Unit 62
World Bank
The World Bank is one of the major channels through which development aid is passed from the Industrial West to the poor and developing nations. In the last decade, important changes have taken place in the size of the Bank's operations and in the emphasis of its lending policies. Few people would deny that the President of the Bank, Mr. Robert McNamara, has played a vital role in bringing about the changes.
What immediately strikes anyone looking at the lending figures over the last ten years is the tremendous expansion of the Bank's loan program. This has increased from $1 billion to nearly $7 billion. The figure includes "hard loans" which are made at current rates of interest, and "soft loans" which are allocated to poor countries at concessionary rates. In deciding the emphasis of its lending policy, the Bank had to take into account the population explosion in poor countries. There is a strong and deeply-rooted tradition among people in these countries to have big families. The large family unit, it is believed, brings greater financial stability.
What the Bank discovered -- this was a revolutionary idea -- was that there was a link between economic and social development, on the one hand, and a reduction in fertility rate, on the other. Thus, by improving basic health services, by introducing better nutrition in a poor country, a lower fertility rate would be achieved. This advance in thinking persuaded the Bank to change its overall lending strategy. Where previously it had concentrated on the big infrastructure project such as dams, roads and bridges, it began to switch to projects which directly improved the basic services of a country. There was a shift from building dams to digging water holes to provide clean water.
A second reason for the change in approach was that the Bank had learned a bitter lesson from projects financed in the 1960s. Many of it capital investments had scarcely touched the lives of the urban and rural poor, nor had they created much employment. Instead, the huge dams, steel mills and so on were left as monuments to themselves.
This redirection of its lending has meant that the Bank has tended to support labor-intensive activities rather than capital-intensive ones. There is a better chance, in the first case, that its funds will benefit the bottom 40% of a country's population. The Bank is also looking at ways of stimulating the growth of small businesses in many developing countries, since this would create employment opportunities for people with low incomes.
The major thrust of the Bank's effort is directed towards improving conditions in poor countries. The Bank sees it as a moral duty of developed countries to help those living in conditions of absolute poverty. Mr. McNamara has publicly stated that he trusts "Civilized people will never allow themselves to reach a state where they will watch on their TV sets other less fortunate nations perish." |