I think the key point here is "third world and developing
countries" ie: places where hygiene standards are less
than Western, and clean water might be hard to come by...
By washing the umbilical stump in an antibacterial solution
(this particular one is the same used as a pre-surgery hand wash,
and it is also in a mouth wash and wound wash) they are doing more
or less what I do to my babies umbilical stumps with regular
rubbing alcohol after each diaper change... killing bacterial that
can cause infection.
The last sentence is the most important
"...we
think that sufficient evidence has accrued to claim
proof-of-principle that application of 4% chlorhexidine to the cord
stump can prevent omphalitis and neonatal mortality in
high-mortality settings."
Basically, places where this type of infection is not only
prominent, but DEADLY to babies.