World Bank And Sustainable Development Essay Research

World Bank And Sustainable Development Essay, Research Paper

Since the 1950’s the World Bank has had an indifferent, to say the least, affect on theThird World. The actions of the Bank have always come under severe scrutiny because of theimportant role it plays in many lives of Third World peoples. This paper will outline therole of the Bank; some of the arguments against its policies, power, and influence; reasonswhy the Bank has found it difficult to achieve favourable outcomes in its policies; andwhether it has in fact been beneficial to the people it claims to help. The World Bank wasset up initially as an aid organisation to help “foster the reconstruction of Europe, andlater guarantee loans made by private banks for projects in the poorer, developingcountries”1. The former of the objectives never eventuated to the extent of its founders’hopes. The World Bank ( otherwise known as the Bank ) was subjugated to a minor role in thepost war reconstruction of Europe, due to the more robust influence and attraction of theMarshall Plan. Of the $41.8 billion in loans, made in the decade after the end of the war,only $497 million was disbursed from the Bank. This was a result of the war-torn countriesneeding “rapidly disbursed grants and concessional loans for balance of payments support andimports necessary to meet basic needs.”2 The Bank, on the other hand, provided loans forspecific projects that required lengthy preparation. Thus, the Banks diminished role inEurope, lead it to focus its lending to Third World countries, and this became the core ofits operations from the 1950’s. The World Bank’s goal to “reduce poverty and improve livingstandards by promoting sustainable growth and investments in people”,3 has been challengedby many, who all see the role of the Bank being either detrimental to the economy’s of thecountries it is supposed to help, or the social cost being too high for the economicprograms being put in place. A number of arguments, have been developed that make light ofthe Banks preponderant shortcomings and its many social inequities. It must be said that a full analysis of the Bank short comings could include thousands of pages. This paper will,however, take only a representative few, which it is hoped can suffice a fair and broadanalysis. These are described below. The World Bank, in the opinion of Yunus4, hassingle-mindedly pursued growth until it is distracted by other issues such as hunger, women,health, the environment, etc. The Bank then tries to adapt itself to these considerationswithout giving up its basic goal and adopting these issues as rhetoric, but they are seldomput into action. This ineffective action may be explained by two factors. Firstly, thetheoretical framework within which the Bank operates does not assign any urgency or primacy to poverty reduction, thus its pronouncements only get prescribed through humanitarianadd-ons, such as safety-net programs. Secondly, Bank staff were not employed to eliminatepoverty, but for qualities that may not have immediate relevance for poverty reduction;meaning they are not the right people to undertake such sensitive social projects as theWorld Bank does. Susan George, a long time critic of the World Bank, sees the role of theBank being purely to make sure the debt of Third World countries is being serviced5. Sheclaims that the Bank presides over a net outflow of capital from the Third World, which will continue to further drive their economy’s into ruin and poverty. At the same time the Bankhas enforced structural adjustment programs that have cured very little at all. Georgebelieves that these economic policies have caused “untold human suffering and widespreadenvironmental destruction,” emptying debtor countries of their resources and rendering themless able each year to service their debts, let alone invest in human capital. The policies inherent in creating such harmful effects are, according to George, the result of a capitalintensive, energy-intensive, unsustainable Western model of development, which is onlyfavourable to Third World elites, Northern banks and multinational corporations. SusanGeorge, believes that the World Bank has induced social and economic outcomes whichultimately affect the Western world in adverse ways. These outcomes she describes as debtboomerangs,6 and are described below. The first “boomerang” is debt induced poverty. Thiscauses Third World people to exploit natural resources in the most profitable and least sustainable way, causing an increase in global warming and a depletion of geneticbio-diversity, thus affecting all citizens of the world. Secondly, the illegal drug tradefor heavily indebted countries, like Peru, Bolivia, and Colombia, is their major exportearner. Thus giving them little alternative, but to condone such activities. The social andeconomic costs of drug consumption in the US alone, has cost $60 billion. Thirdly, Westerngovernments have allowed their banks tax concessions so they may write off so-called “baddebts” from Third World countries. However this has not reduced the real debts of poor countries, and in the case of the UK has cost the government $8.5 billion. Fourthly, therehave been lost exports to Western countries from the Third World due to the burden of highdebt servicing costs. It has been estimated that this accounts for one fifth of total USunemployment. Fifthly, legal and illegal immigration from the Third World has resulted in100 million economic