World Bank government-reform projects: One-size-fits-all or adapted to their context?

 
World Bank president Jim Yong Kim (Guardian)
World Bank president Jim Yong Kim (Guardian)
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The World Bank was founded toward the end of World War II by representatives from the 44 Allied nations. Its stated mission was to reduce poverty in developing countries through direct loans. Currently, the organization manages 1,600 projects in 172 countries and in 2012 provided approximately $30 billion in loans.

Despite such investments, the World  Bank has been the subject of considerable criticism. It has been accused of funding environmentally destructive projects, imposing a Western economic model on less-developed nations — including shifting lucrative industries from state hands to private entities — and operating in an often opaque and fragmented way. World Bank president Jim Yong Kim, expressing concern that the organization could disintegrate into a series of regional banks, has proposed a sweeping reorganization to increase collaboration across regions.

A 2013 working paper by Matt Andrews of the Harvard Kennedy School’s Center for International Development, “Do International Organizations Really Shape Government Solutions in Developing Countries?” examines a selection of World Bank projects since the 1950s to see to what degree they are adjusted to their context and what the impact has been. The projects examined were all in the public administration, law and justice sector (PAL&J) and took place in 40 developing countries ranging from Afghanistan to Uruguay. Rather than funding development-related work, World Bank PAL&J projects are intended to change the characteristics of a developing country’s government.

The study’s main findings include:

  • About two-thirds of World Bank interventions in developing countries have reflected a generic set of solutions — implying that the “right rules,” the appropriate institutional structures, are largely the same across different contexts. These “right rules” aim to establish market-friendly conditions as well as disciplined, modernized and depoliticized governance.
  • Reforms typically begin by curbing government control in the private sector. Subsequent interventions introduce management mechanisms into government by “increasing accountability and control to enhance efficiency and effectiveness.” This sequence of interventions illustrates the “hallmark characteristic of externally influenced public sector institutional reforms”: Regardless of a country’s financial discipline and economic liberalization, these are deemed the correct policies with which to begin.
  • Before the 1980s, less than 1% (18 of 2,782) of World Bank projects were classified as PAL&J sector projects. This tiny proportion illustrates the international development community’s early focus on nonpolitical engagement and avoidance of government interference.
  • Since the 1990s, the percentage of the bank’s PAL&J projects has steadily increased: In the 1990s, they constituted 62% of its operations; in the 2000s, the proportion increased to 65%. As of April 2011, the World Bank supported 13,121 PAL&J projects.
  • Public-sector institutional reforms typically target change in government structures considered necessary for market development. These reforms include: privatizing state enterprises, deregulating sectors, creating laws that open up trade, and establishing government entities to promote competitive markets.

“The discussion here should not be read as a critique or endorsement of the one-best-way model that seems to persist in development or even of the idea that international organizations are shaping the government solutions in place across the developing world,” the author states. “It simply notes that it exists and is reflected in patterns of World Bank project data.”

Keywords: Africa, corruption, poverty, free markets, good governance

Last updated: November 5, 2013

 

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Citation: Andrews, Matt. "Do International Organizations Really Shape Government Solutions in Developing Countries?" Center for International Development, Harvard University, August 2013.