The World Bank is prepared to fight another war on poverty but it does not seemed to have learned anything from its past failures in its efforts to cut poverty rates.
On March 18, Monterrey, Mexico, will host a United Nations summit on special problems in development. World Bank chief James Wolfensohn is running around saying that the current gap between the developed and the developing worlds is “unacceptable” and that nations could no longer afford to tolerate “a wold where less than 20 percent of the population dominates the world’s wealth and resources and takes 80 percent of its dollar income.”
The World Bank wants massive increases in foreign aid to reach $40 to $60 billion. Of course, the United States is raining on the World Bank’s parade.
What exactly is the point of simply throwing more money at the developing world, again. This effort was tried in the 1960s-1980s to largely disastrous results. Such aid did nothing to solve the developing world’s structural problems such as corruption and a lack of respect for human rights. In some cases, in fact, the aid clearly reinforced those trends by subsidizing corrupt regimes.
U.S. Treasury Secretary Paul O’Neill puts a damper on the whole affair, noting that past World Bank/IMF efforts to relieve poverty had the perverse effect of reinforcing poverty. Rather than billions in new loans for countries, O’Neill wants the world community to emphasize smaller grants sent directly to non-governmental organizations to use to fight poverty and disease. In addition, O’Neill says countries and the international community must do more to improve private investment flows to improve the economies of the developing world rather than see them constantly at the mercy of World Bank loans.
Of course those ideas don’t exactly make O’Neill a very popular man. As the BBC editorializes in its “news” story, “many developing countries will see a conference which yields little in terms of concrete results as a signal that the world’s rich countries are no longer interested in that goal.” But fixing the developing world’s problems is a two-way street that will require those nations to get serious about eliminating corruption and having more respect for democracy and human rights. Just throwing billions of dollars in loans at these countries isn’t going to solve anything.
Source:
World Bank’s war on poverty. Steve Schifferes, The BBC, March 6, 2002.