The World Bank and the Post-Washington Consensus in Vietnam and Indonesia

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THE WORLD BANK AND THE POST-WASHINGTON CONSENSUS IN VIETNAM AND INDONESIA

Susan Engel

Routledge, Abingdon, 2010, 227 pp.

The international conference held at Bretton Woods in 1944 established 'a small, conservative banking institution' called the International Bank for Reconstruction and Development (IBRD). Together with the establishment of the International finance Corporation (IFC) twelve years later--and the subsequent development of bodies concerned with securing multilateral investment--came the emergence of The World Bank as a distinct institutional grouping. The IBRD and the IFC are still the Bank's two principal development lending arms, sharing the same staff, headquarters and president (who is always from the USA). The IFC provides zero-interest loans to the poorest of countries, while the IBRD provides loans at market rates to more conventionally creditworthy nations ranging from poor to middle-income. Together, their cumulative lending totalled over $590 billion by the end of 2006.

This book by Susan Engel investigates how the funding lever of the World Bank has been used to promote a particular view and practice of economic development. Her book is a study of hegemonic power--'the organisation of consent'(p.7). That emphasis on hegemony distinguishes the book methodologically from other critiques of the World Bank, of which there are many. In historical terms, it involves analysis of how the Bretton Woods negotiations and outcomes reflected the shift from British to American hegemony. It also involves study of how the Bank's later 'discovery' of poverty became linked with a neoliberal agenda through structural adjustment programs, 'transforming the Bank from a reflection of pax americana to an institution that was a key force in establishing and reproducing that hegemony' (p.35).

As an enforcer of the 'Washington Consensus', the Bank emphasised loan conditions relating to trade liberalisation, privatisation of state-owned enterprises, banking deregulation, removal of foreign exchange controls and its own interpretation of what constitutes 'good governance'. The problems of this particular prescriptive model came to be widely recognised, and the subject of much resistance in developing nations. By 2000, as the author notes, the Bank had to admit the negative impact of the Washington Consensus: that was the time when its former chief economist Joseph Stiglitz resigned and came out as a strong critic of the Bank and its policies. …