The World Bank: An Institution with Many Faces

By Weller, Patrick; Yi-chong, Xu | Social Alternatives, Second Quarter 2009 | Go to article overview
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The World Bank: An Institution with Many Faces

Weller, Patrick, Yi-chong, Xu, Social Alternatives

The World Bank is one of twin institutions established to stabilise the post-war international economic structure and provide development assistance. It has been subject to much criticism. This article considers some of these criticisms and examines the structure and operation of the World Bank. It concludes that there is an alternative image of the World Bank, one that shows it is a more diverse and multi-facetted institution than its critics allow.

The World Bank (hereafter the Bank) is a multilateral development agency based in Washington, DC. Its mission is to assist member countries in the development of their economies and alleviate poverty. It was one of the twin institutions created at the Bretton Woods conference in 1944 to stabilise the post-war international economic structure; the other is the International Monetary Fund. The Bank is large; it has around 10,000 staff. Its assistance comes in many forms, from the traditional project work in infrastructure, agriculture and health to the more recently developed social protection and governance. It not only offers loans but also provides analytical support, training and technical assistance. It manages the subscriptions of its member states, borrows on the international financial markets, and coordinates trust funds. Its annual lending is over $20 billion. Even though its financial assistance to developing countries in the global assistance budget is minuscule compared to the national aid agencies, its profile remains high and it is properly regarded as authoritative when it talks of development.

Critics of the Bank are vocal, articulate, and persistent and their views are often heard. Its sins are legion. There is an alternative story, perhaps less often heard, certainly more dispersed, in which people in the Bank's client countries appreciate the electricity that lights their houses, the irrigation that underpins their shift from outright poverty, the education that taught their children to read, and the efforts made by some Bank officials to maintain stability . There has hardly been any debate between the 'good' and the 'bad' Bank; it is the latter that prevails in the media and in scholarly writing because the arguments are simple to understand, and stir high emotions.

Criticism of the World Bank

This article examines the three main criticisms of the World Bank. The first critique proposes that, instead of lending to poor countries which are thereby pushed further into debt, the Bank should provide grants or other forms of assistance free of charge. Easterly (2006, 11) argues, after 60 years and $2.3 trillion, the poor remain poor because the Bank's lending programs only add to the burden of the poor. Instead of trying to 'develop' poor countries, 'aid agencies could devise a program to give cash subsidies to parents to keep their children in school' Jeffrey Sachs (2005, 270) made a similar argument: 'the existing World Bank poverty reduction plan lays out the country's goals, targets, policies, and strategies to cut poverty', but the Bank is underfunded because the traditional loan programs (concessional or not) must be supplemented with additional programs of debt relief.

The second critique suggests that, as an international organisation, the Bank has been hijacked by the rich countries and that it has been an all-powerful arm of imperialism, recolonising the poor countries around the world with its neo-liberal ideologies imposed through loans (Wade 1997, George & Sabelli 1994, Woods 2006).

The third argument portrays the Bank as a single actor in the international arena with clearly defined objectives and well-designed instruments and condemns it on those grounds, without identifying who or what really speaks and acts for the Bank. These claims come not only from protestors in the street but also from sophisticated analysts, using the principal-agent or constructivist theories. By contrast, insiders argue, 'no one person sitting in the headquarters building or working elsewhere grasps all the threads of activities bearing the label of the World Bank' (Marshall 2008, 2).

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The World Bank: An Institution with Many Faces


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