Post on 14-Apr-2018
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The World Bank
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Structure and Objectives of
Lecture Section One: The founding principles of the
World Bank and the History of the WorldBank until 1981 (Berg Report)
Section Two: Critically examine the WorldBanks structural adjustment policies in the1980s
Section Three: Examine the main tenants ofthe Banks contemporary polices/project
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Section Four: Raise some conceptual issuesabout how we conceptualise the banksrelationship with clients and otherinternational institutions
At the end of lecture you should have a clear
sense of the manner in which the Worldbanks policies have evolved over time andthe main debates surrounding the Bankscontemporary polices.
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Section One
The World Bank Group actually consists offive institutions
The International Bank for Reconstructionand Development (IBRD), established in1945, which provides debt financing on thebasis of sovereign guarantees.
The International Finance Corporation (IFC),established in 1956, which provides variousforms of financing without sovereignguarantees, primarily to the private sector.
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The International Development Association(IDA), established in 1960, which providesconcessional financing.
The Multilateral Investment GuaranteeAgency (MIGA), established in 1988, whichprovides insurance against certain types ofrisk, including political risk, primarily to theprivate sector.
The International Centre for Settlement ofInvestment Disputes (ICSID), established in1966, which works with governments toreduce investment risk.
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Five purposes:
Assist development and reconstruction
To promote long term balancedinternational trade
To lend for project development
To conduct its operations with dueregard to business conditions
Promote private investment
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Reconstruction alludes to its proposed
role in rebuilding war ravaged
economies of Europe and Japan However the Banks role in the entire
enterprise was negligible
Bank intervened within and supportedpost-colonial states
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In contrast to the WTO the World Bank is aninternational organisation in a sense that canbe relatively easily understood
It has a large staff and an executive boardwho are appointed by its largest contributors
Its head is always a American (current
Wolfowitz). United States holds 16.4% of totalvotes, Japan 7.9%, Germany 4.5%, and theUnited Kingdom and France each held 4.3%
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In the 1950s and 1960s the Banklargely serviced the agenda of post-
colonial state elites Project based lending
$1 Billion support to Tanzanian statist
modernisation project Very poor auditing
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Banks capacity to dominate the development
agenda limited by 3 factors
Dominance of the idea of state leddevelopment
The international moral standing of post-colonial leaders
The relative health of post-colonialeconomies
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GDP growth per capita in Sub-SaharanAfrica
1960-74 :1.9
1974-1990: 0.7
1990-2000: 0.3
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1970s witnessed a massive increase inprivate lending to the third world
Bank mirrors this overall increase
Lending to Sub Saharan Africa rosefrom less than $2 billion in 1969 to over
$12 billion in 1981
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National Development Projects in 3rdworld literally living on borrowed time
Between 1970 and 1978 Sub SaharanAfrican debt rose from $9 billion to $60billion
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National Development Projects in3rd World literally living on
borrowed time
Between 1970 and 1978 Sub
Saharan African debt rose from $9billion to $60 billion
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Robert McNamara powerful head ofBank with clear anti-poverty agenda
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Second Two
By end 1970s it is clear that NationalState-led Development had run its
course (and in most cases failed) Recession following 1979 OPEC price
increases drove economies over theedge
Election of Thatcher and Regan (newideational climate)
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Berg Report 1981(Accelerated Developmentin Africa: An Agenda to Action)
The Problem is the post-colonial state. Theanswer less state and more market
Conditionality
The Conditions: Open Up, Privatise, De-regulate, Control Inflation and Cut PublicSpending
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Social spending declined by 26% from1980 and 1985 in Sub Saharan Africa
Even in there own terms SAPs were acomplete disaster
Growth was negative (even worse than
macroeconomic statistics suggest), noinflux of private investment or growth inexports
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Why did they fail?
Failure to Implement properly (Yes)
Dreadful Initial starting point (Yes)
Fundamentally misunderstood thenature of the problem and the waymarkets work (The Bank itself nowlargely accepts this)
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Many states in question were predatory butthey were also weak (The Weberian
substance of the state was weak). SAPsweakened them future.
Markets require elaborate institutionalframeworks and certain basic public goods to
function properly. In the absence of aeffective state the formal policy stance ofgovernment is largely irreverent
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Section Three
Post-Washington Consensus: TheWorld Bank rediscovers the state
What new and what is not new aboutthe Post-Washington consensus?
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What stays the same is the basicemphasis on private enterprise (logics
of capital) and no change in the contentof macroeconomic policy
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New emphasis on importance of regulationand the provision of basic public services
If the Washington consensus sought tobypass the state the post-Washingtonconsensus seeks to remake the state andsociety (social capital)(reengagement with
Webarian project)
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Post-conditionality: It is not enough forcountries to be forced to reform they must bemade to actively support reform
The paradox of ownership: With the formationof comprehensive development frameworkand PRSP bank is extending its remit to allaspects of policy. Here is the policy you mustown it
Yet the focus on ownership is real
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Bank seeks to integrate itself into thestate by establishing join committees
within key domestic ministries
Whole project is supported by clear
emphasis on transparency(The WorldBank governance frameworks)
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The meat of the Banks project is to create
functional capitalist states in the periphery
and to integrate the entire population of theworld into the capitalist system
Surprisingly, critics and supporters essentially
agree on content of the project. Although thelanguage they use is very different
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For the Bank it is simple the Poor'smost valuable asset is their labour.
Thus the key to ending poverty is toextend capitalist markets, give the poorbasic healthcare and education (so that
are employable), and create billions of$2 a day jobs
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Its critics (Cammack Attacking the Poor)stress the problems associated with exposingthe poor to the vagaries of the market and the
inability of capitalism to end poverty due to itsneed for a lumpenproleteriat.
We shall return to question of whether theBanks policies can reduce/ elimate poverty inthe conclusion. Prior to this lets examinesome conceptual issues we face in studyingthe contemporary bank.
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Section Four
Conceptual issues about how we understandrelationship between states and the World
Bank There is little sense in understanding the
Bank as a external actor when we study itsrelationship with very poor clients (not India,
China or middle income states)
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1990s 30% of Tanzanian GDP wasBank support
1990-2003 55% of Ugandan publicspending was external aid
1990s in Mozambique 50% of
government spending externally funded,75% of public investment
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The World Bank constitutes an integralpart of the state
Harrison idea of an sovereignty frontieris a useful one in helping us understandthe relationship
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World bank part of a broader project to
extend and deepen capitalist disciplines(think back to the WTO)
Also other traditionally more left leaninginstitutions (UNCTAD) have beenincorporated Monterey Consensus2002
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Conclusions
Following the failure of state led developmentin LDCs and crude neo-liberalism the WorldBank is now engaged in project of creating
capitalist states and societies not simplycapitalist markets (Sophisticated neo-liberalism)
Given that it is a attempt to reengineer statesfrom without and extend global systemiclogics the project is clearly imperialist
This does not necessarily mean it is wronghowever.
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In my view what matters is the extent to whichit delivers on its promise to reduce povertyand create functioning states.
There are success stories (Mozambique,Uganda and Tanzania), although it is difficultto ascertain if this is because of massive aidor the policies pursued. The World Bank getstrapped in these states by ideational andfinancial investments
Also the project has an undeniable logic
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On the other hand..
Evidence of a wider upturn is limited (Wade)
In fairness to the Bank it is constrained by theconsistent failure by core capitalist states todo what it believes is required. Open markets,engage in massive debt restructuring and
increase aid
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Also Quality of Clients (although thepoint about Post-Washington
consensus is that you can transformclients)
Time will tell!
What is clear is how the Banks projectfits into broader globalisation project(think back to firms, Harvey and WTO)
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Looking forward it also clear role thisinstitution plays in the Global
surveillance regime. The subject of nextweeks lecture!