On October 7th, McGill was chosen by the World Bank to host the first major policy signaling-address of its new President, David Malpass. Ahead of his afternoon speech in Pollock Hall, Malpass held a Q&A session with thirty students from across the Arts, Management, and Science faculties. While they were given the opportunity to ask him questions about his plans for the World Bank, many students found Malpass’ speech to be vague and uninspiring. This unenthusiastic response and the overall global development context raises serious questions about the future of the World Bank.
It is tradition for the World Bank President to give a policy signaling address at a leading academic institution before heading to Washington for the General Assembly. President Malpass’s address at McGill was significant because it was the first to be held outside of the United States. The United States is the largest single-country shareholder in the World Bank at the moment, which is why there is a tacit agreement between the United States and the European Union that the World Bank President will be American, while the IMF International Monetary Fund President will be European. This arrangement can be traced back to the founding of the Bretton Woods Institutions, when the Western bloc had control of these agencies.
Nonetheless, while the World Bank does contribute to some important projects and initiatives, there is still pervasive institutional bias that values the desires of its Western donors over the needs of the developing nations it seeks to assist.
As developing countries have become more prominent within these institutions, this informal agreement between the major Western powers has been called into question. The World Bank has been, and still is, a key actor for development in developing nations. The loans which it provides to these countries, as well as the development projects which it helps fund, are in many cases an important source of revenue for some countries. Nonetheless, while the World Bank does contribute to some important projects and initiatives, there is still pervasive institutional bias that values the desires of its Western donors over the needs of the developing nations it seeks to assist.
One of the main critiques of the World Bank in the development sector is that many of its projects lack proper grass-roots research, falling short of the purpose of their creation. This is also due to the lack of representation of developing countries within the organization, which perpetuates fosters the lack of local perspective and context which can only be provided by the direct involvement of local people. The World Bank has a tendency to generalize places by continents, which causes problems when creating development projects since every country has a specific set of circumstances and historical background that may influence the outcome of the program. While President Malpass has shown interest in working closer with countries to focus on creating projects that will work more efficiently, it remains to be seen how this will change the outcomes of World Bank initiatives.
While President Malpass has shown interest in working closer with countries to focus on creating projects that will work more efficiently, it remains to be seen how this will change the outcomes of World Bank initiatives.
David Malpass has expressed his desire to limit the amount of countries the World Bank lends money to and to exclude two emergent economies, China and India. One of the explanations he has given is that China has the second largest economy in the world, and a development bank of its own, so he believes the money would better be spent elsewhere. Whether or not he is right in pulling the funding from China, or whether his reasons are related to the current trade war between the U.S and China, the World Bank would be losing a source of revenue and income, and a trustworthy debitor. China often repays the loans it receives more quickly than expected and carries out projects successfully. The intention with pulling the funding is to focus more on low and middle income countries, but many of these countries are already going to regional development banks for funding instead of the World Bank.
Five years ago, the existence of these multilateral development banks did not threaten the World Bank, a well established, powerful international institution. However, since the World Bank’s last fundraising effort in 2016, these other agencies have quickly caught up and are becoming important players in the development sector. Furthermore, developing countries prefer new banks such as the BRIC since they demand fewer barriers, and allow higher levels of representation from developing countries in their boards. Whether banks such as Asian Infrastructure Investment Bank (AIIB) and the New Development Bank (NDB) will have a positive impact on the countries they lend to remains to be seen, but as 2020 approaches, these emerging multilateral development banks beg the question of whether the World Bank will remain the key creditor for development projects. This is may not be the case, seeing as other countries, such as Canada, are donating millions to regional development banks and supporting their endeavors.
as 2020 approaches, these emerging multilateral development banks beg the question of whether the World Bank will remain the key creditor for development projects.
While it wouldn’t be the first time the World Bank redefines its mission, it may become progressively harder for them to secure funding as global politics have changed and non-Western countries are now playing an increasingly more relevant role in development politics. The World Bank is known for promoting neoliberalism globally, attaching conditionalities to its loans, withholding funds from countries unless they adapt to Western policies, and undermining the sovereignty of these nations. Whether these nations decide to continue accepting these conditions or decide to go to other development banks for funding is not yet clear, but the next ten years will certainly determine whether Western-governed institutions, such as the World Bank and the IMF, remain indispensable to development, or whether they become a thing of the past.
Edited by Shannon Benson
Photo credits: “2013 World Bank / IMF Spring Meetings” by Simone D. McCourtie / World Bank. Published 20th of April, 2013. This work was sourced under a Attribution-NonCommercial-NoDerivs 2.0 Generic (CC BY-NC-ND 2.0) License.