Shareholder Control and the Rise of Poverty Reduction at the World Bank

Abstract

In early 1942, Harry Dexter White sat down in his US Treasury office to draft a proposal for an international bank. With his mind understandably focused on the mass of physical devastation that the years of war had wrought, White headed the report ‘Bank for Reconstruction’. However, during the course of re-writing the blueprint, a tête á tête with his deputy, Ed Bernstein, would lead to a fateful two-word appendage to the embryonic institution’s title. When optimistically thinking to the future and considering the bank’s place in a post-war global order, Bernstein wondered aloud about what to do with the institution after reconstruction had been completed. White turned the question back on his deputy, and Bernstein suggested that it could be used to lend to other areas that required development. When the amended plan was circulated to other governments the following year, it outlined ideas for an expanded organisation: an ‘International Bank for Reconstruction and Development’ (Kapur et al. 1997: 57). It is around the operationalisation of this broad developmental mandate that shareholder states have, with increasing intensity, sought to bolster the mechanisms of control at their disposal. And in establishing a monitoring framework and financial inducements to support their MDG-focused ‘results agenda’, the Bank’s shareholders are working to lock in a particularly precise understanding of poverty reduction at the heart of the organisation’s mission.

There has never been a more urgent need for results in the fight against poverty …. Whether investing in education, health, infrastructure, agriculture, or the environment, we in the World Bank must be sure that we deliver results.

(Wolfowitz 2005)

I call on all multilateral development banks … to tie support more directly to clear and measurable results.

(Bush 2001)