Tuesday, April 27, 2010

Governance reforms: World Bank

International institutions are schizophrenic.
  • Hello, I'm a bank. I want you to loan me money so I can loan money to someone else (or maybe back to you!) so I'll make more money.
  • Hello, I'm a donor organization. I want more money to do good in the world.
  • Hello, I'm an ultimate representation of capitalist democracy: one dollar, one vote.
  • Hello, I'm an international power broker. You only get more voice in here if I say so and if that means I get less money, so be it.
    • No, we don't want your stinking currency.
    • Well, okay, maybe we do.
In other words, the World Bank just got $5 billion more in capital, a lot of it from developing countries to increase their voting share from 44 percent to 47 percent and giving China the 3rd largest voice behind the US and Japan. Increasing the vote of developing nations is (at current levels) generally considered a Good Thing.

The Bank expects that this infusion will merely enable it to keep up its earlier projects while at the same time being encouraged to "redouble its focus on helping the poor, especially in sub-Saharan Africa; invest in agriculture and infrastructure; promote global “collective action” on climate change, trade and other priorities; combat corruption; and prepare for crises." A lot to do while increasing only enough to maintain status quo.

Pres. Zoellick said this about the move:
“A lot of growth is coming from the developing world, and so the financing we do in the developing world is now beyond charity and social solidarity — it’s a question of self-interest,” he said. “They have become sources of demand.”
Hat tip: Blattman.

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