Equity, defined as equality of opportunities among people, should be an integral part of a successful poverty reduction strategy anywhere in the developing world, according to a report released yesterday by the World Bank.

The World Development Report (WDR) 2006, titled 'Equity and Development' examines the relationship between equity, both within and between nations, and development, over the short and long term.

The report calls for equity, not just as an end in itself, but because it stimulates greater and more productive investment, which leads to faster growth.

The report shows how wide gulfs of inequality in wealth and opportunity contribute to the persistence of extreme deprivation, often for a large proportion of the population.

This wastes human potential and, in many cases, can slow the pace of sustained economic growth.

The relationship between equity and development is a critical one for South Africa and, indeed, the entire continent, as countries most in need of development display extreme socioeconomic inequalities, within themselves and in comparison to the rest of the world.

However, the report concludes that strategic proequity policies can bridge these gaps and contribute to development.

South Africa has already put in place and legislated policies such as broad-based black economic-empowerment and employment equity.

However, 'Equity and Development' suggests that the objective is not equality of incomes, but rather to expand access by the poor to healthcare, education, jobs, capital, and secure land rights.

Crucially, equity requires greater equality of access to political freedoms and political power. It also means breaking down stereotyping and discrimination, and improving access to justice systems and infrastructure.

”Public action should seek to expand the set of opportunities of those who have the least voice and fewest resources and capabilities,” writes World Bank President Paul Wolfowitz in the foreword to the report.

“It should do so in a manner that respects and enhances individual freedoms, as well as the role of markets in allocating resources.”

To increase equity within developing countries, the report calls specifically for policies that correct for persistent inequalities in opportunity, by levelling the economic and political playing fields.

Many such policies will also increase economic efficiency and correct market failures. Examples of pro-equity policy changes include land reform Studies in India, Kenya and Zimbabwe, among other developing countries, show that the poor must pay much higher interest rates than the rich.

"We would thus expect the poor to underinvest, certainly relative to the rich, but also relative to what would happen if markets functioned properly," the report concludes.

In addition to domestic reforms, the report also calls on nations to promote greater equity in the global arena, notably in the international markets for labour, goods, ideas and capital.

To achieve this, it urges rich countries to allow greater migration for unskilled workers from developing countries, to press ahead with trade liberalisation under the Doha Round at the WTO, to allow poor countries to use generic drugs, and to develop financial standards appropriate to developing countries.

It also reiterates the importance of increased and more-effective development aid.

A mix of these policies, applied with close attention to specific conditions in different countries, can help give poor people more equal opportunities, at once increasing their economic contribution to their societies, and reducing their own poverty.

While pointing out the negative consequences of extreme inequality, the WDR draws a clear distinction between equality and equity.

Equity, the authors say, is not the same as equality in incomes, or health status, or any other specific outcome.

Rather, it is the quest for a situation in which opportunities are equal, that is, where personal effort, preferences and initiative - and not family background, caste, race, or gender - account for the differences between people's economic achievements.

The report makes the case that equity and prosperity are complementary, citing examples in which high levels of economic and political inequality lead to economic institutions and social arrangements that systematically favour the interests of those with more influence.

Such institutions, it argues, undermine a country's potential for growth and poverty reduction.