INTD 200: TAKE-HOME EXAM FALL 2012 (B+ answers)

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McGill University
International Development
INTD 200
Karen Mc Allister

INTD 200: TAKE-HOME EXAM FALL 2012 Noori Kim 260456742 November 14, 2012 English Describe the structure and role of the World Bank and the main criticisms over time with respect to its policies and administration. Established in 1944 at the Bretton Woods Conference, the World Bank‟s initial function was to “provide financing for postwar reconstruction and development projects. From 1950, the World Bank focused on providing loans to developing-world countries at lower rates of interest than those of private international banks. These loans were directed mainly towards building infrastructure for development” (Taylor 2009: 155). However, this international financial institution became highly controversial and widely criticized by many NGOs and academics because it was no longer focusing on ensuring economic stability and dealing with poverty reduction. From both sides of the political spectrum, the World Bank was criticized for being too bureaucratic and inefficient as well as entrenching poverty and exasperating global inequality. For instance, in terms of the actual structure of the World Bank, there have been many criticisms and controversies resulting from its organisation. The major policy body of the World Bank is its board of directors, which is usually comprised of the Ministers of Finance from member nations. The voting rights in the World Bank are weighted according to quota subscriptions based on the member nation‟s GDP, meaning that voting is weighted in favour of the Bank‟s largest financial donors. This voting system has led to many unfair situations. For example, since the US currently holds seventeen percent of the voting rights, and eighty-five percent is necessary to pass constitutional amendments, the US has a unilateral veto over amendment proposals. Additionally, the twenty-five seats that comprise the board of executive directors are chosen through vote share. Therefore, due to their low voting share, forty-six sub- Saharan African nations have only two representatives on the executive board. As a method of circumventing the unfairness of this system, certain nations have been asked to represent smaller nations that are not on the executive board. This had led to serious political infighting at the World Bank, especially because it is mainly controlled by the US and its allies. Examples include harsh actions taken against Cuba when the US did not agree with them, favouring of dictatorships in Latin America, and approval of loans to nations with dubious human rights records. Most of the criticism and controversy garnered by the World Bank today has been a result of the establishment and implementation of structural adjustment programs. As a debt stricken developing countries were not able to stabilize their economies through standard austerity programs in the late 1970s, the World Bank (along with the International Monetary Fund) determined that “a more profound process of transformation was necessary through which economics would become more open to foreign trade and more focused on producing export. At the same time, the state would decrease its interventions and allow market forces a greater role in distributing resources across the economy” (Taylor 2009:159-160). These structural adjustment programs produced many negative social impacts by undermining food security and decreasing government spending. Issues of sovereignty and conditionality were also raised by critics, as these new economic policies that developing countries were forced to implement were dictated by outside forces that did not appropriately analyze each nation‟s problems. Additionally, “At no point did the [World Bank] question the burden of the debt crisis being placed on the developing world rather than being shared with the international banks that had lent money irresponsibly” (Taylor 2009:160). Thus, World Bank was criticized because it appeared that its main concern was to ensure debt repayment to protect the interests of debtor nations and the international financial system – clearly a shift away from its original goal of dealing with poverty reduction and promoting stable growth in developing countries. In attempts to address the criticisms of structural adjustment lending and re-emphasize its role as a global poverty alleviator, the World Bank created the Poverty Reduction Strategy Papers (PRSPs). Instead of focusing on debt repayment and altering economic policies to the detriment of developing nations, the World Bank concentrated on “overseeing the „social and structural‟ policies of participating countries” (Taylor 2009:166). Furthermore, by focusing on the idea of „ownership‟, in which countries must determine the goals and implementation of programs, the World Bank emphasizes that policies are no longer implemented in a detached top-down fashion. However, this notion of „ownership‟ has also received criticism, as PRSPs must be approved by both the World Bank and the IMF before funding is granted. Thus, despite the attempts of removing the association that the International Financial Institutions force developing nations to implement policies that do not appropriately address the different problems of each individual country, the IFIs still maintain a hold over the actions of governments. Consequently, despite the well-natured intentions of the World Bank at the time of its conception, this international financial institution has created a great deal of controversy regarding its policies and administration. Although it has taken steps to move away from its focus on applying neo-liberal economic policies, there are still many obstacles to overcome before it can promote a comprehensive approach to development. Explain and describe how the sustainable livelihood framework can be applied to understanding famine and food insec
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