The Guardian August 23, 2000

"More world, less bank"

by Mark Weisbrot*

Every month the World Bank gets hit with another scandal or resignation 
that sends its hefty public relations operation into overdrive, working on 
damage control.

The Bank's latest embarrassment follows a very disturbing resignation last 
month by Ravi Kanbur, a Cornell University economist who was lead author of 
the World Bank's influential 2000 World Development Report.

Kanbur quit because he came under pressure, reportedly from the US Treasury 
Department, to alter the manuscript so that it would conform to the 
IMF/World Bank/Treasury's orthodoxy on globalisation.

That orthodoxy maintains that the opening of markets to international trade 
and investment is the most important policy that governments can adopt.

Challenges to this view have been gathering momentum over the last few 
years, in both developed and underdeveloped countries.

Kanbur's resignation is looking like a sequel to that of Joseph Stiglitz, 
who was the Bank's chief economist until December of last year. He was 
forced out after he criticised the IMF's costly mistakes in the Asian 
financial crisis, and in Russia.

The World Bank and the IMF insist that they know what's best for every 
country, and that their policies promote growth and development.

These claims are generally accepted at face value, in many cases even by 
their opponents. In fact, critics often accuse the Bank and the Fund of 
being overly concerned with economic growth, and not paying enough 
attention to the needs of the poor or to protection of the environment.

But their record on economic growth is their most spectacular failure. Over 
the last 20 years, low and middle-income countries throughout the world 
have implemented the economic policies of the World Bank and the IMF  
often under the threat of economic strangulation.

The worst disaster has been in Russia and the states of the former Soviet 
Union, which lost more than 40 percent of their national income in the 
1990s. This is worse than our own (US) Great Depression.

Income per person in sub-Saharan Africa has declined about 20 per cent over 
the last 20 years. In Latin America, it has barely grown: maybe seven per 
cent over the whole two decades. By contrast, both of these regions showed 
vastly superior economic growth in the previous two decades, before the IMF 
and Bank's "structural adjustment" policies become the norm.

From 1960 to 1980, income per person grew 34 per cent in Africa, and 73 per 
cent in Latin America.

The only region that has grown rapidly over the last 20 years has been 
South and East Asia. But this region had similarly rapid growth in the 
previous two decades. And these are the countries that have most 
disregarded Washington's instructions.

China, which quadrupled its national income over the last 20 years, does 
not even have a convertible currency.

In short, there is no region in the world that the Bank and the Fund can 
claim as a success story; while their failures have been widespread and 
devastating. That is why their top officials, when they are questioned 
about these issues, will point to an individual country's progress over a 
relatively short period of time.

For example, in a recent New York Times article, US Treasury 
Secretary Larry Summers cited Uganda and Poland as success stories for 
their economic model. But Uganda, despite seven years of growth, is still 
30 per cent below its per capita income of 1983.

And Poland is very unrepresentative of the IMF's work in Eastern Europe and 
the former Soviet Union.

Sadly, most of the 19 "transition economies" in that region are still 
living far below their 1989 levels of income. Perhaps the attention of 
reformers should turn to downsizing these institutions  with their 
unchecked power, an incredibly long string of failures, and no serious 
reform in sight.

The simple slogan of the protesters who gathered outside the World Bank and 
IMF headquarters last April may turn out to be the best strategy for 
reform: "More World, Less Bank."

* * *
*Mark Weisbrot, PhD. is an economist and research director at the Preamble Center in Washington, DC. His latest book is Social Security: The Phony Crisis (with Dean Baker), 1999, University of Chicago Press. People's Weekly World, paper of Communist Party, USA.

Back to index page