Multilateral Development Banks, Governments, and Civil Society: Chiaroscuros in a Triangular Relationship

Article excerpt

Landmark events such as the end of the Cold War, the renaissance of market policies, and the worldwide expansion of liberal political systems have contributed to civil society being gradually accepted as a legitimate international actor. Although nongovernmental organizations (NGOs) have implemented microlending and resettlement projects since the 1980s, the setting is different today. So is the responsibility of the players. For one thing, NGOs are now given the responsibility of identifying vulnerable groups and social needs in order to design effective assistance programs; NGOs are also seen as vehicles for maximizing the effectiveness of international funds. Most important, they have become the main challenge to the agendas of international economic institutions.

It is in this context that the World Bank and the Inter-American Development Bank (IDB) initiated step-by-step adjustments in their mission and mandate on the one hand, and operational changes on the other. Both enlarged their agendas to incorporate interventions in areas closely associated with public administration (that is, modernization of the state, consolidation of democratic institutions, strengthening of local governments, protection of human rights and the environment, and reform of social policies). Conditions applied to the loans and their implementation in specific projects also became subject to public monitoring. The cultural change within the institutions themselves demanded new skills to initiate consultations with local civil society. These advances have not followed a linear progression. The new approach still coexists with the persistence of traditional top-down practices. Furthermore, country case studies show that there is a major gap between the incorporation of new modalities by the mu ltilateral development banks (MDBs) and their implementation in programs and projects at the national level, often as a result of borrowing governments' resistance.

In this concluding essay, we bring together the various components of our project in two main parts. In the first, we deal with the governance agenda as it is applied by the multilateral development banks at the global and local levels and in relation to their own institutional governance. In the second, we draw together the main conclusions and the major trends stemming from the case studies.

The Evolving Agenda

Until the 1970s, the operations of the MDBs were strictly related to the narrow mandates stipulated in their charters: the provision of long-term financing for infrastructure projects such as roads, bridges, power plants, and sewerage. The MDBs were meant to take the place of undeveloped domestic capital markets and eventually close the gap with the more advanced industrial nations. By the late 1970s, but most notably in the 1980s, this strategy yielded far lower results than expected. Questions emerged about the value of such efforts, in a context in which macroeconomic mismanagement undermined contributions to growth. By the mid-1980s, as priorities shifted from economic development to financial survival, a policy consensus prevailed on the failure of key economic policies in many developing countries and on what should be done. A new confidence in orthodox economics set the frame for the structural reform agenda that called for a stronger role of market mechanisms to allocate resources. Trade liberalizatio n, privatization, deregulation, and the elimination of price-distorting subsidies were then considered essential to restore, first, financial solvency and, then, the conditions for sustainable long-term economic growth in developing countries. The MDBs continued their traditional infrastructure-related loans but wrapped up with policy-based loans. Conditionality funds were contingent on the commitment to market liberalization. [1] In the context of the debt crisis and the shallow international financial markets of the late 1980s, the leverage of the MDBs to put forward their reform agenda was significant. …