International Economic Organizations III World Bank

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International Economic Organizations IIIWorld
Bank
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• International Bank for Reconstruction and
  Development (IBRD) World Bank
• Established in 1944 to help Europe recover from W
  W II
• By the 1950s turn attention to poorest countries
• International Development Association (IDA) 1960
  (USA initiative President Dwight Eisenhowere
  IDA be part of World Bank
• First loans in 1961 to Chile, Honduras, India and
  Sudan

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• 40 offices world wide, 95 staff in DC
• Resources - 300 billion, most influential intl.
  institution for developing countries.
• 1944 Resources 58 of world trade, now only
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• Industrial countries not inclined to contribute
  since have not relied on WB

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• Investment bank, 180 member nations equity shared
  in the Bank
• Bank borrows and lends (worlds capital markets),
  IMF credit union, whose members have access to
  common pool of resources
• IDA lends only to govts. To very poor development
  countries per capita GNP below 1,065 in 2008)
• 80 countries eligible to receive IDA resources
  2.5 billion people, 1.5 billion survive on less
  than US2/day
• Total loans by IDA US182 billion
• -interest free loans and maturity of 35-40 years

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• WB loans in first 2 decades to electric power
  and transportation projects (infrastructure)
• Specific project support
• 1980s structural reform
• Market based, economic growth Latin America,
  South Asia, Sub Saharan Africa

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Critique

• Developed Countries/Underdeveloped distinction
• Bretton Woods 27 from underdeveloped countries
  (Latin American, African, Egypt, Ethiopia and
  Liberia)
• 5 from Asia (India, Iran, Iraq, China,
  Philippines)
• No bargaining power
• Economic liberalism
• Role of govt. in operation of market not
  recognised

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• 1974 S. called for New Intl. Economic Order at
  UN General assembly
• Ask for greater financial flows from IMF
• World Bank shift from highly visible
  infrastructural projects to poverty focused aid)
• Robert McNamara (1968-1981)
• 1978 Word Bank Development Report

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• II Washington Consensus- neoliberalism
• 1980s shift to market not state based thinking
  in North
• By early 1990s, demise of eastern bloc
• IMF and WB exclusive holders of legitimate
  knowledge about development monopoly on policy
  advice
• Role of external/structural factors in
  development challenge was downplayed
• ODA decline in 1990s

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• Washington Consensus (WC)
• Assumption free trade is most effective route
  to promote growth
• Trickle down
• Rid of govt. spending deficits
• Control inflation by stabilization
• Cut public spending and raise interest rates
• Privatize public expenditure, liberalize trade,
  investment and finance, export led growth,

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• Foreign investors bring in capital and technology
  no govt. regulation
• ---------------------
• If S share of world trade higher by 1 (Africa,
  East Asia, S. Asia, Latin America each increase
  exports by 1, 128 million people lifted out of
  poverty
• N demands S open its borders but protects its own
  markets from S imports

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• E.g. textiles
• N subsidises its own domestic production results
  in global dumping and destruction to S production
• N subsidies to domestic farmers 1billion per
  day. EU cash subsidy to every dairy cow exceeds
  total per capita EU aid to Sub Saharan Africa

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• III Globalisation (accelerated flows of money,
  goods, labor, production)
• World Bank project based
• Contradictions between silo based assumption of
  self-contained national economies and reality of
  global flows of capital and goods
• Nation-state structure of data gathering, loan
  structure of Bank
• Technocratic planning /democratic planning

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• No Transparency
• Un-democratic
• Civil Society (Non-governmental organisations
  involved in local development efforts)

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