Low Soo Peng Banking World
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Low Soo Peng Banking World

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Low Soo Peng Banking World

Low Soo Peng Banking World

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Low Soo Peng Banking World Low Soo Peng Banking World Presentation Transcript

  • The World Bank
  • Structure and Objectives of Lecture • Section One: The founding principles of the World Bank and the History of the World Bank until 1981 (Berg Report) • Section Two: Critically examine the World Bank’s structural adjustment policies in the 1980s • Section Three: Examine the main tenants of the Bank’s contemporary polices/project
  • • Section Four: Raise some conceptual issues about how we conceptualise the banks relationship with clients and other international institutions • At the end of lecture you should have a clear sense of the manner in which the World bank’s policies have evolved over time and the main debates surrounding the Bank’s contemporary polices.
  • Section One • The World Bank Group actually consists of five institutions • The International Bank for Reconstruction and Development (IBRD), established in 1945, which provides debt financing on the basis of sovereign guarantees. • The International Finance Corporation (IFC), established in 1956, which provides various forms of financing without sovereign guarantees, primarily to the private sector.
  • • The International Development Association (IDA), established in 1960, which provides concessional financing. • The Multilateral Investment Guarantee Agency (MIGA), established in 1988, which provides insurance against certain types of risk, including political risk, primarily to the private sector. • The International Centre for Settlement of Investment Disputes (ICSID), established in 1966, which works with governments to reduce investment risk.
  • • Five purposes: • Assist development and reconstruction • To promote long term balanced international trade • To lend for project development • To conduct its operations with due regard to business conditions • Promote private investment
  • • ‘Reconstruction’ alludes to its proposed role in rebuilding war ravaged economies of Europe and Japan • However the Bank’s role in the entire enterprise was negligible • Bank intervened within and supported post-colonial states
  • • In contrast to the WTO the World Bank is an international organisation in a sense that can be relatively easily understood • It has a large staff and an executive board who are appointed by its largest contributors • Its head is always a American (current Wolfowitz). United States holds 16.4% of total votes, Japan 7.9%, Germany 4.5%, and the United Kingdom and France each held 4.3%
  • • In the 1950s and 1960s the Bank largely serviced the agenda of postcolonial state elites • Project based lending • $1 Billion support to Tanzanian statist modernisation project • Very poor auditing
  • • Bank’s capacity to dominate the development agenda limited by 3 factors • Dominance of the idea of ‘state led development’ • The international moral standing of postcolonial leaders • The relative health of post-colonial economies
  • GDP growth per capita in Sub-Saharan Africa 1960-74 :1.9 1974-1990: 0.7 1990-2000: 0.3
  • • 1970s witnessed a massive increase in private lending to the third world • Bank mirrors this overall increase • Lending to Sub Saharan Africa rose from less than $2 billion in 1969 to over $12 billion in 1981
  • • National Development Projects in 3rd world literally living on borrowed time • Between 1970 and 1978 Sub Saharan African debt rose from $9 billion to $60 billion
  • • National Development Projects in 3rd World literally living on borrowed time • Between 1970 and 1978 Sub Saharan African debt rose from $9 billion to $60 billion
  • • Robert McNamara powerful head of Bank with clear anti-poverty agenda
  • Second Two • By end 1970s it is clear that National State-led Development had run its course (and in most cases failed) • Recession following 1979 OPEC price increases drove economies over the edge • Election of Thatcher and Regan (new ideational climate)
  • • Berg Report 1981(Accelerated Development in Africa: An Agenda to Action) • The Problem is the post-colonial state. The answer less state and more market • Conditionality • The Conditions: Open Up, Privatise, Deregulate, Control Inflation and Cut Public Spending
  • • Social spending declined by 26% from 1980 and 1985 in Sub Saharan Africa • Even in there own terms SAPs were a complete disaster • Growth was negative (even worse than macroeconomic statistics suggest), no influx of private investment or growth in exports
  • • • • • Why did they fail? Failure to Implement properly (Yes) Dreadful Initial starting point (Yes) Fundamentally misunderstood the nature of the problem and the way markets work (The Bank itself now largely accepts this)
  • • Many states in question were predatory but they were also weak (The Weberian substance of the state was weak). SAPs weakened them future. • Markets require elaborate institutional frameworks and certain basic public goods to function properly. In the absence of a effective state the formal policy stance of government is largely irreverent
  • Section Three • Post-Washington Consensus: The World Bank rediscovers the state • What new and what is not new about the Post-Washington consensus?
  • • What stays the same is the basic emphasis on private enterprise (logics of capital) and no change in the content of macroeconomic policy
  • • New emphasis on importance of regulation and the provision of basic public services • If the Washington consensus sought to bypass the state the post-Washington consensus seeks to remake the state and society (social capital)(reengagement with Webarian project)
  • • Post-conditionality: It is not enough for countries to be forced to reform they must be made to actively support reform • The paradox of ownership: With the formation of comprehensive development framework and PRSP bank is extending its remit to all aspects of policy. Here is the policy you must own it • Yet the focus on ownership is real
  • • Bank seeks to integrate itself into the state by establishing join committees within key domestic ministries • Whole project is supported by clear emphasis on transparency(The World Bank governance frameworks)
  • • The meat of the Bank’s project is to create functional capitalist states in the periphery and to integrate the entire population of the world into the capitalist system • Surprisingly, critics and supporters essentially agree on content of the project. Although the language they use is very different
  • • For the Bank it is simple the Poor's most valuable asset is their labour. Thus the key to ending poverty is to extend capitalist markets, give the poor basic healthcare and education (so that are employable), and create billions of $2 a day jobs
  • Its critics (Cammack “Attacking the Poor”) stress the problems associated with exposing the poor to the vagaries of the market and the inability of capitalism to end poverty due to its need for a lumpenproleteriat. We shall return to question of whether the Banks policies can reduce/ elimate poverty in the conclusion. Prior to this lets examine some conceptual issues we face in studying the contemporary bank.
  • Section Four • Conceptual issues about how we understand relationship between states and the World Bank • There is little sense in understanding the Bank as a external actor when we study its relationship with very poor clients (not India, China or middle income states)
  • • 1990s 30% of Tanzanian GDP was Bank support • 1990-2003 55% of Ugandan public spending was external aid • 1990s in Mozambique 50% of government spending externally funded, 75% of public investment
  • • The World Bank constitutes an integral part of the state • Harrison idea of an sovereignty frontier is a useful one in helping us understand the relationship
  • • World bank part of a broader project to extend and deepen capitalist disciplines (think back to the WTO) • Also other traditionally more left leaning institutions (UNCTAD) have been incorporated ‘Monterey Consensus’ 2002
  • Conclusions • Following the failure of state led development in LDCs and crude neo-liberalism the World Bank is now engaged in project of creating capitalist states and societies not simply capitalist markets (Sophisticated neoliberalism) • Given that it is a attempt to reengineer states from without and extend global systemic logics the project is clearly imperialist • This does not necessarily mean it is wrong however.
  • • In my view what matters is the extent to which it delivers on its promise to reduce poverty and create functioning states. • There are success stories (Mozambique, Uganda and Tanzania), although it is difficult to ascertain if this is because of massive aid or the policies pursued. The World Bank gets ‘trapped’ in these states by ideational and financial investments • Also the project has an undeniable logic
  • • On the other hand….. • Evidence of a wider upturn is limited (Wade) • In fairness to the Bank it is constrained by the consistent failure by core capitalist states to do what it believes is required. Open markets, engage in massive debt restructuring and increase aid
  • • Also Quality of Clients (although the point about Post-Washington consensus is that you can transform clients) • Time will tell! • What is clear is how the Bank’s project fits into broader globalisation project (think back to firms, Harvey and WTO)
  • • Looking forward it also clear role this institution plays in the Global surveillance regime. The subject of next weeks lecture!