low soo peng bank world.ppt

7/27/2019 Low Soo Peng Bank World.ppt

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The World Bank


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Structure and Objectives of

Lecture Section One: The founding principles of the

World Bank and the History of the WorldBank until 1981 (Berg Report)

Section Two: Critically examine the WorldBanks structural adjustment policies in the1980s

Section Three: Examine the main tenants ofthe Banks contemporary polices/project


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Section Four: Raise some conceptual issuesabout how we conceptualise the banksrelationship with clients and otherinternational institutions

At the end of lecture you should have a clear

sense of the manner in which the Worldbanks policies have evolved over time andthe main debates surrounding the Bankscontemporary polices.


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Section One

The World Bank Group actually consists offive institutions

The International Bank for Reconstructionand Development (IBRD), established in1945, which provides debt financing on thebasis of sovereign guarantees.

The International Finance Corporation (IFC),established in 1956, which provides variousforms of financing without sovereignguarantees, primarily to the private sector.


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The International Development Association(IDA), established in 1960, which providesconcessional financing.

The Multilateral Investment GuaranteeAgency (MIGA), established in 1988, whichprovides insurance against certain types ofrisk, including political risk, primarily to theprivate sector.

The International Centre for Settlement ofInvestment Disputes (ICSID), established in1966, which works with governments toreduce investment risk.


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Five purposes:

Assist development and reconstruction

To promote long term balancedinternational trade

To lend for project development

To conduct its operations with dueregard to business conditions

Promote private investment


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Reconstruction alludes to its proposed

role in rebuilding war ravaged

economies of Europe and Japan However the Banks role in the entire

enterprise was negligible

Bank intervened within and supportedpost-colonial states


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In contrast to the WTO the World Bank is aninternational organisation in a sense that canbe relatively easily understood

It has a large staff and an executive boardwho are appointed by its largest contributors

Its head is always a American (current

Wolfowitz). United States holds 16.4% of totalvotes, Japan 7.9%, Germany 4.5%, and theUnited Kingdom and France each held 4.3%


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In the 1950s and 1960s the Banklargely serviced the agenda of post-

colonial state elites Project based lending

$1 Billion support to Tanzanian statist

modernisation project Very poor auditing


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Banks capacity to dominate the development

agenda limited by 3 factors

Dominance of the idea of state leddevelopment

The international moral standing of post-colonial leaders

The relative health of post-colonialeconomies


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GDP growth per capita in Sub-SaharanAfrica

1960-74 :1.9

1974-1990: 0.7

1990-2000: 0.3


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1970s witnessed a massive increase inprivate lending to the third world

Bank mirrors this overall increase

Lending to Sub Saharan Africa rosefrom less than $2 billion in 1969 to over

$12 billion in 1981


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National Development Projects in 3rdworld literally living on borrowed time

Between 1970 and 1978 Sub SaharanAfrican debt rose from $9 billion to $60billion


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National Development Projects in3rd World literally living on

borrowed time

Between 1970 and 1978 Sub

Saharan African debt rose from $9billion to $60 billion


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Robert McNamara powerful head ofBank with clear anti-poverty agenda


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Second Two

By end 1970s it is clear that NationalState-led Development had run its

course (and in most cases failed) Recession following 1979 OPEC price

increases drove economies over theedge

Election of Thatcher and Regan (newideational climate)


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Berg Report 1981(Accelerated Developmentin Africa: An Agenda to Action)

The Problem is the post-colonial state. Theanswer less state and more market

Conditionality

The Conditions: Open Up, Privatise, De-regulate, Control Inflation and Cut PublicSpending


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Social spending declined by 26% from1980 and 1985 in Sub Saharan Africa

Even in there own terms SAPs were acomplete disaster

Growth was negative (even worse than

macroeconomic statistics suggest), noinflux of private investment or growth inexports


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Why did they fail?

Failure to Implement properly (Yes)

Dreadful Initial starting point (Yes)

Fundamentally misunderstood thenature of the problem and the waymarkets work (The Bank itself nowlargely accepts this)


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Many states in question were predatory butthey were also weak (The Weberian

substance of the state was weak). SAPsweakened them future.

Markets require elaborate institutionalframeworks and certain basic public goods to

function properly. In the absence of aeffective state the formal policy stance ofgovernment is largely irreverent


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Section Three

Post-Washington Consensus: TheWorld Bank rediscovers the state

What new and what is not new aboutthe Post-Washington consensus?


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What stays the same is the basicemphasis on private enterprise (logics

of capital) and no change in the contentof macroeconomic policy


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New emphasis on importance of regulationand the provision of basic public services

If the Washington consensus sought tobypass the state the post-Washingtonconsensus seeks to remake the state andsociety (social capital)(reengagement with

Webarian project)


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Post-conditionality: It is not enough forcountries to be forced to reform they must bemade to actively support reform

The paradox of ownership: With the formationof comprehensive development frameworkand PRSP bank is extending its remit to allaspects of policy. Here is the policy you mustown it

Yet the focus on ownership is real


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Bank seeks to integrate itself into thestate by establishing join committees

within key domestic ministries

Whole project is supported by clear

emphasis on transparency(The WorldBank governance frameworks)


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The meat of the Banks project is to create

functional capitalist states in the periphery

and to integrate the entire population of theworld into the capitalist system

Surprisingly, critics and supporters essentially

agree on content of the project. Although thelanguage they use is very different


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For the Bank it is simple the Poor'smost valuable asset is their labour.

Thus the key to ending poverty is toextend capitalist markets, give the poorbasic healthcare and education (so that

are employable), and create billions of$2 a day jobs


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Its critics (Cammack Attacking the Poor)stress the problems associated with exposingthe poor to the vagaries of the market and the

inability of capitalism to end poverty due to itsneed for a lumpenproleteriat.

We shall return to question of whether theBanks policies can reduce/ elimate poverty inthe conclusion. Prior to this lets examinesome conceptual issues we face in studyingthe contemporary bank.


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Section Four

Conceptual issues about how we understandrelationship between states and the World

Bank There is little sense in understanding the

Bank as a external actor when we study itsrelationship with very poor clients (not India,

China or middle income states)


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1990s 30% of Tanzanian GDP wasBank support

1990-2003 55% of Ugandan publicspending was external aid

1990s in Mozambique 50% of

government spending externally funded,75% of public investment


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The World Bank constitutes an integralpart of the state

Harrison idea of an sovereignty frontieris a useful one in helping us understandthe relationship


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World bank part of a broader project to

extend and deepen capitalist disciplines(think back to the WTO)

Also other traditionally more left leaninginstitutions (UNCTAD) have beenincorporated Monterey Consensus2002


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Conclusions

Following the failure of state led developmentin LDCs and crude neo-liberalism the WorldBank is now engaged in project of creating

capitalist states and societies not simplycapitalist markets (Sophisticated neo-liberalism)

Given that it is a attempt to reengineer statesfrom without and extend global systemiclogics the project is clearly imperialist

This does not necessarily mean it is wronghowever.


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In my view what matters is the extent to whichit delivers on its promise to reduce povertyand create functioning states.

There are success stories (Mozambique,Uganda and Tanzania), although it is difficultto ascertain if this is because of massive aidor the policies pursued. The World Bank getstrapped in these states by ideational andfinancial investments

Also the project has an undeniable logic


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On the other hand..

Evidence of a wider upturn is limited (Wade)

In fairness to the Bank it is constrained by theconsistent failure by core capitalist states todo what it believes is required. Open markets,engage in massive debt restructuring and

increase aid


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Also Quality of Clients (although thepoint about Post-Washington

consensus is that you can transformclients)

Time will tell!

What is clear is how the Banks projectfits into broader globalisation project(think back to firms, Harvey and WTO)


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Looking forward it also clear role thisinstitution plays in the Global

surveillance regime. The subject of nextweeks lecture!

low soo peng bank world.ppt

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