Advertisement

Development

, Volume 62, Issue 1–4, pp 147–153 | Cite as

World Bank Financializing Development

  • K. S. JomoEmail author
  • Anis Chowdhury
Unplugged

Abstract

This article critically reviews the World Bank’s reorientation from its traditional role as a lender for major development projects to become a broker for private investment. It highlights the follies of the Bank’s ‘billions to trillions’ agenda, rebranded as Maximizing Finance for Development, that seeks to use aid and public money to leverage private finance, supposedly to fill the financing gap for achieving the SDGs. While such leveraging has failed to raise substantial finance, the Bank’s promotion of PPPs and ‘de-risking’ foreign private finance in developing countries has significantly increased risk for developing country governments. Focusing on ‘blending’ aid with private finance has obscured crucial measures such as macro-prudential regulations and international cooperation to address systemic issues, e.g., harmful tax competition and illicit capital outflows from developing countries via transfer pricing and tax havens. The B2T/MFD hype has also deflected attention from stagnant and declining aid flows, and onerous conditionalities, especially for the least developed and other fragile economies.

Keywords

World bank Billions to trillions Maximizing finance for development Sustainable development goals De-risking Financialization Development finance Multilateral development banks 

Notes

References

  1. Bughin, Jacques, James Manyika and Jonathan Woetzel. 2016. Bridging Global Infrastructure Gaps. McKinsey Global Institute. https://www.mckinsey.com/industries/capital-projects-and-infrastructure/our-insights/bridging-global-infrastructure-gaps. Accessed 10 Apr 2019.
  2. Cordella, Tim. 2018. Optimizing Finance for Development. Policy Research Working Paper WPS8320 (January). The World Bank, Washington, DC. https://documents.worldbank.org/curated/en/859191517234026362/pdf/WPS8320.pdf. Accessed 10 Apr 2019.
  3. Financial Stability Board. 2017. Transforming Shadow Banking into Resilient Market-based Finance: Non-Cash Collateral Re-Use: Measure and Metrics. 25 January. https://www.fsb.org/wp-content/uploads/Non-cash-Collateral-Re-Use-Measures-and-Metrics.pdf. Accessed 10 Apr 2019.
  4. G20 EPG [G20 Eminent Persons Group]. 2018. Making the Global Financial System Work for All. October. https://www.globalfinancialgovernance.org/assets/pdf/G20EPG-Full%20Report.pdf. Accessed 10 Apr 2019.
  5. Gourinchas, Pierre-Oliver, and Oliver Jeanne. 2013. Capital Flows to Developing Countries: The Allocation Puzzle. The Review of Economic Studies 80(4): 285.CrossRefGoogle Scholar
  6. Hoag, Foley. 2017. Summary Comments on the World Bank Group’s 2017 Guidance on PPP Contractual Provisions. Heinrich Boell Stiftung, Washington, DC. https://us.boell.org/2017/09/15/summary-comments-world-bank-groups-2017-guidance-ppp-contractual-provisions-0. Accessed 10 April 2019.
  7. Intergovernmental Committee of Experts on Sustainable Development Finance, 2014. Report Final Draft, 8 August. https://sustainabledevelopment.un.org/content/documents/4588FINAL%20REPORT%20ICESDF.pdf. Accessed 10 Apr 2019.
  8. Irwin, Tim, Samah Mazraani, and Sandeep Saxena. 2018. How to control the costs of public-private partnerships. IMF How to Note, 18/04 (16 October), International Monetary Fund, Washington, DC. https://www.imf.org/en/Publications/Fiscal-Affairs-Department-How-To-Notes/Issues/2018/10/17/How-to-Control-the-Fiscal-Costs-of-Public-Private-Partnerships-46294. Accessed 7 July 2019.
  9. Kapoor, Sony. 2019. Billions to Trillions—A Reality Check. RE-DEFINE Policy Brief for Stamp Out Poverty (March). https://www.stampoutpoverty.org/wp-content/uploads/2019/04/Billions_to_trillions_web.pdf. Accessed 7 July 2019.
  10. Kim, Jim Yong. 2017. Rethinking Development Finance. LSE Public Lecture, 11 April podcast. https://www.lse.ac.uk/lse-player?id=3802. Accessed 10 Apr 2019.
  11. Lee, Nancy. 2018. More Mobilizing, Less Lending: A Pragmatic Proposal for MDBs. CGD Brief, April, Center for Global Development, Washington, DC. https://www.cgdev.org/sites/default/files/more-mobilizing-less-lending-pragmatic-proposal-mdbs.pdf. Accessed 10 Apr 2019.
  12. Mann, Howard. 2018. The High Cost of “De-Risking” Infrastructure Finance. Project Syndicate, 26 December. https://www.project-syndicate.org/commentary/world-bank-ppp-de-risking-by-howard-mann-2018-12. Accessed 10 Apr 2019.
  13. Morrissey, Monique, and Dean Baker. 2003. When Rivers Flow Upstream: International Capital Movements in the Era of Globalization. Issue Brief, 22 March, Center for Economic and Policy Research, Washington, DC. https://cepr.net/documents/publications/capital_flows_2003_03.pdf. Accessed 7 July 2019.
  14. Nose, Manabu. 2017. Enforcing Public-Private Partnership Contract: How do Fiscal Institutions Matter? IMF Working Paper WP/17/243 (15 October), International Monetary Fund, Washington, DC. https://www.imf.org/en/Publications/WP/Issues/2017/11/15/Enforcing-Public-Private-Partnership-Contract-How-do-Fiscal-Institutions-Matter-45353. Accessed 7 July 2019.
  15. Prasad, Eswar, Raghuram Rajan and Arvind Subramanian. 2007. Foreign Capital and Economic Growth. Brooking Papers on Economic Activity (Spring), 153–230.Google Scholar
  16. Ramachandra, Komala, and Erika Lennon. 2019. How the World Bank Can Stop Funding Disaster. The Nation, 21 March. https://www.thenation.com/article/world-bank-jam-ifc-cao/ Accessed 10 Apr 2019.
  17. Romero, María José. 2018. Public–Private Partnerships Don’t Work. It’s Time for the World Bank to Take Action. Devex Opinion; https://www.devex.com/news/opinion-public-private-partnerships-don-t-work-it-s-time-for-the-world-bank-to-take-action-92585. Accessed 10 Apr 2019.
  18. Schroth, Josef. 2016. Capital Flows to Developing Countries: Is There an Allocation Puzzle? Bank of Canada Staff Working Paper 2016–53, November. https://www.bankofcanada.ca/wp-content/uploads/2016/11/swp2016-53.pdf. Accessed 7 July 2019.
  19. SDSN. 2015. Investment Needs to Achieve the Sustainable Development Goals. Understanding the Billions and Trillions. SDSN Working Paper Version 2, Sustainable Development Solutions Network. https://unsdsn.org/wp-content/uploads/2015/09/151112-SDG-Financing-Needs.pdf. Accessed 10 Apr 2019.
  20. Stein, Felix, and Devi Sridhar. 2017. The World Bank reinvents itself—and puts poverty reductions at risk. https://theconversation.com/the-world-bank-reinvents-itself-and-puts-poverty-reduction-at-risk-79403. Accessed 10 Apr 2019.
  21. UNCTAD. 2014. World Investment Report 2014: Investing in the SDGs: An action plan. United Nations Conference on Trade and Development, Geneva. https://unctad.org/en/PublicationsLibrary/wir2014_en.pdf. Accessed 10 Apr 2019.
  22. UN-DESA (DPAD). 2017. Development Issues, No. 10 (24 March). Division for Policy Analysis and Development, Department of Economic and Social Affairs, United Nations. https://www.un.org/development/desa/dpad/wp-content/uploads/sites/45/publication/dsp_policy_10.pdf. Accessed 7 July 2019.
  23. World Bank. 2007. Lessons for their Design and Use in Infrastructure. Washington, DC: PPP Unit, The World Bank.Google Scholar
  24. World Bank. 2017. Public–Private Partnerships Reference Guide. Version 3. Washington, DC: The World Bank.CrossRefGoogle Scholar
  25. World Bank-IMF Development Committee. 2015. From Billions to Trillions: Transforming Development Finance. Post-2015 Financing for Development: Multilateral Development Finance. Washington, DC: The World Bank. https://siteresources.worldbank.org/DEVCOMMINT/Documentation/23659446/DC2015-0002(E)FinancingforDevelopment.pdf. Accessed 10 Apr 2019.
  26. World Bank-IMF Development Committee. 2017. Maximizing Finance for Development: Leveraging the Private Sector for Growth and Sustainable Development. DC-2-17-0009, 19 September, The World Bank, Washington, DC. https://siteresources.worldbank.org/DEVCOMMINT/Documentation/23758671/DC2017-0009_Maximizing_8-19.pdf. Accessed 10 Apr 2019.

Copyright information

© Society for International Development 2019

Authors and Affiliations

  1. 1.Khazanah Research InstituteKuala LumpurMalaysia
  2. 2.School of Social Sciences and PsychologyWestern Sydney UniversitySydneyAustralia

Personalised recommendations