-both politically and economically and in the domestic and the global arenas. The report recognizes the intrinsic value of equity but aims primarily to document how a focus on equity matters for long-run development. It has three parts: Part I considers the evidence on inequality of opportunity, within and across countries. Part II asks why equity matters, discussing the two channels of impact (the effects of unequal opportunities when markets are imperfect, and the consequences of inequity for the quality of institutions a society develops) as well as intrinsic motives. Part III asks how public action can level the political and economic playing fields. In the domestic arena, it makes the case for investing in people, expanding access to justice, land, and infrastructure, and promoting fairness in markets. In the international arena, it considers leveling the playing field in the functioning of global markets and the rules that govern them-and the complementary provision of aid to help poor countries and poor people build greater endowments.