The World Bank & IMF Respond to Criticisms
By Nicole Wendt, Samantha Sheppard & Maria Weidner
In the last section, we reviewed criticisms of the World Bank and the IMF (collectively, the Bretton Woods Institutions, or BWIs), which arose in response to their 50th anniversary in 1994. In this section we explore how the BWIs responded to these criticisms. This introduction begins by considering the “big picture” aspects of the BWIs’ response. The body of this section offers a particularized look at specific steps the BWIs took—or didn’t take—to respond to accusations that they supported environmentally destructive projects, neglected human rights, and supported inefficient governments and state-dominated development.
As you read this section, ask yourself whether or not you think the responses the BWIs developed in response to concerns raised in the early 1990s were effective. What impact did the BWIs’ bureaucracies have on the ability to respond to their critics? Should accountability for the purported failures of the BWIs lie with the institutions themselves, or with the governments of member countries that—as funders and borrowers—were (and are today) responsible for defining key aspects of the policies and programs the BWIs pursue? Did the BWIs respond as best they could under the circumstances?
A. The Bureaucratic Structure of the BWIs Affected Their Response to the Criticisms of the Early 1990s
Perhaps the most important factor to bear in mind with respect to how the BWIs responded then (and now) to their critics is their bureaucratic structure. As massive institutions, the BWIs were simply not able to respond to each individual instance of public criticism. Rather, both the World Bank and IMF often responded to criticisms in a more generalized manner, by fostering changes at the institutional level. In many cases these broad, systematic reforms were an attempt to be responsive to multiple criticisms. Likewise, the institutional limits of both BWIs often apply not just to one area (e.g., the environment or human rights) but across the range of criticisms made against them. We begin by covering some of these key tools and constraints as they applied to some or all of the criticisms the BWIs were subject to in the early 1990s.
1. Both the World Bank and IMF Were Answerable to Their Member Nations; the BWIs’ Members Essentially Functioned as Shareholders of These Institutions.
Both the World Bank and IMF rely on the continued financial support of their members—who are essentially shareholders—to continue their work or implement new funding initiatives. This places limits on what the institutions can do. For example, in 1993 the IMF—in an effort to expand assistance available to poor countries—attempted to create a new structural adjustment facility. While this plan had the support of members from the developing world, the United States and Germany—two of the wealthiest and therefore most powerful members—chose not to contribute. Consequently, the entire plan was threatened.
Additionally, keep in mind that just as members can prevent a project or plan from occurring, they can also use their influence to compel the undertaking of other initiatives. During the 1990s, the use of massive amounts of BWI funds to assist in the transition of Soviet bloc nations from planned to free market economies serves as an example of this type of influence. Another trend in the early 1990s that affected the politics of the BWIs—particularly the IMF—was the growing role of member countries from the developing world, not just as borrowers, but increasingly as contributors. All the same, the industrialized world, that had for so long exercised almost complete control over the BWIs, strongly resisted moves by developing nations to play a greater role in policy development. As you read the remainder of this section, consider how these underlying political conflicts might have affected the BWIs’ responses to critics.
2. Both the World Bank and IMF Were Limited by Their Respective Charters.
In the early 1990s, the World Bank recognized that its responsiveness to criticism required it to walk a fine line with respect to its charter, which prohibits it from interfering with the domestic politics of member countries. Specifically, according to Article IV, Section 10 of the World Bank charter, neither the institution nor its officers may “interfere in the political affairs of any member, nor shall they be influenced in their decisions by the political character of the member . . . [O]nly economic considerations shall be relevant to their decisions, and these considerations shall be weighed impartially.” In order to abide by this mandate, the World Bank formulated a test to distinguish between “economic” factors, which it can take into account, and “political” factors, which it cannot.
Not surprisingly, this test, which focuses on whether a factor has a “direct and obvious economic effect” relating to the Bank’s work, is difficult to apply. For example, poverty and income inequality are factors that affect the overall health of the economy, but they are also aspects of the political situation in a given country. In a word, it is a challenge to draw the line between politics and economics. Again, the collapse of the Soviet Union and the subsequent BWI-aided transition of emerging nations from communist governments with planned economies to democratic governments with market-based economies provide a striking example of this difficulty. Use of BWI funds in the former Soviet bloc was a controversial issue in the early 1990s because developing nations felt that funds were being diverted from them for the political ends of “democratizing and liberalizing” former Communist nations. In short, BWI members from the developing world (e.g., India, Malaysia) charged that BWI members from the developed world (e.g., United States, Europe) were using the BWIs to realize goals that were primarily political, as opposed to economic.
Likewise, the IMF’s charter restrains the scope of the conditionality, that is, the variables it requires borrowing countries to adhere to in exchange for financial assistance. Article IV(3)(b) of the IMF charter requires that it “respect the domestic social and political policies of members, and in applying these principles . . . pay due regard to the circumstances of members.” In the 1990s, the IMF asserted its belief that this provision prohibited it from considering political factors in its operations. However, as noted above, distinguishing between political and economic factors was—and continues to be—a challenge.
3. Nonetheless, the World Bank and IMF Found Ways to Adjust Their Practices so as to Respond to Their Critics.
The World Bank and the IMF implemented systematic approaches to address a wide range of problems, including environmental and human rights issues. Hence, here we provide an overview of (i) the World Bank’s Operational Manual, an online collection of Bank policies and procedures, and (ii) the Inspection Panel, an entity created by the Bank to give affected communities a tool to enforce Bank policies. With respect to the IMF, we also discuss that institution’s expansion of what are known as Article IV consultations with member countries as well as movements to revise its technical assistance and retool its structural adjustment plans. Finally, we consider some ways in which the World Bank and IMF increased collaboration with each other in efforts to be more efficient and effective.
4. The World Bank’s institutional approach to responding to critics included the promulgation of written policies as well as providing a means for their enforcement.
a. The World Bank’s Operational Manual set forth a wide array of policies and procedures for dealing with issues that were the basis of criticisms of the early 1990s.
The World Bank’s Operational Manual, which is available online to the general public, is a critical response tool used by that institution to address issues that arise in the course of project planning and implementation, many of which are the same issues raised by the Bank’s critics. While the Operational Manual itself predates the early 1990s, it is the repository for Bank procedures and policies regarding projects that are ongoing or in the planning stages. There are four types of policy documents found in the Operational Manual.
Operational Policies (OPs) establish how operations should be conducted in different situations and flow from general conditions and policies that have been approved by the Board of the World Bank and are consistent with the Bank’s Articles of Agreement. Bank Procedures (BPs) explain how the Bank staff should carry out the policies in the OPs. Good Practices (GPs) provide advice and guidance on policy implementation. Operational Directives (ODs) contain policies, implementation guidelines, and guidance, and are in the process of being replaced by OPs, BPs, and GPs. Operational Memoranda (Op Memos) are temporary documents that contain interim instructions and are meant to elaborate on existing OPs and BPs. Op Memos are retired once their changes have been incorporated into the relevant OP or BP. Examples of OPs, BPs, and GPs that are relevant to issues raised by Bank critics will be provided later in this section.
The policies set forth in the Operational Manual are revised on an as-needed basis, frequently with input from outside experts such as non-governmental organizations (NGOs) that specialize in a particular area. For example, the Bank’s policy on Environmental Action Plans is available at OP and BP 4.02. The current version was finalized in February of 2000, replacing the version finalized in October of 1994. Likewise, the Bank’s policy on Indigenous People in use in 1994 is found at OD 4.20; this policy was finalized in 1991 and replaced an operational management statement (OMS, a policy document no longer in use by the Bank) on indigenous people, OMS 2.34, which was originally issued in 1982. The current policy on Indigenous People was finalized in 2005 and can be found at OP 4.10. A non-profit NGO that advocates for indigenous people and the poor in developing countries, the Bank Information Center, submitted comments to the 1994 and 2005 revisions. Relevant examples of Bank policies set forth in the Operational Manual will be discussed in greater detail below.
b. The World Bank’s Inspection Panel provides affected communities with a means of enforcing World Bank policy.
In 1993, amid mounting criticism from NGOs and affected communities, the World Bank formed the Inspection Panel, an independent body dedicated to “address[ing] the concerns of the people who may be affected by Bank projects and to ensure that the Bank adheres to its operational policies and procedures during design, preparation, and implementation phases of projects.” The Panel is made up of three members, who are selected by the Executive Board of the World Bank (Board). Inspection Panel members are chosen for their familiarity with the issues surrounding developing countries, their independence from the Bank, and their ability to deal “thoroughly and fairly” with inspection requests. Panel members serve non-renewable five-year terms.
A case is brought before the Inspection Panel when a “Request for Inspection” is filed. A Request may only be filed by individuals who have been or will be affected by a Bank-funded project. The Request may be made by a group of two or more individuals or by an entity representing the affected party. The requester must have previously raised their concerns with the Bank Managers overseeing the project and have been unsatisfied with the answer received. The Request must include reference to the policies and procedures—found in the Operational Manual—that the Bank is alleged to have violated.
Upon receipt of a Request, the Inspection Panel first determines “whether the request is within its mandate.” Second, it forwards the Request to the Bank Managers for the project, who then prepare and submit a response to the requester’s allegations. Upon reviewing the Request and assessing the Bank’s response, the Panel submits its recommendation as to whether the Request should be investigated. With approval from the Board, the Panel investigates the case.
Investigative findings are submitted to the Board and Bank management. Bank management then has six weeks to respond with recommended actions that should be taken based on the Panel’s findings. The Board’s final decision is based on the Inspection Panel’s findings and the Bank Manager’s recommendations. The first Request for Inspection was submitted in September 1994; it will be discussed in greater detail below.
5. The IMF’s institutional response to critics included expansion of Article IV consultations and a retooling of its approach to certain aspects of its lending.
a. The IMF expanded the substance of Article IV consultations with member countries.
Since the 1980s, the IMF had begun to realize that some social issues—traditionally considered to be outside the realm of economic concerns—could affect a nation’s overall economic health. This realization, together with activism by investors and NGOs, resulted in a significant expansion of topics discussed during regular meetings—known as Article IV consultations—between IMF staff and the economic policymakers of member countries. The IMF began to address such issues as health care, environmental protection, and income distribution. In many cases, these areas were later touched on as part of IMF conditionality (conditions placed on lending).
b. The IMF revised the technical assistance it offered to borrower countries and attempted to retool its approach to structural adjustment.
Many criticisms of the IMF were rooted in what observers claimed were the indirect effects of structural adjustment programs: reduced spending on social programs, spikes in commodity prices, increased taxes, and depletion of natural resources. In part, this problem resulted because the IMF traditionally had been involved in lending to developed nations. By the early 1980s, the IMF’s role had shifted to lending to developing countries; it then began to realize that the macroeconomic tools that had worked in industrialized economies needed to be retooled in order to promote economic growth without destabilizing the more vulnerable economies of the developing world. As a result, the IMF began to take issues such as poverty into account and developed funding programs to protect vulnerable populations during adjustment periods. It also offered technical and policy advice on social safety nets. The IMF also began to coordinate with other multilateral organizations such as the United Nations International Children’s Emergency Fund (UNICEF) and the International Labor Organization (ILO) to provide further assistance to borrower governments in designing adjustment programs that would minimize adverse effects on vulnerable populations like the poor.
6. The IMF and World Bank increased levels of collaboration with each other.
The IMF and World Bank consulted with each other in the development of funding programs for borrower countries. One of the primary ways they did this was through information sharing. Both institutions developed documents in concert with the borrower country that provided a “big picture” look at the socioeconomic situation. The IMF’s planning document was called a Project Funding Platform (PFP). The World Bank’s planning document was contained in its Country Assistance Strategy (CAS). Through this development and sharing of country-specific information, the BWIs were better able to coordinate their efforts and be responsive to countries’ needs while avoiding redundancy of each other’s efforts.
B. The BWIs’ Responded to Environmental Criticisms of the Early 1990s
1. The World Bank Countered Criticisms of Its Approach to the Environment by Creating Protective Procedures for Use During Project Development and Implementation.
The World Bank was heavily criticized in the early 1990s for its alleged role in funding environmentally destructive programs. Critics asserted that many Bank-funded projects damaged fragile ecosystems and displaced large numbers of people. While the World Bank seldom provided a direct response to specific environmental criticisms in the early 1990s, it did attempt to demonstrate an increased focus on environmental issues at the institutional level. We will discuss three ways the World Bank began to address environmental issues: 1) developing Environmental Action Plans (EAPs) and incorporating them into its Country Assistance Strategies (CASs); 2) developing Environmental Management Plans (EMPs) for individual projects, and 3) working more closely with concerned NGOs and affected local constituencies.
a. Environmental Action Plans played a role in the Bank’s overall assistance strategy for borrower countries.
One of the Bank’s major steps was to include environmental concerns in its Country Assistance Strategies (CAS) by incorporating Environmental Action Plans (EAPs) into these documents. CASs are found in the Operational Manual at BP 2.11. They are described as “the central tool with which Management and the Board review and guide the Bank Group’s support for the country’s development program.” Inclusion of the EAP in the CAS meant that environmental planning was being taken into consideration in the Bank’s “big picture” approach to borrower countries. The EAP is developed by the member country, often with technical assistance from the Bank. The EAP is not project-specific; rather it is used to identify environmental problems that a country is facing in general. Incorporation in the CAS allows for tracking of the EAP, and thus the possibility of updating it in light of new information and changing priorities. EAPs are discussed in the Operational Manual at BP 4.02.
b. The World Bank developed an Environmental Assessment tool to determine the ecological effects of individual projects.
The World Bank also began to consider the environmental effects of individual projects. It began to conduct Environmental Assessments (EAs) of projects. A detailed description of the current assessment process is found at OP 4.01 of the Operational Manual. For projects judged to have substantial impacts on the local environment, the Bank provides for the development of an Environmental Management Plan (EMP), a process detailed in Annex C of OP 4.01. In these considerations, Bank Project Managers are also required to take other relevant Bank policies into account (e.g., Safety of Dams, OP 4.37 or Pest Management, OP 4.09).
c. By working more closely with NGOs and local constituencies, the Bank became more responsive to external concerns.
The World Bank also began working more closely with NGOs and local constituencies. The Bank’s approach to consultation with NGOs is covered in the Operational Manual at GP 14.70, Involving Nongovernmental Organizations in Bank-Supported Activities. Additionally, the creation of the Inspection Panel gave local constituencies and NGOs a tool for enforcing the policies set forth in the Operational Manual. The first Request for Inspection of a Bank-funded project was filed with the Inspection Panel in September of 1994. It serves as an illustration of the use of both the Operational Manual and the Inspection Panel as a means of responding to local concerns.
i. CASE STUDY: Disposition of the Arun III controversy as an example of the World Bank’s responsiveness to local concerns.
The Arun III hydroelectric project in Nepal was a highly controversial Bank-funded project discussed at length in the previous section. Critics alleged that Arun III was emblematic of environmentally unsound projects the Bank promoted and funded in developing nations. They asserted that such projects favored the interests of wealthier, more industrialized nations and led to the depletion of natural resources, undermining sustainable development in impoverished nations. However, Arun III can also be viewed as an example of the proper functioning of the Bank’s system of responses to environmental (and human rights) concerns. A citizen organization, the Arun Concerned Group, filed a Request for Inspection with the Bank’s Inspection Panel in September of 1994, citing policies from the Bank’s Operational Manual that it claimed project managers had violated. The Panel investigated the issues and made a series of recommendations for improvement. Ultimately, the Bank chose to withdraw from the project. Arun III, then, can be seen as an example of how the Bank’s steps to respond to criticisms were in fact responsive and provided relief and protection to adversely affected constituencies.
2. The IMF Responded to Environmental Criticisms by Including Environmental Issues in Its Assistance Planning Documents and Coordinating with the World Bank.
As noted throughout this and the previous section, the IMF was criticized for the indirect effects of its structural adjustment programs on the environment. That is, the IMF’s involvement in the developing world focused on the overall economic outlook of a nation. In contrast, the World Bank’s involvement in development consisted of funding specific projects, albeit with a new focus on overall development of the borrower country. Thus, Bank assistance was in many ways more amenable to specific reforms than IMF programs. The IMF also emphasized that while it made strong suggestions and provided technical assistance with regard to the design of adjustment programs, the onus was—and is—always on the borrower country to design and implement its own adjustment program. IMF spokespeople often noted in articles and reports that the institution cannot force social change on governments; recall that such involvement is prohibited by the IMF charter (discussed above).
In the 1980s and 1990s, the IMF had begun to realize that the relative health of the environment is something that could have positive or negative effects on the economy as a whole. In 1991, the IMF’s Executive Board decided that the institution had to look at how environmental issues might affect the macroeconomic performance of member countries. As a result, the IMF began to take the environment into account in its Project Funding Platforms (PFPs), the country-specific document that formed the basis of the IMF’s lending strategy and also served as a guide for tailoring technical assistance. Additionally, the IMF and World Bank coordinated and shared environmental information about member countries. For example, the Bank uses PFPs in drafting and updating a country’s EAP, which ultimately is included in the CAS. The EAP and CAS were discussed above.
C. The BWIs Responded to Human Rights Criticisms of the Early 1990s
1. The World Bank Created Procedures and Committees to Respond to Concerns Raised About Its Approach to Human Rights Issues.
In response to concerns raised about human rights issues associated with Bank-funded projects, the World Bank promulgated policies governing the manner in which Bank Project Managers should deal with human rights issues. These policies were included in the Bank’s Operational Manual and as a result were enforceable by affected populations through the mechanism of the Inspection Panel, both discussed above. Two such policies were the Bank’s Operational Directive on Indigenous Peoples (OD 4.20) and Operational Directive on Involuntary Resettlement (OD 4.30). With respect to accusations that the Bank did not do enough to support the role of women in development (WID), the Bank formed committees and sought input from NGOs to better incorporate women into project planning. We discuss each of these in turn below.
a. The World Bank developed policies addressing Indigenous Peoples and Involuntary Resettlement.
The Word Bank’s policy on Indigenous Peoples requires that the borrower country develop an Indigenous Peoples Plan (IPP) in consultation with the indigenous community when undertaking a project that could affect the interests of indigenous people. This policy ensures not only the population’s support for the project, but also that the community enjoys project benefits. The policy also sets out general requirements for the relocation of indigenous populations (also known as involuntary resettlement). These requirements assert that borrower countries must first seek alternatives to relocation. However, if relocation is found to be unavoidable, the borrower country must mitigate and compensate the affected population. Finally, support of the plan by the indigenous population is required. The policy on Involuntary Resettlement addresses this issue in greater detail and covers non-indigenous populations as well.
As mentioned above, these policies are enforceable by affected communities through the Inspection Panel. Again, the Arun III disposition is instructive of how the process works. The policies on Indigenous People and Involuntary Resettlement were among those that the Arun Concerned Group, a coalition of affected parties including the indigenous populations of the Arun Valley, alleged had been violated during the project planning and implementation process. As mentioned above, the World Bank ultimately withdrew from this unpopular project. While the withdrawal was not a direct result of the petition process itself, it arguably provided the people with a forum that they otherwise would not have had and without which the project might have proceeded.
b. The World Bank established committees and sought input from NGOs to better accommodate issues of women in development.
Critics also accused the World Bank of lagging in both the analysis of and actions taken regarding women in development (WID) issues, noting the fact that other donors, including bilateral agencies of Norway, Sweden, and the United States, had already taken the lead in such issues. The World Bank responded by issuing an OP in 1994 (updated in 1999) titled The Gender Dimension of Development. That OP has since been replaced by OP 4.20, Gender and Development. The policy requires that gender issues be incorporated into the overall development strategy of borrower countries as set forth in the CAS.
Two main areas recognized by the World Bank’s WID strategy were the accessibility of education and women’s participation in economic development. However, Bank efforts to act on these areas had mixed results. For example, the Bank supported an initiative in four developing countries where gender disparities in school enrollments were significant. While the initiative was relatively successful in Bangladesh and Gambia, it failed in Yemen and Zambia. Likewise, programs developed to encourage women’s participation in economic development tended to be limited to small, ad hoc WID components. Finally, the Bank had to take care in where and how to promote WID, as the political climates in some nations were not hospitable to the notion of WID.
In addition to the Operational Policy on the Gender Dimension of Development, the World Bank also made internal changes to increase its focus on WID issues. For instance, Bank staff prepared reports for the Bank’s Executive Board on the plans and progress of integrating gender issues into operations. The most pivotal of these was a World Bank Policy Paper called Enhancing Women’s Participation in Economic Development, which set forth the Bank’s approach for empowering and incorporating women in its development strategy. Gender issues were also included in the Bank’s policies and procedures beyond the aforementioned OP. For example, the policy on Indigenous Peoples states in its opening paragraph that the social and economic benefits of projects should be gender inclusive.
2. The BWIs Responded to Allegations in the Early 1990s That Their Structural Adjustment Programs Undermined Human Rights in Developing Countries.
The World Bank responded to criticisms of its use of structural adjustment programs by stating that, although the structural adjustment programs might sometimes have adverse effects on vulnerable populations, they were also working. The World Bank also recognized that structural adjustment programs are not necessary in every situation. In one of its development reports the World Bank conceded that effective reforms could in some situations be accomplished in the absence of adjustment lending.
Meanwhile, the IMF contended that structural economic problems in member countries necessitated adjustment remedies that were equally structural and profound. It asserted that this is especially true in a globalized economy, where one nation’s problems could quickly spread to other regions of the world. Thus, the IMF argued that countries must undergo the short-term pain of adjustment in order to grow economically in the long term. Without the adjustment programs paving the way to efficient growth, the IMF contended, vulnerable groups would ultimately be worse off.
While defending structural adjustment as an integral tool to promoting economic health, the IMF also began to adopt policies recognizing the human component of structural adjustment. One such policy involved the use of social “safety nets,” programs designed to cushion the effects of adjustment programs on vulnerable segments of society. The spending from such funds is “targeted” at vulnerable groups, primarily because economists noted that a good portion of government spending intended for the poor was absorbed by the relatively well-off segments of society, leaving very little for the people the government intended to benefit. So, for example, these targeted safety nets have involved reworking a food subsidy program available to all citizens into a program focusing on obtaining basic foods for the poor.
3. The BWIs Responded to Charges that They Favored Authoritarian Governments.
At a meeting of the IMF and World Bank in 1994, World Bank Finance Secretary Roberto de Ocampo noted the popularity of the opinion that the key to economic success is a strong and authoritarian government as opposed to a democratically elected one. Ocampo went on to state that there is “another way” and encouraged his audience to “wait and see.” However, after these statements were made the BWIs continued lending to authoritarian countries and by 1996 critics claimed that neither the World Bank nor the IMF had developed a successful lending strategy for democratically-led countries without a consensus among the political elite, i.e., countries not under authoritarian rule. At the same time, these critics appeared to ignore two important facts. First, that a stable government is necessary to promote development and encourage investment. Second, the charters of both organizations, discussed above, prohibit taking political matters in a given country into account.
D. The BWIs Responded to Criticisms of Institutional Inefficiency & Fostering Statism
1. The World Bank Responded to Charges that It Was Inefficient in the Early 1990s.
In the early 1990s, the World Bank conducted an intensive review of its own procedures, projects, and personnel through its Task Force on Portfolio Management. The resulting 1992 report, known as the Wapenhans Report, after group leader Willie Wapenhans, identified a number of problems, led by a counterproductive “loan approval” culture at the World Bank. The report claimed that the quality of projects and their success had fallen over the years, that employees were unhappy, and that member countries and local communities claimed the project cycle (the way projects are designed and implemented) was not responsive to their needs.
Then-Bank President Lewis Preston had appointed the Task Force on Portfolio Management to effect a positive change in the Bank’s funding focus and increase its efficiency. It adopted a “smaller is better” lending philosophy by refocusing on quality or outcome-oriented analysis. This new approach stressed project viability and funding loans for smaller projects, such as small local businesses run by individuals or groups (“microenterprise lending”). The Bank also began to encourage “participatory” development by seeking information and feedback from project stakeholders. Moreover, it began assessing the social impact of its operations. The Country Assistance Strategies, discussed above, are examples of how the Bank attempted to broaden its focus from individual projects to the national level, implementing a country-by-country management approach that allowed for more accurate assessment of social impacts.
The Bank also increased collaboration with the authorities of borrower countries to review the performance of each country’s assistance program and resolve any problems, allowing for the implementation of more effective development strategies. These and other initiatives were part of the Strategic Compact, an administrative plan intended to streamline the Bank and improve its effectiveness and efficiency. Most importantly, the Compact’s goals included expanded partnerships with other institutions, greater transparency, and an increased emphasis on the social impact of development.
2. The IMF Responded to Charges that It Was Inefficient in the Early 1990s.
The IMF shifted its emphasis to development policies that promoted “high quality” economic growth. To do so, the IMF called upon member countries to adopt stable macroeconomic policy frameworks, market-based trade and investment policies, and principles of good governance including transparency, participatory development, accountability, and social safety nets for temporary use during adjustment phases. (Section IV, Part 2 of the E-Book discusses participatory development; Section V, Part 2 discusses good governance and transparency.)
The IMF also revised the technical assistance and training given to member countries used to assist them in devising and executing financial and economic policies. In 1994, the purpose, scope, and effectiveness of these programs were reviewed and the IMF decided to develop a better method with which to respond to problems encountered by countries undergoing structural adjustment. The IMF experienced a steady increase in demand for training through the program. By 1995, the demand for technical assistance had increased 75% over 1990 levels, suggesting that the expansion was a success.
3. The BWIs Responded to Charges that They Fostered Statism in the Early 1990s.
Both the IMF and World Bank experienced criticism regarding the practice of encouraging or aiding state-dominated development. While the IMF remained silent regarding such criticisms, the World Bank responded by recognizing and acknowledging situations where state-dominated development was not working. At the same time, the Bank emphasized that stateless development is not effective.
In 1997, the World Bank released a report titled The State in a Changing World. This report made clear that the World Bank believed that without an effective state entity, continued economic and social development is impossible. However, the report also contended that the state, while central to development, must facilitate growth rather than act as the direct and sole engine of growth.
[OUTLINE] [PART 2:III] [BIBLIOGRAPHY]
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