The World Bank self-proclaims to “promote shared prosperity” through low-interest loans to developing countries, and yet global wealth disparity is only rising. Who really benefits from the World Bank, and whose development is it truly supporting?
The main focus of current development – one that is promoted through the conditions of the World Bank’s loans and its focus on infrastructure projects – is the growth of developing countries’ economies, in a world which is already far too developed. Trying to reproduce the economy of the Global North in developing countries as a solution to global poverty and inequality is a contradiction bordering on madness, as anyone with a basic understanding of global economics and the current disparity of wealth would agree.
Seeing as we are already consuming 50% more of our planetary resources than can be replenished each year, pushing for further growth is not only illogical but will ultimately be impossible; our resources are overstretched and our carbon emissions have recently reached what many environmentalists are terming “the point of no return”. Not only does development focused on economic growth promote a consumerist cycle which exacerbates the environmental disaster we are facing (the idea that more production = more money = less poverty) but this is being pursued regardless of statistics showing that it is simply not working.
While the global economy has grown by 380% since 1980, the number of people living on less than $5 a day has increased by 1.1 billion in that time; and yet we are still pursuing growth as a solution to poverty. The disparity of global wealth has been increasing rapidly, despite the $130 billion in aid sent from richer countries to poorer countries each year. This is seemingly a contradiction, until you discover that poorer countries are paying over 4.5 times that amount – about $600 billion – back to richer countries every year, in debt repayment of loans that have already been paid off many times over.
While admittedly not all of these loans are from the World Bank, a lot of them are; and moreover, the style and conditions of lending promoted by the Bank, as well as the neo-liberal development it encourages, create a world in which this type of development – which is evidently leading us backwards – is the norm. While the richest 1% of the population now own 43% of the world’s wealth, there has been no readjustment in the Bank’s policy of aid; leading us to ask why, with the statistics so clearly showing that only the elite are benefiting, the Bank does not change its strategy.
Let’s talk for a moment about how the World Bank is structured. It’s based in the USA, with an American Bank President at the head of it; these have all typically been old, white Western men, pursuing old, white, Western agendas. Whereas the current American-South Korean President, Jim Yong Kim, brings an element of racial diversity to the team, he is somebody who publicly called for the World Bank to be shut down in the 1990s after experiencing first hand the devastation and disease in shanty towns surrounding Lima, Peru caused by the “structural readjustment” stage of the Bank’s development strategy; inflation controls and government cutbacks dictated by the lender, which frequently cause a period of economic instability and further poverty in the countries being “developed”. Yet these days he is portrayed in the media playing golf with Obama – a long, long way from Peru and any problems it may still be facing.
It’s worth noting that the countries which invest the most money in the Bank get the highest amount of votes on how that money is spent; meaning that the USA has 20% of the voting power, with just one representative. Contrastingly, the 47 sub-Saharan African countries have only 7% of the voting power between them. With this system in place, poorer countries are effectively stripped of the power to decide how loans from the World Bank direct their own development. Arguably, the countries that do have the influence to decide how loans from the Bank are spent use this power to pursue their own neo-liberal foreign policies, regardless of the fact that it is evidently not helping the developing world.
Conclusively, in terms of the development and loans the Bank provides, it is not the poorest countries who are benefiting. For a more even distribution of global wealth and poverty reduction, the only conceivable solution could now be “de-development” and a more modest way of living in the Global North. However, in a world where the richest 300 people – a lot of them owners of large American corporations – have greater wealth than the poorest 3 billion, the question becomes why those in a position of influence over global economic policy would be aiming for this redistribution at all.
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