New Approaches to Growth, Governance and Poverty
Chapter 4: The Role of Donors and Recipient Responses
In this chapter we shall consider what role the World Bank, the International Monetary Fund (IMF) and donor staff in general have played in the failure of aid. Subsequently, the chapter will present an assessment of the World Bank/IMF approach to development in the context of recent changes in economic thought and the theory of the second best. The chapter also considers the role of the World Bank in development research, and what impact this has had on aid and development strategies. Although the IMF is, strictly speaking, not a donor, its programmes also need to be considered. This is because, with the World Bank, it effectively leads much of the behaviour of the donor community, and, together, these two institutions are the most influential source of advice on all growth-related issues for developing countries. In consequence, their approach, strategies and programmes have a critical impact on the development effectiveness of aid. It is therefore necessary to discuss the basis of Bank/IMF advice, conditionalities and support, and undertake an assessment of whether financial flows from these two organizations have achieved their stated objectives. THE WORLD BANK AND THE INTERNATIONAL MONETARY FUND The World Bank’s support for development through advice and direct assistance has been based on the presumption that aid finances investment and growth. Before 1980, all the lending was in the form of projects, with a particular sector or area being favoured depending on the flavour of the times. For instance, after 1973, rural development projects, consisting of a...
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