Empowerment and Development Effectiveness
The need to deploy scarce development resources—whether in the
form of finance or policy advice and technical assistance—as effec-
tively as possible is a central development concern. This chapter very
briefly explores three of the key channels through which empowerment
enhances development effectiveness: through its impacts on good gov-
ernance and growth, on helping growth to be pro-poor, and on the
outcomes of development projects. It is important to note that there is
a synergistic relationship among these variables, and between key inter-
ventions to promote empowerment and effectiveness objectives. For
example, support for broadening people’s access to basic education and
health care is central to the empowerment agenda; it is also critical for
optimizing the long-run effectiveness of development strategies, includ-
ing the creation of a dynamic investment climate. Finally, it should also
be emphasized that empowerment, in the sense of enlarging people’s
choices and hence their freedom to take action to shape their lives, is
much more than a means to other objectives; it is a good in itself, and a
desirable goal of development.
Empowerment and Development Effectiveness:
Good Governance and Growth
Good governance has increasingly been recognized as a crucial prereq-
uisite for development effectiveness and the growth that it fosters. It is
critical for ensuring a positive investment climate, and it has a two-way
relationship with empowerment—that is, good governance promotes
empowerment, and empowerment further enhances good governance.
The components of good governance range very widely; some of its
aspects and their relationship with empowerment and development ef-
fectiveness are briefly discussed below. The rule of law is one of the foundations of good governance. Ac-cording to Dollar and Kraay (2000), the availability (or absence) of
impartial, dependable, and reasonably speedy judicial systems and as-
sociated enforcement mechanisms is important for the investment cli-
mate, and hence for countries’ growth prospects. Kaufmann, Kraay,
and Zoido-Lobatón (1999) found a large, significant, and causal rela-
tionship between the rule of law and the income of nations (and also
between rule of law, higher literacy, and reduced infant mortality). In its
equity (or inequity) aspects, the rule of law also affects empowerment:
if poor people can obtain impartial justice, their freedom is enhanced.
By the same token, empowerment can improve the quality of the judi-
cial and enforcement system, especially by increasing the availability
and dissemination of information about how the system works.
Corruption is both a symptom and a cause of poor governance. It
undermines the investment climate and development effectiveness. It
imposes heavy costs on poor people, who have fewer resources than the
better-off to pay bribes. A study in Ecuador demonstrates that poor
people and small firms pay more in bribes as a proportion of their in-
come than the rich or large firms.Empowering people through greater
openness and participation can lead both to the availability of more
information about the pervasiveness of corruption and to popular pres-
sure to eliminate it—once again illustrating the two-way relationship
between empowerment and good governance. One proxy for empower-
ment is the strength of civil liberties in society; Kaufmann (2000), using
data from 150 countries, found that those with high levels of civil liber-
ties had very low corruption, but that the level of corruption was four
times higher in countries that were only partly free and 24 times higher
in countries with no civil liberties.
One specific aspect of empowerment—enhanced women’s rights and
participation—deserves special mention in this context. Empowerment
of women is associated with cleaner business and government, and bet-
ter governance. Specifically, the greater their involvement in public life,
the lower the level of corruption, even in countries with the same in-
come, civil liberties, education, and legal institutions. At the micro level,
studies have shown that women in business are less likely than men to
pay bribes to government officials, either because they have higher ethi-
cal standards or because they are more risk-averse. A study of 350 firms
in Georgia found that firms managed by men are twice as likely to pay
bribes as those managed by women. The difference drops but is still significant after controlling for firm size, sector, and education of owner
or manager.
Empowerment—through inclusion, voice, and accountability—can
also promote social cohesion and trust, qualities that help reduce
corruption, reinforce government and project performance, and pro-
vide a conducive environment for reform, with consequential benefits
for development effectiveness and economic growth. Ritzen, Easterly,
and Woolcock (2000) have demonstrated the importance of social co-
hesion and inclusiveness for generating the trust needed to implement
reforms. Knack and Keefer (1997) have established the relationship
between growth and measures of trust and civic cooperation. La Porta
and others (1997) have demonstrated the positive relationships between
trust and judicial efficiency, anti-corruption, bureaucratic quality, tax
compliance, and civic participation. Rodrik (1999) has shown that coun-
tries with the steepest falls in growth after exogenous shocks after 1975
were those that were socially divided in terms of income inequality,
ethnic and linguistic fragmentation or conflict, and social trust, and
had weak institutions for managing conflict.
Extreme examples of the breakdown of social cohesion and trust
are war and civil conflict. Their intuitively evident consequences have
been confirmed by research. For example, Collier (2000) has shown
that on average civil war reduces a country’s per capita output by more
than 2 percent a year compared to what it would otherwise have been.6
A study of Indian states shows that civil strife leads to the worst invest-
ment climate and growth performance.
An important aspect of poor governance, with adverse consequences
for growth prospects, is the extent of “state capture” by large firms. Busi-
ness Environment and Enterprise Performance Surveys carried out re-
cently in 20 countries in Eastern Europe and Central Asia demonstrate
the extent of this phenomenon and its effects in terms of firms’ capacity
to buy influence in parliamentary legislation, criminal and commercial
courts, and decision making by central banks. The study shows that,
between 1997 and 1999, “high capture” countries achieved only half the
sales and investment of “low capture” countries. Again, however, the
two-way relationship between empowerment and good governance comes
into play. Good governance can promote empowerment by encouraging
the growth of civil liberties—and countries with a high degree of empow-
erment in terms of civil liberties have low state capture.
Finally, because development effectiveness and growth depend criti-
cally on public action, including well-designed and effectively deployed public spending on development priorities, sound public expenditure
management is an essential aspect of good governance. Here again, as-
pects of empowerment, including provision of information to citizens
and government commitment to transparency and accountability with
respect to public spending, can play a critical role. When stakeholders,
including civil society, the private sector, and intended beneficiaries (in-
cluding poor people), can monitor public expenditure outcomes, per-
formance can be enhanced. Public spending on education in Uganda
provides a case in point. When Uganda instituted public monitoring of
funds going to primary schools and school districts, the share of nonwage
allocations actually reaching schools rose from 22 percent in 1995 to
about 80 to 90 percent by 2000.9 Here is an example of how key as-
pects of empowerment and government performance (and development
effectiveness) go hand in hand: spending on improvements in education
service delivery is critical for empowerment, while empowerment, in
the form of citizen monitoring, is helping to ensure that public spending
on education is actually reaching its intended beneficiaries—and thereby
enhancing the effectiveness of public action and growth prospects.
Empowerment and Development Effectiveness:
Making Growth Pro-Poor
There is a large cross-disciplinary literature and substantial develop-
ment experience on the links between empowerment, growth, and pov-
erty reduction (see especially Stern 2002; World Bank 2000c). Income
poverty has fallen most rapidly in economies that have grown dynami-
cally, and poverty has remained high or has increased in countries with
poor growth records.
Experience also shows that growth alone is not enough to ensure
substantial and sustainable poverty reduction. Country data indicate
that similar growth rates can lead to very different poverty reduction
outcomes. For a given rate of growth, poverty will fall faster in coun-
tries where the distribution of income becomes more equal, as in
Uganda, than in countries where it becomes less equal, as in
BangladeshA critical aspect of an empowering approach is to reduce inequality
by broadening human capabilities (through, for example, universal basic
education and health care, together with adequate arrangements for so-
cial protection) and improving the distribution of tangible assets (such
as land or access to capital). Such an approach can enhance the poverty-
reducing impact of growth-inducing policies and investments by enabling
poor people to more effectively participate in markets. The converse also
applies. When inequality is high, poor people lack capabilities and assets
(ranging from literacy to collateral for credit) and thus have difficulty
taking advantage of economic opportunity. This limits a society’s poten-
tial for growth in general and pro-poor growth in particular, and conse-
quently the effectiveness of development efforts.
Gender discrimination, whether legal or customary, is a particularly
important aspect of inequality. By curtailing the economic contribution
of half the population, overall prospects for growth and higher living
standards are limited—a situation perpetuated into future generations by
inadequate investment in female education.
Empowerment also implies more participatory, bottom-up ap-
proaches to development objectives. There is now substantial agree-
ment that approaches giving poor people more freedom to make eco-
nomic decisions enhance development effectiveness at the local level in
terms of design, implementation, and outcomes. A particularly striking
example of the positive consequences of empowering people in these
ways comes from China. Two major Chinese reforms, the Household
Responsibility System and the Township and Village Enterprise move-
ment, promoted poor people’s participation and freedom to make eco-
nomic choices in rural areas, releasing the entrepreneurial energies of
the Chinese people and thereby helping China to achieve rapid pro-
poor growth. The number of poor people in rural China fell from 250
million in 1979, the first year of reform, to 34 million in 1990, with
about half of the decline occurring between 1978 and 1985.15
Finally, empowerment can have sociopolitical benefits for a
country’s poverty reduction efforts. As noted in the previous section,
societies that take steps toward wider social inclusion, broader voice,
and enhanced accountability of governments can better achieve the
social consensus and capacity for collective action needed to carry
through sometimes difficult reforms effectively. They are also more
likely to have a greater degree of policy and political stability, both of
which help to promote sustainable and equitable pro-poor develop-
ment, broadly defined.And even where income distribution does not become
more unequal with growth, country differences in initial inequality
produce different poverty reduction outcomes for a given rate of
growth. Hence, if poverty reduction is taken as a measure of develop-
ment effectiveness, then the development effectiveness of growth ef-
forts varies with levels of inequality. A critical aspect of an empowering approach is to reduce inequality
by broadening human capabilities (through, for example, universal basic
education and health care, together with adequate arrangements for so-
cial protection) and improving the distribution of tangible assets (such
as land or access to capital). Such an approach can enhance the poverty-
reducing impact of growth-inducing policies and investments by enabling
poor people to more effectively participate in markets. The converse also
applies. When inequality is high, poor people lack capabilities and assets
(ranging from literacy to collateral for credit) and thus have difficulty
taking advantage of economic opportunity. This limits a society’s poten-
tial for growth in general and pro-poor growth in particular, and conse-
quently the effectiveness of development efforts.
Gender discrimination, whether legal or customary, is a particularly
important aspect of inequality. By curtailing the economic contribution
of half the population, overall prospects for growth and higher living
standards are limited—a situation perpetuated into future generations by
inadequate investment in female education.
Empowerment also implies more participatory, bottom-up ap-
proaches to development objectives. There is now substantial agree-
ment that approaches giving poor people more freedom to make eco-
nomic decisions enhance development effectiveness at the local level in
terms of design, implementation, and outcomes. A particularly striking
example of the positive consequences of empowering people in these
ways comes from China. Two major Chinese reforms, the Household
Responsibility System and the Township and Village Enterprise move-
ment, promoted poor people’s participation and freedom to make eco-
nomic choices in rural areas, releasing the entrepreneurial energies of
the Chinese people and thereby helping China to achieve rapid pro-
poor growth. The number of poor people in rural China fell from 250
million in 1979, the first year of reform, to 34 million in 1990, with
about half of the decline occurring between 1978 and 1985.
Finally, empowerment can have sociopolitical benefits for a
country’s poverty reduction efforts. As noted in the previous section,
societies that take steps toward wider social inclusion, broader voice,
and enhanced accountability of governments can better achieve the
social consensus and capacity for collective action needed to carry
through sometimes difficult reforms effectively. They are also more
likely to have a greater degree of policy and political stability, both of
which help to promote sustainable and equitable pro-poor develop-
ment, broadly defined.
The need to deploy scarce development resources—whether in the
form of finance or policy advice and technical assistance—as effec-
tively as possible is a central development concern. This chapter very
briefly explores three of the key channels through which empowerment
enhances development effectiveness: through its impacts on good gov-
ernance and growth, on helping growth to be pro-poor, and on the
outcomes of development projects. It is important to note that there is
a synergistic relationship among these variables, and between key inter-
ventions to promote empowerment and effectiveness objectives. For
example, support for broadening people’s access to basic education and
health care is central to the empowerment agenda; it is also critical for
optimizing the long-run effectiveness of development strategies, includ-
ing the creation of a dynamic investment climate. Finally, it should also
be emphasized that empowerment, in the sense of enlarging people’s
choices and hence their freedom to take action to shape their lives, is
much more than a means to other objectives; it is a good in itself, and a
desirable goal of development.
Empowerment and Development Effectiveness:
Good Governance and Growth
Good governance has increasingly been recognized as a crucial prereq-
uisite for development effectiveness and the growth that it fosters. It is
critical for ensuring a positive investment climate, and it has a two-way
relationship with empowerment—that is, good governance promotes
empowerment, and empowerment further enhances good governance.
The components of good governance range very widely; some of its
aspects and their relationship with empowerment and development ef-
fectiveness are briefly discussed below. The rule of law is one of the foundations of good governance. Ac-cording to Dollar and Kraay (2000), the availability (or absence) of
impartial, dependable, and reasonably speedy judicial systems and as-
sociated enforcement mechanisms is important for the investment cli-
mate, and hence for countries’ growth prospects. Kaufmann, Kraay,
and Zoido-Lobatón (1999) found a large, significant, and causal rela-
tionship between the rule of law and the income of nations (and also
between rule of law, higher literacy, and reduced infant mortality). In its
equity (or inequity) aspects, the rule of law also affects empowerment:
if poor people can obtain impartial justice, their freedom is enhanced.
By the same token, empowerment can improve the quality of the judi-
cial and enforcement system, especially by increasing the availability
and dissemination of information about how the system works.
Corruption is both a symptom and a cause of poor governance. It
undermines the investment climate and development effectiveness. It
imposes heavy costs on poor people, who have fewer resources than the
better-off to pay bribes. A study in Ecuador demonstrates that poor
people and small firms pay more in bribes as a proportion of their in-
come than the rich or large firms.Empowering people through greater
openness and participation can lead both to the availability of more
information about the pervasiveness of corruption and to popular pres-
sure to eliminate it—once again illustrating the two-way relationship
between empowerment and good governance. One proxy for empower-
ment is the strength of civil liberties in society; Kaufmann (2000), using
data from 150 countries, found that those with high levels of civil liber-
ties had very low corruption, but that the level of corruption was four
times higher in countries that were only partly free and 24 times higher
in countries with no civil liberties.
One specific aspect of empowerment—enhanced women’s rights and
participation—deserves special mention in this context. Empowerment
of women is associated with cleaner business and government, and bet-
ter governance. Specifically, the greater their involvement in public life,
the lower the level of corruption, even in countries with the same in-
come, civil liberties, education, and legal institutions. At the micro level,
studies have shown that women in business are less likely than men to
pay bribes to government officials, either because they have higher ethi-
cal standards or because they are more risk-averse. A study of 350 firms
in Georgia found that firms managed by men are twice as likely to pay
bribes as those managed by women. The difference drops but is still significant after controlling for firm size, sector, and education of owner
or manager.
Empowerment—through inclusion, voice, and accountability—can
also promote social cohesion and trust, qualities that help reduce
corruption, reinforce government and project performance, and pro-
vide a conducive environment for reform, with consequential benefits
for development effectiveness and economic growth. Ritzen, Easterly,
and Woolcock (2000) have demonstrated the importance of social co-
hesion and inclusiveness for generating the trust needed to implement
reforms. Knack and Keefer (1997) have established the relationship
between growth and measures of trust and civic cooperation. La Porta
and others (1997) have demonstrated the positive relationships between
trust and judicial efficiency, anti-corruption, bureaucratic quality, tax
compliance, and civic participation. Rodrik (1999) has shown that coun-
tries with the steepest falls in growth after exogenous shocks after 1975
were those that were socially divided in terms of income inequality,
ethnic and linguistic fragmentation or conflict, and social trust, and
had weak institutions for managing conflict.
Extreme examples of the breakdown of social cohesion and trust
are war and civil conflict. Their intuitively evident consequences have
been confirmed by research. For example, Collier (2000) has shown
that on average civil war reduces a country’s per capita output by more
than 2 percent a year compared to what it would otherwise have been.6
A study of Indian states shows that civil strife leads to the worst invest-
ment climate and growth performance.
An important aspect of poor governance, with adverse consequences
for growth prospects, is the extent of “state capture” by large firms. Busi-
ness Environment and Enterprise Performance Surveys carried out re-
cently in 20 countries in Eastern Europe and Central Asia demonstrate
the extent of this phenomenon and its effects in terms of firms’ capacity
to buy influence in parliamentary legislation, criminal and commercial
courts, and decision making by central banks. The study shows that,
between 1997 and 1999, “high capture” countries achieved only half the
sales and investment of “low capture” countries. Again, however, the
two-way relationship between empowerment and good governance comes
into play. Good governance can promote empowerment by encouraging
the growth of civil liberties—and countries with a high degree of empow-
erment in terms of civil liberties have low state capture.
Finally, because development effectiveness and growth depend criti-
cally on public action, including well-designed and effectively deployed public spending on development priorities, sound public expenditure
management is an essential aspect of good governance. Here again, as-
pects of empowerment, including provision of information to citizens
and government commitment to transparency and accountability with
respect to public spending, can play a critical role. When stakeholders,
including civil society, the private sector, and intended beneficiaries (in-
cluding poor people), can monitor public expenditure outcomes, per-
formance can be enhanced. Public spending on education in Uganda
provides a case in point. When Uganda instituted public monitoring of
funds going to primary schools and school districts, the share of nonwage
allocations actually reaching schools rose from 22 percent in 1995 to
about 80 to 90 percent by 2000.9 Here is an example of how key as-
pects of empowerment and government performance (and development
effectiveness) go hand in hand: spending on improvements in education
service delivery is critical for empowerment, while empowerment, in
the form of citizen monitoring, is helping to ensure that public spending
on education is actually reaching its intended beneficiaries—and thereby
enhancing the effectiveness of public action and growth prospects.
Empowerment and Development Effectiveness:
Making Growth Pro-Poor
There is a large cross-disciplinary literature and substantial develop-
ment experience on the links between empowerment, growth, and pov-
erty reduction (see especially Stern 2002; World Bank 2000c). Income
poverty has fallen most rapidly in economies that have grown dynami-
cally, and poverty has remained high or has increased in countries with
poor growth records.
Experience also shows that growth alone is not enough to ensure
substantial and sustainable poverty reduction. Country data indicate
that similar growth rates can lead to very different poverty reduction
outcomes. For a given rate of growth, poverty will fall faster in coun-
tries where the distribution of income becomes more equal, as in
Uganda, than in countries where it becomes less equal, as in
BangladeshA critical aspect of an empowering approach is to reduce inequality
by broadening human capabilities (through, for example, universal basic
education and health care, together with adequate arrangements for so-
cial protection) and improving the distribution of tangible assets (such
as land or access to capital). Such an approach can enhance the poverty-
reducing impact of growth-inducing policies and investments by enabling
poor people to more effectively participate in markets. The converse also
applies. When inequality is high, poor people lack capabilities and assets
(ranging from literacy to collateral for credit) and thus have difficulty
taking advantage of economic opportunity. This limits a society’s poten-
tial for growth in general and pro-poor growth in particular, and conse-
quently the effectiveness of development efforts.
Gender discrimination, whether legal or customary, is a particularly
important aspect of inequality. By curtailing the economic contribution
of half the population, overall prospects for growth and higher living
standards are limited—a situation perpetuated into future generations by
inadequate investment in female education.
Empowerment also implies more participatory, bottom-up ap-
proaches to development objectives. There is now substantial agree-
ment that approaches giving poor people more freedom to make eco-
nomic decisions enhance development effectiveness at the local level in
terms of design, implementation, and outcomes. A particularly striking
example of the positive consequences of empowering people in these
ways comes from China. Two major Chinese reforms, the Household
Responsibility System and the Township and Village Enterprise move-
ment, promoted poor people’s participation and freedom to make eco-
nomic choices in rural areas, releasing the entrepreneurial energies of
the Chinese people and thereby helping China to achieve rapid pro-
poor growth. The number of poor people in rural China fell from 250
million in 1979, the first year of reform, to 34 million in 1990, with
about half of the decline occurring between 1978 and 1985.15
Finally, empowerment can have sociopolitical benefits for a
country’s poverty reduction efforts. As noted in the previous section,
societies that take steps toward wider social inclusion, broader voice,
and enhanced accountability of governments can better achieve the
social consensus and capacity for collective action needed to carry
through sometimes difficult reforms effectively. They are also more
likely to have a greater degree of policy and political stability, both of
which help to promote sustainable and equitable pro-poor develop-
ment, broadly defined.And even where income distribution does not become
more unequal with growth, country differences in initial inequality
produce different poverty reduction outcomes for a given rate of
growth. Hence, if poverty reduction is taken as a measure of develop-
ment effectiveness, then the development effectiveness of growth ef-
forts varies with levels of inequality. A critical aspect of an empowering approach is to reduce inequality
by broadening human capabilities (through, for example, universal basic
education and health care, together with adequate arrangements for so-
cial protection) and improving the distribution of tangible assets (such
as land or access to capital). Such an approach can enhance the poverty-
reducing impact of growth-inducing policies and investments by enabling
poor people to more effectively participate in markets. The converse also
applies. When inequality is high, poor people lack capabilities and assets
(ranging from literacy to collateral for credit) and thus have difficulty
taking advantage of economic opportunity. This limits a society’s poten-
tial for growth in general and pro-poor growth in particular, and conse-
quently the effectiveness of development efforts.
Gender discrimination, whether legal or customary, is a particularly
important aspect of inequality. By curtailing the economic contribution
of half the population, overall prospects for growth and higher living
standards are limited—a situation perpetuated into future generations by
inadequate investment in female education.
Empowerment also implies more participatory, bottom-up ap-
proaches to development objectives. There is now substantial agree-
ment that approaches giving poor people more freedom to make eco-
nomic decisions enhance development effectiveness at the local level in
terms of design, implementation, and outcomes. A particularly striking
example of the positive consequences of empowering people in these
ways comes from China. Two major Chinese reforms, the Household
Responsibility System and the Township and Village Enterprise move-
ment, promoted poor people’s participation and freedom to make eco-
nomic choices in rural areas, releasing the entrepreneurial energies of
the Chinese people and thereby helping China to achieve rapid pro-
poor growth. The number of poor people in rural China fell from 250
million in 1979, the first year of reform, to 34 million in 1990, with
about half of the decline occurring between 1978 and 1985.
Finally, empowerment can have sociopolitical benefits for a
country’s poverty reduction efforts. As noted in the previous section,
societies that take steps toward wider social inclusion, broader voice,
and enhanced accountability of governments can better achieve the
social consensus and capacity for collective action needed to carry
through sometimes difficult reforms effectively. They are also more
likely to have a greater degree of policy and political stability, both of
which help to promote sustainable and equitable pro-poor develop-
ment, broadly defined.
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