7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 1/17
1
THE UNIVERSITY OF ZAMBIA
SCHOOL OF HUMANITIES AND SOCIAL SCIENCES
DEPARTMENT OF DEVELOPMENT STUDIES
.
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 2/17
CONTEMPORARY ECONOMIC POLICYREFORMS.
2
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 3/17
World Bank Group (WBG)
• The group consists of five (5) international organisationsresponsible for providing finance and advice to member countries for the following purposes;
– Economic development
– Poverty reduction
– Encouraging and safeguarding international development.
• Like the IMF, it is also headquartered in Washington DC,with a membership of about 192 .
3
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 4/17
The World Bank Group headquartersin Washington, DC.
4
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 5/17
WBG Agencies
The World Bank Group consists of;
• International Bank for Reconstruction and
Development (IBRD), established in 1944, which provides
debt financing on the basis of sovereign guarantees aims to
reduce poverty in middle-income and creditworthy poorer
countries by promoting sustainable development through
loans, guarantees, risk management products, andanalytical and advisory services. Established in 1944 as the
original institution of the World Bank Group, IBRD is
structured like a cooperative that is owned and operated for
the benefit of its 187 member countries (1,2);• International Finance Corporation (IFC), it was
established in 1956, is the largest global development
institution focused exclusively on the private sector in
developing countries. It provides various forms of
financing without sovereign guarantees. 5
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 6/17
WBG Agencies
The World Bank Group consists of;
• International Development Association (IDA),
established in 1960. It is concerned with public sector
lending. It provides concessional financing (interest-free
loans or grants), usually with sovereign guarantees (2);
• International Centre for Settlement of Investment
Disputes (ICSID), established in 1966. It works withgovernments to reduce investment risk by helping settle
investment related disputes between TNCs and host
countries.
• Multilateral Investment Guarantee Agency (MIGA),founded in 1988, which provides insurance against certain
types of risk, including political risk, primarily to the
private sector.
6
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 7/17
WBG activities in the Global South
• Provision of preferential loans and grants
• Emphasis placed in fields of human development such as
education, health, agriculture and rural development
(irrigation and rural services), environmental mitigation,
infrastructure development and governance issues.
• Washington, DC, January 18, 2012 — Developing
countries should prepare for further downside risks, as
Euro Area debt problems and weakening growth in several big emerging economies are dimming global growth
prospects, says the World Bank in the newly-released
Global Economic Prospects (GEP) 2012
7
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 8/17
WBG Presidency
8
Conventionally, the Bank President has always been
a U.S. citizen nominated by the President of the United
States, the largest shareholder in the bank.
The nominee is subject to confirmation by the Board of
Governors, to serve for a five year, renewable term.
Current President ,Robert Zoellick (1,2).
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 9/17
WBG Governance
• The institutions of the World Bank Group are all run by a Board
of Governors meeting once a year.
• Each member country appoints a governor, generally its
Minister of Finance.
• On a daily basis the World Bank Group is run by a Board of 24Executive Directors to whom the governors have delegated
certain powers.
• Each Director represents either one country (for the largest
countries), or a group of countries. Executive Directors areappointed by their respective governments or the constituencies.
• The agencies of the World Bank are each governed by their
Articles of Agreement that serve as the legal and institutional
foundation for all of their work.
9
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 10/17
WBG Voting Rights.
• Votes are proportional to shareholding.
• Membership gives certain voting rights (basic votes)
that are the same for all countries but there are also
some additional votes which depend on the member’s financial contributions to the organization
• As of November 15, 2009 the United States held
16.4% of total votes, Japan7.9%, Germany 4.5%, the
United Kingdom 4.3%, and France 4.3%. As changesto the Bank's Charter require an 85% super-majority,
the US can block any major change in the Bank's
governing structure.10
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 11/17
WBG Voting Rights.
• In 2010, voting powers at the World Bank were revised to increase the
voice of developing countries, notably China. The countries with most
voting power are now the United States (15.85%), Japan (6.84%),
China (4.42%), Germany (4.00%), the United Kingdom (3.75%),
France (3.75%), India (2.91%), Russia (2.77%), Saudi Arabia (2.77%)and Italy (2.64%).
• Under the changes, known as 'Voice Reform – Phase 2', countries
other than China that saw significant gains included South Korea,
Turkey, Mexico, Singapore, Greece, Brazil, India, and Spain. Most
developed countries' voting power was reduced, along with a few poor countries such as Nigeria. The voting powers of the United States,
Russia and Saudi Arabia were unchanged (1).
11
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 12/17
12
In the recent past, the WBG and IMF policies are often equated
with neo-liberalism and market-fundamentalism. They have
thus, attracted street protests and in some cases violent riots.
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 13/17
13
Critic to WBG Policies
• The World Bank has been subject to long standing criticismfrom a wide range of non-governmental organizations and
some academics, notably including its former Chief Economist Joseph Stiglitz, who is equally critical of theInternational Monetary Fund and other internationalorganizations.
• In some cases, the WB’s own internal evaluations have
produced negative conclusions. It is criticized along thefollowing lines;
– Critics argue that the so-called free market reform policies – which the Bank advocates for in many cases – in practice areoften harmful to economic development if implemented badly,too quickly ("shock therapy"), in the wrong sequence, or invery weak, uncompetitive economies. World Bank loanagreements can also force procurements of goods and servicesat uncompetitive, non free-market prices (Stiglitz, 2003).
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 14/17
Critic to WBG Policies
It is viewed to be a tool for the US and WesternGovernments for imposing economic policies thatsupport western interest by the anti- corporation(TNCs) neo-colonialism (globalization). The bank is
accused of being in favor of the installation TNCs tothe detrimental of the development of the localindustry.
It has also been criticized for its neo-liberal guiding
policies which are not always suitable for nationsexperiencing conflicts, wars, depressed economiesand those with poor governance structures.
14
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 15/17
Critic to WBG Policies
• Social consequences of these programs ledin many countries to social unrest. Socialsafety nets were generally missing and programs were often implemented in ashort period of time.
• A major problem was that the programs
were designed to solve short termstabilization problems but were notadequate to solve structural problems;they rather reinforced these.
15
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 16/17
Critic to WBG Policies
• The bank is further accused of intervening in order to
salvage irresponsible loans from private institutions to
LDC Govts which are also often corrupt and non
representative and thus shifts the risk from the original risk takers to the public in the DCs.
•
16
7/29/2019 Contemporary Economic Policy Reforms
http://slidepdf.com/reader/full/contemporary-economic-policy-reforms 17/17
WB and Corruption
• The World Bank is supposedly working against corruption both
outside and within its organization. Its website states:• Recognizing that any program to assist in controlling corruption
worldwide needs to start with the example of best practices at home,
the Bank has taken initiatives to stamp out conflicts of interest and any
possible corrupt practices among its own staff.
•Beginning in 2005, Paul Wolfowitz, former President of the WorldBank, allegedly used his position to influence a pay and grade increase
for his girlfriend Shaha Riza. Riza, who had held a position at the bank
before Wolfowitz was appointed president in June 2005, was required
to leave the bank and re-assigned to the State Department to avoid a
conflict of interest, working in the office of Liz Cheney, daughter of
Dick Cheney, while remaining on the bank's payroll. Her salary was
increased from nearly $133,000 to tax-free compensation of $180,000,
and eventually reached $193,590 after subsequent raises. The panel
concluded that the salary increase "at Mr. Wolfowitz's direction" was
"in excess of the range" allowed under bank rules. As a result of this
controversy, Paul Wolfowotz has resigned effective June 30, 2007. 17