http://www.economist.com/blogs/feastandfamine/2013/09/poverty-growth-and-world-bank
I have never been one to be interested and really good at
economics, but I chose this article to stir up a little debate. I am going to
ask you guys whether or not you think the World Bank benefits poorer countries?
I have heard nothing but back and forth arguing on this exact matter. Some say that
the World Bank provides good loans that successfully help poorer countries
build up their infrastructure through good capital investment projects. Other
people argue that the World Bank either takes advantage of poorer countries
through unfair interest rates or with built in ‘fine print’ stipulations in the
loan/ capital investment project contracts. An example of this could be that
the World Bank may give two billion to the country of Chad for the construction
of a new runway for an airport. The catch is that next to that runway there
will be UN and United States hangers that must not be touched. Chad, as a
country does not have a strong economy or infrastructure. The World Bank will
look as if it is giving meaningful money to the country of Chad, but the people
truly benefitting from this deal are the ones who are acting as if they are
helping.
Just to clarify, the World Bank is defined as a United
Nations international financial institution that gives loans to developing
countries for projects aimed at benefitting the country involved. According to
its website, the goal of the World Bank is to diminish world poverty as well as
to promote international trade. The
World Bank also identifies goals that it wishes to achieve by the end of this
year. The eight goals are the following: eradicate extreme poverty and hunger,
achieve universal primary education, promote gender equality, reduce child
mortality, improve maternal health, combat HIV/AIDs, malaria, and other
diseases, ensure environmental sustainability, and develop a global partnership
for development. Now for my opinion, I think those eight goals sound all sweet
and good but I hold more of a pessimistic view when it comes to the World Bank.
This is not because I found a great deal of information for or against it (I
found a great deal of both), it is because I think developing countries are
still behind in times. I hate to say it, but any of us who have been to a developing
areas can see it. Last month I was in St. Lucia, one of the most beautiful
islands I have ever seen… healthcare, basic infrastructure, and even the
schools that I saw made the country seem sad once I was outside the nice white
gates of my resort. My point is even if you think the World Bank is helping
these countries… there is no way it is helping out fast enough.
Please feel free to add any arguments for or against the
World Bank. Please share specific research or articles that you think would
raise eyebrows or stir up even more debate on this matter.
I'm interested to see how the idea of international economic development is changed by the New Development Bank which has only 5 member countries (BRICS). The issue with organizations like the World Bank and IMF is that their policies are often made in the interest of the members with the largest capital share, i.e. the United States. Each member of the NDB has one vote. In theory (I don't know much about how the reality of the situation is) this would lead to a more democratic and fair process of giving out economic assistance, hopefully avoiding situations like the hypothetical you described above with Chad.
ReplyDeleteI think that Dan brings up a good point with the idea that these economic institutions give a stronger influence to countries with larger capital shares, because their interests abroad stimulate growth around the world. I think that economic institutions can be good in theory, but often times with the red tape attached to various funding it creates more harm than good. That being said, I think that there is no such thing as a perfect system and these institutions should work with member countries democratically to find a more permanent reasonable standard.
ReplyDeleteI feel like I agree with both of you. I also still think that The World Bank does not give a lot of say to the undeveloped countries who would be receiving the loans for projects. I think it is important to have their input more, and as Timothy stated, a more democratically fair system in place.
ReplyDeleteI think it is accurate to say that in general the established institutions we have tend to benefit countries that are more well off. I believe Dan brought up a valid point with the New Development Bank set up by BRICS. It seems to be set up with good intentions and hopes to promote a more far system for economic assistance and international economic institutions. Do you think over time we will have the same debate and question whether the New Development Bank will end up benefiting BRICS countries more than the country in need?
ReplyDeleteThe thing that is most striking to me is that the eight goals are extremely vague, or at least most of them are. For instance, "promoting gender equality" is all well and good, but how exactly do you measure that? I think goals that are so vague and largely without measurable results are ill advised and in many ways a cop out for the organization because they can issue statements for gender equality and that is technically promoting it but it isn't doing anything to achieve it in reality. It would be much more meaningful if there was some sort of tangible goal, not just an idea of gender equality. In the context of the World Bank, I am confused how they would accomplish this anyway. I assume a loan package would have to contain a ton of strings mandating reforms, but would they even have the ability to enforce the reforms due to the sovereignty of the nation they are giving the package to? I'm just very skeptical about the ability of the World Bank to achieve reform in this way.
ReplyDeleteI kind of feel like the goals the World Bank has set for itself this years are just generic goals that anyone in the world would want to create an ideal world. But if eel like that is not possible by only throwing money at a developing nation. If money is given to a nation in hopes of helping eradicate extreme poverty and hunger and promote education the money should be attached to an education plan and where the money will go exactly. I don't particularly see how a new runway for an airport will combat HIV/AIDS, malaria and other diseases.
ReplyDelete