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Masters of Illusion: The World Bank and the Poverty of Nations Hardcover – January, 1997
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From Publishers Weekly
Though the International Bank for Reconstruction and Development, or World Bank, professes that its chief objective is fighting global poverty, most of its projects help the rich get richer while shortchanging the poor, charges Caufield. World Bank-funded proposals, she observes, have displaced millions of people, pushing them into destitution; for example, the Narmada Valley dams in India, which submerged several hundred villages. Instead of focusing on human services in developing nations, the bank promotes high-tech energy and transportation projects and Western-style, capital-intensive agriculture-development schemes that often enrich heads of state, contractors, exporters, middlemen, landholding elites and multinational corporations. Moreover, she adds, the bank pressures borrowers to amend or repeal countless local laws to qualify for loans, thereby weakening labor protections, trade unions, communal land holdings and maternity benefits. Ordinary taxpayers in donor nations ultimately finance this reallocation of funds to the relatively well-off in underdeveloped nations, she asserts. Caufield, a former environment correspondent for Britain's New Scientist, has written a scathing, well-researched critique that is likely to generate controversy in financial circles and among policy-makers.
Copyright 1996 Reed Business Information, Inc.
From Library Journal
Another bureaucracy in Washington, D.C., rivals the federal government in power, especially on the world stage. It belongs to the World Bank, born at the end of World War II with the noble intent of rebuilding war-torn Europe and aiding Third World development. Journalist Caufield (In the Rainforest, 1984) believes that the bank has strayed from this course, often with disastrous results. Having done exhaustive research, she skillfully dissects the workings of the organization and finds plenty of blame to go around. She brings the story up to the present with the recent appointment of James D. Wolfensohn as the new bank president. Caufield sheds light on a secretive, often mysterious organization that has affected millions of people?often misguidedly. Her compelling and sobering account is highly recommended.?Richard S. Drezen, Washington Post News Research Ctr., Washington, D.C.
Copyright 1997 Reed Business Information, Inc.
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Top Customer Reviews
"The Bank's founders envisioned a rosy picture of a future in which its loans would bring economic growth to its borrowers, making their citizens prosperous and increasing world trade, thus reinforcing global prosperity, strengthening the bonds between nations, and creating the climate for a lasting peace. That this picture has not materializes is due both to the false assumptions on which the Bank was established and to the structure of the Bank itself. Perhaps the key assumption underlying the Bank's creation was that there was a condition called underdevelopment and that virtually every country in Asia, Africa and Latin America suffered from it" (333.)
The World Bank seems always to have been an organization that looks good on paper; but is quite bad in practice (25.) Many of the World Bank's calculations and plans have been overly optimistic and not investigated thoroughly enough (17.) The World Bank has not been an innovator, but has instead been trying to move along with the status quo (234-5.) In fact the World Bank has been a highly bureaucratic organization, full of red tape, some public embarrassment, and many misguided steps. As said, The World Bank appears highly effective on paper and in plans; in practice, the World Bank leaves a lot to be desired. Basically the World bank has suffered from its slow start as an organization and a lack of continuity in Bank policy. It has also suffered because it bends rules, is susceptible to despots (206-12), and has fallen prey to lending to nations with corrupt governments. Whatever the stated mission of the Bank, poverty is more widespread; the gap between rich and poor is greater. Where the Bank has intervened, in many cases, the quality of life and environment have been compromised. The Bank historically has encountered problems learning from its own mistakes. The Bank's central focus has been based on a set of assumptions it has made about poor countries. "The Bank was assuming that poor countries cannot modernize without money from abroad." This unresearched assumption has led directly to the accumulation of debt and loss of sovereignty for many of the poor nations in the world. Development was a key concept in the founding of the World Bank and the IMF. In hindsight, however, it is easy to ask, "What kind of development?" When the Bank was founded, development consisted largely of dams and other high scale projects that were thought to technologically advance nations and benefit nations overall with easier and cheaper access to electricity, irrigation, regulation of flood waters... meanwhile, there were social and environmental impacts to consider. The World Bank did not employ an environmental factors office until the 1970s. Even then, projects were funded which did not demonstrate plans to account for people displaced from their homes or for sometimes catastrophic, adverse environmental impacts. This is reminiscent of the book Northwest Passage in which the author describes the damming of the Columbia River. At first it provided economic prosperity, cheap and abundant electricity and jobs in a time when jobs were needed. In time, the environmental and social impacts were felt. Native American tribes who had centered their lives, cultures and livelihoods around the river were left with nothing; the river itself was a shadow of what it was; the salmon population rapidly died out because they could not make it back upstream to spawn, and Hanford Nuclear Site is also along the river and could potentially contaminate the river. The river has been important to commerce, but at what cost? Is this truly development? (Especially in the "Third World"?) Some would argue, of course, that this was exploitation of a poor nation for the benefit of the industrialized rich nations. At the expense of the impoverished people the World Bank had concluded it would protect. As well, the expense to the overall quality of the environment would merely deplete resources and affect the entire world adversely (eventually.) These considerations were not usually even secondary or even tertiary concerns in reality. Once the Bank funded a project, they did not conduct follow-up studies to see how the funds were used, if the planned reforms or projects had been implemented, or how appropriately the funds had been applied. They simply loaned the money. It seems that "development" had multiple meanings; none of them necessarily positive. In the early days of the Bank, all projects' feasibility was closely examined; however, in time, in the McNamara era, the emphasis was placed on making loans. In what seems like a fast-food approach to lending, McNamara urged the Bank to loan as much as possible. He felt that the more money was loaned, the better off the poor nations would be; the better able they would be to deal with their poverty problems. Of course, his theories were proven wrong, and ultimately the Bank failed not only in alleviating poverty in the nations that borrowed. Instead, the Bank set a precedent of loaning unprecedented amounts of money without even researching the feasibility of the programs they were supposed to study. Granted, the Bank has faced several problems with attracting suitable borrowers, so they have been forced to bend their conditions somewhat in order to accommodate more borrowers as well as to justify their own existence as an organization (92,98-101.) McNamara particularly violated the restrictions of the Articles of Agreement, loaning more and more money, even to socialist nations. These facts were a major departure from previous Bank policy. This striking departure from the norm broke the status quo on the lending side, but did it do anything to expand the development of poor countries? Did it do anything to alleviate poverty? These were McNamara's stated goals; ultimately these were supposed to be the goals of the Bank as well, but in fact, these were just the goals of the director of the Bank at the time. Before McNamara, several directors were to oversee operations of the Bank; each with his own policies. Another way in which the Bank has deviated from its original goal is that it has not helped the people who live with poverty everyday. Eugene Black, the Bank's first long-term president, stated that the Bank is not biased, merely there to help. The Bank often claims to be apolitical, but this could not be further from the truth. The Bank feels it has the right and the responsibility to influence the domestic affairs of its borrowers; this somehow guarantees the money they have lent, perhaps (193.) However, it has been said that the Bank has been too involved in the structural, internal problems of countries (60.) The Bank was distrustful of local knowledge, "It was an article of faith to Bank staffers that only highly educated specialists has the skills and the knowledge needed to guide developing countries into the future. The trial-and-error method, the common wisdom that had worked for centuries in the backwaters of Africa and Asia, would not suffice in the postwar world. By translating complex and messy real-life problems into numerical terms that could be broken down and analyzed, the Bank's Washington experts could formulate solutions to problems in countries they hardly knew" (61.) This is a key notion. How can the World Bank administer programs and make decisions for the economies and programs of countries of which they have little or no knowledge? This has a great deal to do with bureaucratic and political problems. Who is hired and who conducts the Bank's affairs is a matter of politics, in fact. In the World Bank people are hired and appointed because of their connections or because of their impressive educational backgrounds. By impressive educational backgrounds, this does not, of course, entail international studies or development studies. Appointees are finance or economics majors; usually people appointed to study or oversee projects pertaining to specific countries have had no experience with that particular country or language...The mission of the World Bank has shifted over time; how can it adhere to its original mission (299)? Times changes; issues change. "Poverty alleviation, at first seen merely as a desirable side effect of the Bank's lending, is now the central object of its existence" (2.) The Bank lends money but also ultimately decides how it will be spent. "It requ