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New World Bank Strategy Presents Few Real Innovations

Bea Edwards, March 20, 2013

Tomorrow, the Executive Directors of the World Bank are scheduled to discuss "A Common Vision for the World Bank Group," which sets out the development strategy for the institution through 2030.

The goals are ambitious, and the challenges are formidable. Despite impressive economic growth at the country level in the developing world, 1.3 billion people continue to live in extreme poverty. Moreover (although the strategy does not mention this) the level used to classify extreme poverty (less than $1.25 per day) has been a constant figure since 2005, despite the dramatic increases in the price of food and energy since then. So in effect, extreme poverty is more desperate than ever.

The Bank also presents, in this analysis, an astonishing figure: "the share of the world's population that is not poor but that is vulnerable to fall into poverty has increased to around 50 percent." In other words, even those who have escaped the most dire conditions are only able to meet basic needs precariously, and if any economic shock should occur, they may slip back into destitution.

There are deepening contradictions, too, in the way the World Bank continues to contemplate a solution to the persistent poverty problem. The reduction of poverty rates is still to be achieved through economic growth, but as the strategy points out, "there continues to be huge stress on the global commons – most notably in the realm of climate change." So the task is to promote economic growth in ways that do not aggravate already serious problems of environmental degradation.

Although much of this sounds familiar, there is still something new here: "Countries will have to implement policies that prevent large increases in inequality as well as prevent or manage shocks." While most of the analysis focuses on poverty and the poor, there are recurring references to the need for "shared prosperity." If inequality persists and increases, economic growth will have to be correspondingly higher to bring relief to the poor. Such a prospect will aggravate strains on the global commons rather than diminishing them, and the poverty reductions achieved will be only ephemeral. More and more, even the Bank is forced to reckon with a closed system.

To cope with reduced latitude in development strategies, the new plan envisions continuing modernization and reform at the Bank itself, and while there is a certain self-congratulatory tone, the authors seem to realize that the Bank is not sufficiently focused. "Dynamic selectivity" is a new catch phrase, meaning that Bank instruments and projects will become more flexible and responsive to needs and demands.

In an annex to the strategy, the Bank lays out the methods to be used to attack development challenges. The approach appears to be more decentralized and privatized, with greater deference to "clients" through instruments such as the Program for Results. "P4R," gave World Bank watchers fits because it moved Bank-funded activities out from under institutional safeguards. Ironically, the strategy lays out the new Program, reports on the funding provided, identifies participating countries and describes objectives to be achieved, but actual results are not featured. Many feared, as P4R was deployed, that the World Bank was moving backward not forward by formulating loans that evaded environmental safeguards particularly.

In a sense, it seems that the new strategy seeks to promote an image of change, flexibility and reform at an institution now over 60 years old. At heart, though, the core beliefs are much the same – despite the changing forms. While there are new phrases about knowledge and dynamism, the possibilities of putting an optimistic face on "development" are fading away.

 

Bea Edwards is Executive & International Director for the Government Accountability Project, the nation's leading whistleblower protection and advocacy organization.