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Efforts to reform the World Bank


 Such efforts tend to go in circles. Today's reform is to undo yesterday's reform, and tomorrow's reform will be to recreate the one that we undid today. 

It doesn't work day-to-day though.  But year by year and decade by decade.

This is one conclusion one draws from the book REFORMING THE WORLD BANK: TWENTY YEARS OF TRIAL -- AND ERROR by David A, Phillips,

The"20 years" number in the subtitle indicates that Phillips focuses especially upon the period 1986 -- 2006, beginning with the appointment of Barber Conable, a former member of the US House of Representatives.  That was a time of great concern about Latin American indebtedness to the big New York and London banks, and worry about what a wave of defaults would do to those institutions. That concern led to the Baker plan in the middle of the decade, followed by the creation of "Brady bonds" to allow debt relief short of open default. 

In this fraught context, Conable immediately hired an outside consulting firm to advise him on what organization changes needed to be made to the Bank.  

I've already clued you in to Phillips' conclusion, which is that the waves of re-engineering then and over the following twenty years  each had more negative than positive effects. They had left the bank "more bureaucratic, more enmeshed in confusing objectives, more hostage to outside pressure, and more subject to overcomplex projects" than it had been before.  

What they have NOT made it is better positioned to fight poverty. What they also have not done is to make themselves better at promoting development.

Indeed, those are two very different projects, and they sometimes get in each others' way. To speak generically: a policy of helping country X develop/industrialize may well involve putting money into the hands of some of the relatively well-off residents of X. That in turn may make them better able to pay off bonds reliably over time to the World Bank and the sort of private sector institutions that required help from Baker and Brady. 

The recipients of loans to build a hydroelectric dam will not be starving folks in need of imminent rescue. The two goals are so different they should probably be addressed by different institutions so as not to get in each others' way.  This seems to be Phillips point. 

 


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