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Prof. Steven Friedman of University of Johannesburg points to the shifting role of World Bank:
Making economies work for more people is a political task, not a technical exercise. The World Bank has just conceded this – without meaning to do so.
The bank has taken a new direction which, its critics say, means that it has given up on making economies work for the poor.
In theory, they are right. In practice, the bank may be recognising that the politics which shape it made it impossible for it to achieve the development which it promised for the poor.
The change was outlined in an April speech by bank President Jim Yong Kim, and is discussed in a recent document spelling out the bank’s vision for 2030. It’s meant to change it from a lender for development into a broker which will unlock “trillions” of dollars in private investment. It will seek to help countries by advising them on the policy and governance changes they need to make to attract the money. So the Bank will become a conduit for private investment, not public development funding.
The Bank does not say it is giving up on public funding. But its document declares that:
Only where market solutions are not possible … would official and public resources be applied.
So public development funding will be used only where it cannot attract private investors to poorer countries. Since Kim insists it can unlock “trillions” of dollars which can transform developing countries, it seems unlikely to reach for public funding in a hurry. So it seeks now to act as a broker for private investment, not public development.
Both the Bretton Woods institute are gasping for breath and trying to stay relevant. IMF got a lease of life thanks to the financial crisis but there has been no such luck for World Bank.