The World Bank and the Global Financial Crisis: The Reemergence of Lending to Middle-Income Countries
Winters, Matthew S., The Whitehead Journal of Diplomacy and International Relations
By the time the subprime mortgage crisis in the United States began to have serious global ramifications in mid-2008, the developing world already had, since the beginning of the year, been dealing with the twin crises of rising food and fuel prices. As of June 2008, Argentina, Brazil, China, Egypt, and Vietnam had all put in place export limitations on agricultural goods, and Burkina Faso, Cameroon, Cote d'Ivoire, Egypt, Haiti, Mozambique, Senegal, and Yemen had all experienced protests and riots related to rising food prices. In June 2008, the price of oil hit an all-time nominal high of $126 per barrel - a price more than double what it had been one year before. This caused the cost of imported goods and agricultural inputs (e.g. fertilizer, fuel for farm machinery) to rise appreciably across the developing world. The spread of the financial crisis beyond the United States led the World Bank to declare "a sudden convergence of food, fuel and financial crises," and World Bank President Robert Zoellick warned that the September 2008 collapse of the US financial industry could represent a "tipping point for many developing countries," as they would now have to "prepare for a drop in trade, capital flows, remittances, and domestic investment, as well as a slowdown in growth."1 Given the World Bank's status as the world's preeminent development institution, it was natural for the organization to assume a leading role in helping the poorest countries of the world respond to the economic crisis. The Bank had already designed special initiatives and reoriented some of its lending to help poor countries respond to the food and fuel crises which predated the spread of the global financial crisis. Beginning in the fall of 2008, the World Bank undertook a number of additional initiatives aimed at helping poor and middle-income countries weather the crisis.
In this article, I analyze the World Bank's response to the global financial crisis. I show that the World Bank significantiy increased lending after the crisis began, and the majority of this lending went to middle-income countries rather than to the poorest countries of the world. At first glance, it might seem like the Bank was in dereliction of its duty to help the world's poorest countries. In reality, addressing the credit constraint problems of middle-income countries was perhaps the most appropriate pattern of lending for promoting the health of the overall global economy, given the potential for these countries to become drivers of global trade and finance. Additionally, the thematic character of Bank lending (i.e. the distribution of Bank lending across economic sectors) did not change significantly in comparison with the years before the crisis. I also show how the International Finance Corporation (IFC), a branch of the World Bank that typically receives less attention than its two main lending arms, the International Development Association (IDA) and the International Bank for Reconstruction and Development (IBRD), positioned itself to act as a substitute for sources of private capital that were drying up around the world, yet did not substantially increase lending beyond its preexisting trend. Finally, I provide evidence of the World Bank's rhetorical advocacy on behalf of the developing world during the period of the financial crisis, and I argue that the promotion of new financing flows for the developing world ultimately produced at best mixed results.
As compared to research on the International Monetary Fund (IMF), which necessarily involves the role of that institution as a responder to economic crisis, much less has been written about the role that the World Bank plays in addressing economic crises. This article, therefore, offers a novel accounting of World Bank behavior in a crisis period, expanding our knowledge of World Bank decision making and the role, more generally, of international financial institutions in supporting global financial stability. In contrast to those who argue that the World Bank should reduce the scale of its operations and concentrate only on select development interventions or on being simply a "knowledge bank," I argue that the way in which the World Bank was able to provide financing to middle-income countries during the Global Financial Crisis demonstrates that there is an important global financial role for a more comprehensive World Bank.
BACKGROUND CONDITIONS: THE TRIPLE CRISIS OF FOOD, FUEL, AND FINANCE
Several months before the financial meltdown in the United States and Europe and the subsequent decision by the Federal Reserve and the US Congress to inject massive amounts of liquidity into the US economy, World Bank President Robert Zoellick already was warning of crisis conditions in the developing world. In response to rising food and fuel prices, Zoellick called for a "new deal to combat world hunger and malnutrition through a combination of emergency aid and longterm efforts to boost agricultural productivity in developing countries."2 Arguing that thirty-three countries around the world faced "potential social unrest because of the acute hike in food and energy prices," he called for increased foreign aid to the agricultural sector, a more equitable system of global trade that would eüminate market-distorting subsidies, new equity investment in Africa, and increased transparency in the extractive industries.3 The following month, the Bank unveiled its Global Food Crisis Response Program, which included $1.2 billion worth of lending available for developing countries under expedited processing rules.4
By the time the global financial crisis fully broke out in the fall of 2008, the World Bank had in some ways already been on a war tooting, responding to changes in some of the leading global economic indicators. Nonetheless, given the preexisting food and fuel crises, the financial crisis seemed particularly threatening for poor and middle-income countries, implying the need for additional action. Insofar as these countries had been financing food and fuel imports through deficit spending, the freezing up of global credit markets presented a major challenge to crisis-responsive expenditures, particularly for the middle-income countries that were more likely to finance spending through borrowing from global markets.5 In addition, commodityexporting countries experienced a sudden drop in demand as a result of the downturn, which resulted in a reduction of natural resource revenue that had been quite strong in the period leading up to the crisis. In the fourth quarter of 2008, portfolio investment retreated from emerging markets, global exports decreased markedly and remittances from overseas workers (another important source of foreign capital in the developing world) declined.6
In addition to the new constraints on government spending, the crisis also introduced financing constraints on private industry in the developing world. The crisis made corporate bonds expensive, suggesting new limits on fixed capital investment. Not only was the potential for private sector production growth limited by such credit constraints, but the drying up of trade financing further undermined the possibility of export revenue. The lack of liquidity for both governments and the private sector provided opportunities for the World Bank, both for its two lending wings, which provide financing for governments, and also for its private-sector financing branch. I review the crisis behaviors of each in turn.
IBRD/IDA Lending During the Financial Crisis
The International Bank for Reconstruction and Development (IBRD) is the original branch of the World Bank, created at the Bretton Woods Conference in 1944.7 The IBRD specializes in near-market-rate lending (so-called "hard lending") to mostiy middle-income countries. It raises most of its funds through the sale of investment-grade bonds on world financial markets. The International Development Association (IDA) is the concessional lending arm of the Bank. Established in 1960, it provides grants and interest-free loans ("soft lending") to the poorest countries in the world. IDA funds come largely from contributions made by wealthy countries in three-year cycles. The 15th replenishment of IDA took place in 2007 and funded lending from July 2008 to June 2010, while the 16th replenishment of IDA took place in 2010 and will fund lending from July 2011 to June 2014. According to the technical definition of development aid used by the Organization for Economic Cooperation and Development (OECD) Development Assistance Committee (DAC), nearly all IDA lending is classified as official development assistance (ODA) and nearly all IBRD lending is not. The World Bank describes a small number of countries as "blend" countries, which are both eligible for IDA's concessional financing and yet also sufficiendy creditworthy to borrow from the IBRD. In recent years, some of the World Bank's largest borrowers have been blend countries (e.g. India, Indonesia, and Pakistan).
In response to the outbreak of the financial crisis, the World Bank intensified lending from both the IBRD and the IDA. Notably, however, the growth in IBRD lending - that is, the growth in near-market-rate lending to middle-income countries - was significandy greater. Figure 1 shows trends in World Bank lending over the past decade. In fiscal year 2009, total World Bank lending increased by 90 percent from its 2008 levels. IBRD lending increased by 144 percent, whereas IDA lending increased by a more modest 25 percent. Comparing the amounts of lending in the two fiscal years before the outbreak of the global financial crisis to the two fiscal years after the start of the crisis (i.e. FY07 and FY08 to FY09 and FYlO), it can be seen that total IBRD lending almost quadrupled in this period (a 193 percent increase), while IDA lending increased by only 24 percent. Therefore, at first glance it would seem that the major strategy of the World Bank in response to the financial crisis was to substantially increase lending to middle -income countries.
With regard to IDA lending, the World Bank did put in place a fast-track procedure to increase the speed with which IDA funding could reach borrowing countries. Announced in December 2008, the Bank made $2 billion of IDA lending available for expedited approval for countries responding to the financial crisis. This was in addition to the $1.2 billion of IDA funds that already had been set aside in May 2008 for fast-track approval for those countries responding to the food crisis.8 The goal was to make funds available within one month, as compared to the traditional six weeks.9 Armenia and the Democratic Republic of Congo became the first two borrowers to access fast-track funds in February 2009. 10
Table 1 lists the top ten borrowers from the Bank overall and in terms of IBRD and IDA lending for the two years preceding the financial crisis as well as the two years following its outbreak. There is significant consistency across these lists in terms of borrowing countries, an indication that the Bank, in part, was providing crisis funding to its traditional partners. Six of the top ten borrowers in the total lending category for the two years following the start of the crisis were also on the list for the two years leading up to the crisis, and India was the largest overall borrower from the Bank in both periods. Similarly, there are six recurring countries on the list of the top ten IBRD borrowers across the two periods: Brazil, China, Egypt, India, Indonesia, and Turkey. The IDA is even more consistent - in part because IDA allocations across countries are determined by a set formula - with eight out of the ten borrowers from before the crisis listed as top ten borrowers after the start of the crisis.
The countries that saw major increases in borrowing and had not previously been listed among the Bank's top ten borrowers are notable for being middle-income countries that were presumably seeking access to new capital resources at a time when international credit markets were tightening. Mexico, which had borrowed $767 million from the IBRD in fiscal years 2007 and 2008, became the largest IBRD borrower in fiscal years 2009 and 2010, borrowing almost $10 billion from the Bank. In the two-year pre-crisis period, Poland borrowed $184 million from the IBRD for a single investment project; in the two-year crisis period, Poland received three major development policy loans from the IBRD totaling $3.9 billion. South Africa, which had not borrowed from the Bank since 2003, entered into a $3.8 billion investment loan with the Bank in fiscal year 2010. Of this middle-income country lending, World Bank President Zoellick said,
We are trying to help the Mexicos, the Indonesias, and others to try to have some modest defiat finanàng. At a time when the other finandal institutions in the world are in turmoil, we can lean forward to belp.11
Much of this new IBRD lending to middle-income countries came in the form of development policy loans, as can be seen in Figure 1. As compared to investment projects, which finance specific goods, services, and projects on the ground, development policy lending is a type of fast-disbursing budget support that ostensibly facilitates economic reform programs. In a time of crisis, when countries might need quick access to capital, development policy lending serves as a relatively quick way to get money into a national treasury. Figure 1 shows that the majority of the increase in IBRD funding came in the form of development policy lending, although investment lending also clearly rose substantially. From the pre-crisis period to the crisis period, IBRD development policy lending increased by 375 percent, whereas IDA development policy lending remained virtually unchanged. Countries receiving development policy loans of at least $1 billion from the IBRD in this period include Brazil, Hungary, India, Indonesia, Kazakhstan, Mexico, Poland, and Turkey. Major IDA development policy loans in the crisis period went to Pakistan ($800 million in three loans), Vietnam ($550 million in three loans), Tanzania ($520 million in two loans and one instance of supplementary financing) and Nigeria ($500 million in a single loan).
The idea that the Bank increased lending to middle-income countries during the crisis is reinforced by the data in Figure 2. The figure compares pre-crisis and crisis lending across the four Bank classifications of country wealth.12 As expected, the largest visible increase is in IBRD lending to middle-income countries, in both the lower middle-income and upper middle-income categories. IBRD lending to highincome countries - specifically Barbados, Croatia, Hungary, Latvia, and Poland - went from zero in the pre-crisis period to $6.4 billion in the crisis period. IDA lending to the poorest countries appears to have actually decreased in the crisis period, with most of the funding being re-allocated to the lower middle-income countries. The figure is somewhat misleading on this account, however, as ten countries13 transitioned from the category of low-income to lower middle-income countries during this time period. Therefore, we should not interpret the graph to mean that the IDA was derelict in its duty of providing financing to the poorest countries in the world.
Figure 3 shows the relationship between a country's level of development (as measured by its per capita GDP) and the amount of lending that it received, normalized by the size of its economy in the pre-crisis and crisis periods for both IBRD and IDA borrowers. The two plots in the top row demonstrate that IBRD lending became less responsive to level of development during the crisis period. In the data for the pre-crisis period, a 10 percent increase in per capita income corresponds to a 5 percent decrease in normalized lending flows. In the crisis period, however, a similar 10 percent increase in per capita income corresponds to only a 1 percent decrease in lending flows. However, this relationship is estimated with significant uncertainty. This is another sign that the IBRD became increasingly responsive to the needs of middle-income countries during the crisis.
The IDA, on the other hand, continued to distribute its resources in a fashion more proportional to its borrowers' wealth during the crisis, although the relationship weakened somewhat during the crisis period. In fiscal years 2007 and 2008, alO percent increase in level of development corresponded to 8.4 percent less IDA lending, whereas in fiscal years 2009 and 2010, a similar increase in level of development corresponded to 5.7 percent less IDA lending. (Both of these relationships are estimated with significant precision.)
Another point of entry for understanding World Bank lending during the crisis is to look at me relationship between World Bank and IMF lending. Previous research has found that World Bank and IMF lending are complementary: when a country is participating in an IMF program, it receives more World Bank lending, even when controlling for variables that might explain both types of transfers (e.g. economic growth rates or balance-of-payments figures).14 Figure 4 examines the relationship between World Bank and IMF lending before and during the crisis for both the IBRD and the IDA. In the left-hand panel, aid is normalized by population, and in the right hand panel, aid is normalized by the size of the country's economy. For either measure, IBRD borrowers that are in an IMF program do, in fact, receive larger IBRD lending packages than borrowers that are not in an IMF program. The magnitude of this increase changes little from the pre-crisis to the crisis period. By the measure in the left hand panel, IDA borrowers in an IMF program actually appear to receive lower levels of IDA lending as compared to those borrowers who are not in an IMF program, and this is true both in the pre-crisis and crisis periods. When aid is normalized by GDP rather than by population, there is evidence that IDA borrowers in IMF programs received more aid during the crisis period than did those borrowers that were not in an IMF program.15
In summary, comparing World Bank lending for the two fiscal years beginning July 1, 2008 to the two previous fiscal years shows that the near-market-rate lending wing of the Bank, the IBRD, dramatically increased its lending levels to provide a new source of financing for middle-income countries that were having a difficult time finding funding on international financial markets because of the onset of the crisis. Much of this new IBRD lending came in the form of quick-disbursing and relatively hands-off development policy lending as compared to investment project lending. The IDA, the Bank's lending vehicle for the poorest countries in the world, experienced less change than the IBRD. Its lending levels increased to a lesser extent, and the proportion of this lending that was development policy lending remained relatively constant. IDA lending did become somewhat less responsive to national income levels, suggesting that the IDA partially followed the IBRD's path by increasing lending to lower middle-income countries. In general, however, the IDA's poorer borrowers received significantly larger aid flows than did its relatively wealthier borrowers.
There are two important things to note about these patterns. First, the fact that IBRD lending increased more than IDA lending should not necessarily be read as any sort of failure on the Bank's part to fulfill its primary mission of supporting poverty alleviation in the poorest countries in the world. Given their deeper integration into global trade and finance networks, middle-income countries were in some ways more vulnerable than poor countries to potential fallout from the financial crisis. That the World Bank responded to this opportunity for increased middle-income country lending should not be a mark against the institution. In fact, that the Bank provided so much financing to middle-income countries serves as an important rebuttal to those who suggest that the Bank should reduce its scale of operations and concentrate strictly on programming in the least developed countries. When the global crisis arrived, the IBRD was present to provide needed financing to eligible countries who had not necessarily been borrowing regularly from the Bank in the years before the crisis. Arguably, this financing contributed to economic stability in these countries and beyond, illustrating the important role that the World Bank can play in contributing to overall global economic health.
Second, it is worth noting that increased IBRD lending helps to solidify the financial footing of the entire World Bank. Interest and repayments on IBRD loans contribute to the Bank's overall operational budget as well as to the lending budgets of the IDA and the IFC. Therefore, since the Bank made large loans to middleincome countries during the crisis, it can expect to reap financial benefits from these loans over the next two decades, benefits that will be passed along in some form to the poorer countries that borrow from the IDA.
The IFC During the Financial Crisis
The International Finance Corporation was created in 1956 with the goal of "unleashing the power of the private sector to help people escape poverty and improve their lives."16 Compared to the lending to national governments undertaken by the IBRD and the IDA, the IFC lends direcdy to the private sector in developing countries. Given the credit constraints in international financial markets created by the financial crisis, the World Bank recognized that the IFC could play a major role in providing liquidity support to businesses in developing countries and more generally working to facilitate the functioning of the global trade system. One way this was achieved was by increasing the size of the Global Trade Finance Program, a facility within the IFC that provides guarantees for trade-related payment obligations made by financial institutions, from $1 billion to $3 billion. In addition, the IFC created the $1 billion Global Trade Liquidity Pool Program Lo co-finance trade liquidity investments with commercial banks. In terms of support for other substantive economic sectors, the IFC also announced its intention to finance infrastructure and microfinance projects.17
Before the full-scale emergence of the financial crisis, when the World Bank was still focusing on the food price crisis, IFC lending already had been identified as one of the possible means of responding to rising food prices, since the organization could support the scaling up of agribusiness in Africa and improvements in global trade liquidity.18 However, Figure 5 suggests that overall IFC lending grew little during the crisis period. In fiscal year 2009, lending actually fell from its 2008 level, and while 2010 lending was greater than in 2008, the increase essentially only kept pace with the trend from the earlier period of the decade. As Table 2 shows, the top three borrowers remained the same in both the pre-crisis and crisis periods, as did an additional three of the top ten borrowers. Notably, the funds going to support global trade liquidity qualify as being among the ten largest destinations of IFC funding, suggesting the global orientation of IFC financing during the crisis.
In summary, despite the anticipated need for increased private sector financing during the crisis and the Bank's own emphasis on the IFC, we do not see evidence of the same changes in IFC lending patterns that we see for the IBRD and, to a lesser extent, the IDA. However, it is important to again offer some caution in interpreting these results. Insofar as the financial crisis reduced demand for private sector lending because of increased risk aversion among companies and entrepreneurs and broader systemic effects that made it harder to put together corporate financing schemes, it may be that the IFC simply had less of a role to play during the 2009 fiscal year. It is quite possible that without an increased emphasis on IFC lending within the Bank, the fiscal year 2009 lending numbers would have been even lower. Unfortunately, the available data do not allow us to fully examine this counterfactual scenario.
THE WORLD BANK'S ADVOCACY ROLE AND THE 2010 IDA REPLENISHMENT
In advance of the February 2009 World Economic Forum, and with the financial crisis in full effect, World Bank President Zoellick published high-profile op-ed articles in the JVw York Times and the Finandal Times calling for developed countries to dedicate 0.7 percent of their domestic economic stimulus packages to a vulnerability fund for developing countries.19 He offered that the World Bank, the United Nations, and the regional development banks could administer the funds, "us[ingj existing mechanisms to deliver funds fast and flexibly, backed by monitoring and safeguards so the money is well spent."20 At the same time, Zoellick also spoke out about how bank guarantee programs (such as the Troubled Asset Recovery Program in the United States) risked taking capital away from middle-income and developing countries.21 Through op-ed articles and public pronouncements, Zoellick fulfilled an important global advocacy role that the World Bank is poised to play. This advocacy by the World Bank was recognized within the NGO community, which has generally been fairly hostile to Bank activities.22 Samuel Worthington, the president of InterAction, the US-based NGO alliance, commented on this advocacy, stating, "InterAction is pleased that the World Bank continues to insert the needs of the world's poorest nations into the G-20 conversation."23
Ultimately, however, this rhetoric did not culminate in significant action by the world's richest countries. The vulnerability fund suggested by Zoellick never came to fruition, and bilateral donors have been relatively absent from conversations about foreign aid innovation in the context of the crisis. Given that the financial crisis originated in the developed world, the governments of the advanced economies of Europe and North America generally have been more concerned with tending to their own affairs in response to the financial crisis.
Although they might not have undertaken new innovations in response to the crisis, the developed countries did increase their IDA commitments substantially. The 15th IDA replenishment in 2007 yielded $42 billion for the following three years, with $25 billion coming from donor countries and the rest from repayments and interest. The 16th IDA replenishment in December 2010 yielded donor pledges of $31.7 billion and a total fund of $49.3 billion, an 18 percent increase.24 However, compared to the size of stimulus spending packages around the world, estimated at about $2 trillion in early 2009, this increase remains relatively small.25
When the sub-prime mortgage crisis in the United States truly became a global financial crisis in September 2008, the World Bank already was trying to use its lending streams to address food and fuel crises in the developing world brought about by rising commodities prices. The Bank built on its food crisis lending in order to help developing and middle-income countries respond to the financial crisis. Reviewing the patterns in lending for both the IBRD and the IDA, it can be seen that the World Bank's new efforts largely provided financing to middle-income countries - lending flows to these countries almost doubled compared to the two years before the crisis. The Bank was able to mobilize these lending flows largely in the form of fast-disbursing development policy loans, thereby putting large amounts of capital into national treasuries quickly and with fewer restrictions than would be the case with investment project lending. Lending from the IDA also increased, and a fast-track facility was created within the IDA, but the substantive changes in lending patterns were not as pronounced.
The World Bank spoke about an increased role for IFC lending in the financial crisis, but immediately after the start of the financial crisis, IFC lending actually decreased from the pre-crisis period. The countries receiving IFC lending during the crisis period did not change significantly from the pre-crisis period, although there is evidence of the IFC providing important funding for global trade liquidity.
At the same time, World Bank President Zoellick tried to use his bully pulpit to encourage increased foreign aid from the wealthiest countries in the world. Invoking the internationally agreed upon - but rarely reached - foreign aid target of 0.7 percent of GDP, Zoellick called for the world's richest countries to devote that proportion of stimulus funding to development aid.26 There is little evidence of developed countries taking up this call, and although the most recent round of IDA replenishment did augment the available World Bank capital to be used in the developing world, this increase pales in comparison to the amount of resources devoted to bank and industrial bailouts found in other stimulus packages around the world.
What can we infer from this evidence about what the World Bank should be or should become? As compared to those who would argue that the Bank's most important role is as a "knowledge bank"27 and not as a financing institution, IBRD lending patterns during the global financial crisis show that the World Bank may continue to have a very important financing role to play. Similarly, there are those who suggest that the World Bank should become a "niche bank" and lend only to the poorest countries.28 To this claim, IBRD activity over the last two fiscal years shows that there is substantial demand well beyond this niche and that the Bank's ability to meet this demand means access to a valuable alternative financing stream during periods of credit constriction and financial stress.
Although it is difficult to assess the counterfactual of what might have happened to the middle-income countries that drew on the Bank's resources in the absence of the World Bank, we can point to those countries as having survived the financial crisis and contributed to global economic recovery and conclude that World Bank financing played at least some role in this. The IBRD's ability to provide these financing streams may very well remain an important component of global financial stability in the future.
Finally, this financing to middle-income countries will also ultimately translate into lending for lower-income countries. As IBRD loans are repaid, the interest and fees associated with those loans will become increased IDA resources that are available for the poorest countries of the world in the form of concessional lending. Although not as immediate a source of development financing as some might like, the availability of this money does speak to the positive externalities of the lending that the Bank has done in the context of the crisis and provides some hope that the trend of lending to relatively well-off countries ultimately can contribute to the Bank's long-term mission of poverty alleviation and development in the poorest places in the world.
TABLES AND FIGURES
BY THE TIME THE GLOBAL OUT IN THE FALL OF 2008, THE WORLD BANK HAD IN SOME WAYS ALREADY BEEN ON A WAR FOOTING, RESPONDING TO CHANGES IN SOME OF THE LEADING GLOBAL ECONOMIC INDICATORS.
PREVIOUS RESEARCH HAS FOUND THAT WORLD BANK AND IMF LENDING ARE COMPLEMENTARY.
1 "Developing Countries Face Triple Hit from Food, Fuel and Financial Crises," World Bank, Available at: http://go.worldbank.org/5HJ4AQlA40 (accessed February 18, 2011).
2 "World Bank President Calls for Plan to Fight Hunger in Pre-Spring Meetings Address," World Bank, Available at http://go.worldbank.org/6MAUFSQ8C0 (accessed February 18, 2011).
3 Robert Zoellick, "A Challenge of Economic Statecraft," (speech at Center for Global Development, Washington, DC, April 2, 2008), Available at: http://go.worldbank.org/NVCN2DUUF0 (accessed February 25, 2011).
4 "Food Crisis: What the World Bank is Doing," World Bank, Available at: http://www.worldbank.org/foodcrisis/bankinitiatives.htm (accessed on February 4, 2011).
5 It can also be argued, however, that this was less of a challenge than in the past because of higher levels of foreign exchange reserves and lower levels of external debt among emerging market economies. Stephany Griffith-Jones and José Antonio Ocampo, "The Financial Crisis and Its Impact on Developing Countries," United Nations Development Programme Working Paper, Available at: http://www.undgpolicynet.org/ext/economic_crisis/UNDP_-_The_Financial_C.pdf (accessed February 27, 2011).
6 Stijn Claessens, 'The Financial Crisis: Policy Challenges for Emerging Markets and Developing Countries," PEGGED Policy Paper no. 6 (2009), Available at: http://pegged.cepr.org/files/poucy_papers/WP2_6th%20Policy%20Paper_Claessens.pdf; Machiko Nissanke, "The Global Financial Crisis and the Developing World: Transmission Channels and Fall-outs for Industrial Development," United Nations Industrial Development Organisation Research and Statistics Branch Working Paper, Available at: http://www.unido.org/ fileadmin/user_media/Publications/RSF_DPR/WP062009_Ebook.pdf (accessed February 27, 2011); The decline in remittances was much less significant than some had anticipated and less significant than the declines in foreign direct investment and portfolio equity; Dilip Ratha and Ibrahim Sirkeci, "Editorial: Remittances and die Global Financial Crisis," Migration Letters, no. 7 (2010): 125-31.
7 For a useful overview of the World Bank Group, see Ngaire Woods, The Globali^ers: The IMF, the World Bank, and Their Borrowers (Ithaca: Cornell University Press, 2006).
8 "World Bank Group Fast-Tracks $2 Billion for Financial Crisis," World Bank, Available at: http://go. worldbank.org/WH4CK46A40 (accessed February 25, 2011); "World Bank Launches $1.2 Billion Fast-Track Facility for Food Crisis," World Bank, Available at: http://go.worldbank.org/2VMOHRKEY0 (accessed February 25, 2011).
9 Kate Byron, "World Bank Offers $2B to Developing Nations," CNN.com, Available at:, http://edidon.cnn.com/2008/BUSINESS/12/ll/world.bank/index.html (accessed February 25, 2011).
10 "World Bank Approves First Fast Track Assistance Programs," World Bank, Available at: http://go.worldbank.org/CP5ZJDJS20 (accessed February 25, 2011).
11 Alan Beattie, "Zoellick Warns of Fallout from Bank Guarantees," Financial Times, Available at: http://www.ft.eom/cms/s/0/336c973e-ecbe-lldd-a534-0000779fd2ac.html#axzzlCvQDqepa (accessed February 25, 2011).
12 As of 2010, countries with a GDP per capita of less than $975 are labeled Low Income; those between $975 and $3,855 are Lower Middle-income; those between $3,856 and $11,905 are Upper Middle-income; and those greater than $11,455 are High Income. The specific ranges change every year.
13 Cote d'Ivoire, India, Nigeria, Pakistan, Papua New Guinea, Sao Tome, Senegal, Uzbekistan, Vietnam and Yemen.
14 Axel Dreher, Jan-Egbert Sturm, and James Raymond Vreeland, "Development Aid and International Politics: Does Membership on the UN Security Council Influence World Bank Decisions?" Journal of Development Economics no. 88 (2009): 1-18; Matthew S. Winters, "Choosing to Target: What Types of Countries Get Different Types of World Bank Projects," World Politics no. 62 (2010): 422-58.
15 Across all eight comparisons, none of the differences are found statistically significant at the 95 percent confidence level using a conventional difference in means test. Similarly, in linear regressions controlling for GDP per capita and population and predicting total lending levels, IBRD lending or IDA lending, an indicator for being in an IMF program is not a statistically significant predictor at conventional levels.
16 "International Finance Corporation," IFC History, Available at http://www.ifc.org/ifcext/about.nsf/AttachmentsByTide/ifchistory.htm/$FILE/ifchistory.htm (accessed February 25, 2011).
17 "World Bank Group Response to the Financial Crisis," World Bank, Available at: http://www.worldbank.org/financialcrisis/pdf/WBGResponse-VFF.pdf (accessed February 25, 2011); International Finance Corporation, "Global Trade Finance Program: Opportunities in Financial Markets," Available at: http://www.ifc.org/ifcext/gfm.nsf/ AttachmentsByTitle/TF-BrochurePocketFolder/$FILE/TFBrochurePocketFolder.pdf (accessed February 25, 2011).
18 Zoellick, "A Challenge of Economic Statecraft."
19 Robert Zoellick, "A Stimulus Package for the World," New York Times, Available at: http://www.nytimes.com/2009/01/23/opinion/23zoellick.html (accessed February 25, 2011); Robert Zoellick, "Time to Herald the Age of Responsibility," Financial Times, Available at: http://go.worldbank.org/SUQ5XMGFA0 (accessed February 25, 2011); "Zoellick Calls for "Vulnerability Fund' Ahead of Davos Forum," World Bank, Available at: http://go.worldbank.org/76ElGRKBN0 (accessed February 25, 2011).
20 Zoellick, "Time to Herald."
21 Beattie, "Zoellick Warns."
22 Sebastian Mallaby, The World's Banker: A Story of Failed States, Financial Crises, and the Wealth and Poverty of Nations (New York: Penguin, 2004).
23 "Low-Income Countries Face Long Recovery - Serious Challenges Require More and Better Support," WorldBank, Available at: http://go.worldbank.org/W725NIA7R0 (accessed February 25, 2011).
24 Howard Schneider, "Donors Pledge $49.3 Billion to World Bank Fund for Poor Nations," Washington Post, Available at: http://www.washingtonpost.com/wpdyn/content/article/2010/12/15/AR2010121507437.html (accessed February 16, 2011).
25 Sameer Khatiwada, "Stimulus Packages to Counter Global Economic Crisis: A Review," International Institute for Labor Studies Discussion Paper, Available at: http://www.ilo.org/public/Ubdoc/ilo/2009/109B09_49_engl.pdf (accessed February 25, 2011).
26 On the 0.7 percent target, see Michael A. Clemens and Todd J. Moss, "The Ghost of 0.7%: Origins and Relevance of the International Aid Target," International Journal of Development Issues no. 6 (2007): 3-25.
27 This idea was emphasized during James Wolfensohn's tenure at the Bank. See World Bank, World Development Report 1998/99: Knowledge for Development (Washington, DC: World Bank, 1998); David A. Phillips, Reforming the World Bank: Twenty Years of Trial- and Error (New York: Cambridge University Press, 2009).
28 See Anne O. Krueger, "Whither the World Bank and the IMF?" journal of Economic Literature 36:4 (December 1998): 1983-2020; Allan H. Meltzer, Report of the International Financial Institution Advisory Commission, report to the U.S. House of Representatives, March 2000. For the terminology "niche bank," see Jeffrey R. Pincus and Jeffrey A. Winters, eds., Reinventing the WorldBank (Ithaca, NY: Cornell University Press).
Matthew S. Winters is an assistant professor of political science at the University of Illinois at Urbana-Champaign.…
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Publication information: Article title: The World Bank and the Global Financial Crisis: The Reemergence of Lending to Middle-Income Countries. Contributors: Winters, Matthew S. - Author. Journal title: The Whitehead Journal of Diplomacy and International Relations. Volume: 12. Issue: 2 Publication date: Summer 2011. Page number: 57+. © Seton Hall University, School of Diplomacy & International Relations Summer 2009. Provided by ProQuest LLC. All Rights Reserved.
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